According to a study by the Fraser Institute, the Canadian oil business lost out on $20-billion in potential revenue, or nearly 1 per cent of Canada’s GDP.
According to a study by the Fraser Institute, the Canadian oil business lost out on $20-billion in potential revenue, nearly 1 percent of Canada’s GDP.
The report which is titled “The Cost of Pipeline Constraints” explores the impact of Canadian crude oil market performance and the lack of infrastructure development which have lead to discount prices for the product.
“In 2018, after accounting for quality differences and transportation costs, the depressed prices for Canadian heavy crude oil resulted in CA$20.6 billion in foregone revenues for the Canadian energy industry. This significant loss is equivalent to approximately 1 percent of Canada’s national GDP,” claims the report.
A discrepancy between pipeline space and current production levels are suggested as one of the reasons behind the lost revenue.
“The lack of adequate takeaway capacity in recent years has resulted in depressed prices for Canadian heavy crude (WCS) relative to the US (WTI) and global benchmarks, which has caused oil producers—and subsequently the whole economy—to lose revenue,” reads the report.
Finally, the Fraser Institute concludes that the only way to make up for lost revenue is further pipeline development to keep up with production and demand.
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