Gluts, price differential: 6 things to know about Canada’s oil-price gap

Alberta says about 190,000 barrels of raw crude oil and bitumen are being produced each day that can’t be shipped out

The Alberta government has ordered a mandatory cut to crude oil production next year to deal with historically low prices being paid for Canadian oil. Here are six things to know about Canada’s resource:

Light or heavy: Each type of oil around the world has its own price. New-York-traded West Texas Intermediate (WTI), delivered at Cushing, Okla., is the benchmark price for light crude oil in North America. Western Canadian Select (WCS) is the reference price for heavy crude oil from the oilsands delivered at Hardisty, Alta.

Price differential: Canada’s heavy crude usually trades at a discount because of refining and transportation costs, so a price gap or differential is typical between WTI and WCS.

Record gap: The differential is usually between US$10 to US$15 per barrel. The biggest gap — US$52 per barrel — was recorded in October. Experts say the extreme discount happened due to a reliance on high-cost transportation — rail and truck — instead of new pipelines.

READ MORE: B.C. gas prices to hit highest levels in years: GasBuddy forecast

READ MORE: Alberta cuts oil production to help deal with low prices

The glut: Alberta says about 190,000 barrels of raw crude oil and bitumen are being produced each day that can’t be shipped out. Roughly 35 million barrels, about twice the normal level, are in storage.

Cutting production: The province has ordered the output of raw crude oil and bitumen to be reduced by 8.7 per cent, or 325,000 barrels per day, starting in January. As the excess storage clears, the reduction is expected to drop to 95,000 barrels a day until the end of next December. The move is expected to narrow the differential by at least $4 per barrel.

Winners and losers: Calgary economist Trevor Tombe says $4 per barrel doesn’t sound like much but, over a year, it’s worth about $1 billion to the Alberta government’s budget. While some companies will also benefit, those with their own refining and upgrading operations may not.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Verdict gives murder victims’ parents sense of closure

A guilty verdict delivered earlier this week was “like a weight lifted off the chest.”

Thieves break into mailboxes overnight in Courtenay, Comox

Thieves in Comox were busy overnight on March 17, breaking into more… Continue reading

Man convicted of Courtenay couple’s murder

Michael Philip Simard, 45, was charged with two counts of second-degree murder.

Comox Valley RCMP looking for help to identify shoplifters

The Comox Valley RCMP is asking for assistance from the public to… Continue reading

Five highlights in the 2019 federal budget

Latest budget includes a sprinkling of money for voters across a wide spectrum

Comox Valley Hospice Society finds new Ocean Front home

Comox Valley Hospice Society (CVHS) recently announced plans to construct a new… Continue reading

Cougar on Island might have been shot with bow-and-arrow

Conservation officer service looking for animal near Port Alice

Facebook to overhaul ad targeting to prevent discrimination

The company is also paying about $5 million to cover plaintiffs’ legal fees and other costs

B.C. mosque part of open-house effort launched in wake of New Zealand shootings

The ‘Visit a Mosque’ campaign aims to combat Islamophobia

‘That’s a load of crap’: Dog poop conspiracy spreads in White Rock

Allegation picked up steam through a Facebook page run by a city councillor

Explosives unit brought in after suspicious boxes left at B.C. RCMP detachment

Nanaimo RCMP issues all clear after packages were found on lawn earlier in the day

Newfoundland man caught after posting photo of himself drinking and driving

The 19-year-old took a photo of himself holding a beer bottle and cigarette while at the wheel

2019 BUDGET: As deficit grows, feds spend on job retraining, home incentives

Stronger economy last year delivered unexpected revenue bump of an extra $27.8 billion over six years

Most Read