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

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

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

The Crofton trailer park home where the bodies of two people were found. (Photo by Don Bodger)
Mom still waiting for answers after daughter and her fiance found dead in Crofton

Pair discovered dead in their Crofton home in May identified as Rachel Gardner and Paul Jenkins

FILE – Perry Bellegarde, National Chief of the Assembly of First Nations, takes part in an event on Parliament Hill in Ottawa on Tuesday, July 7, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Indigenous Peoples Day must be a ‘call to action’, says Assembly of First Nations chief

Discovery of children at Kamloops residential school site must lead to change, Perry Bellegarde says

CVRD to increase enforcement after audits reveal that curb-side recycling contamination in the district is well above acceptable limits. (File photo)
CVRD reports contamination in recyclables well above acceptable levels

Increased enforcement planned starting this summer

A conceptual rendering of the commercial plaza at 1130 Rocky Creek Road. (Town of Ladysmith/June 15 Council Agenda)
Rocky Creek commercial plaza passes public hearing

The proposed plaza at 1130 Rocky Creek Road would bring commercial activity to Ladysmith’s north end

The border crossing into the United States is seen during the COVID-19 pandemic in Lacolle, Que. on February 12, 2021. THE CANADIAN PRESS/Paul Chiasson
VIDEO: Border quarantine to soon lift for fully vaccinated Canadians

Eligible travellers must still take multiple COVID-19 tests

Chilliwack secondary school’s principal is apologizing after a quote equating graduation with the end of slavery in the U.S. was included in the 2020-2021 yearbook. (Screenshot from submitted SnapChat)
B.C. student’s yearbook quote equates grad to end of slavery; principal cites editing error

Black former student ‘disgusted’ as CSS principal apologizes for what is called an editing error

Skeena MLA Ellis Ross. (Photo by Peter Versteege)
BC Liberal leadership candidate condemns ‘senseless violence’ of Okanagan church fires

Skeena MLA Ellis Ross says reconciliation isn’t about revenge for past tragedies

A coroner’s inquest will be taking place at the Capitol Theatre in Port Alberni for the next week. (ELENA RARDON / ALBERNI VALLEY NEWS)
Teen B.C. mom who died following police custody recalled as ‘friend to many’

Police sent Jocelyn George to hospital after intoxication had gone ‘beyond the realm’ of normal detox

FILE - In this Nov. 29, 2020, file photo, Las Vegas Raiders defensive end Carl Nassib leaves the field after an NFL football game against the Atlanta Falcons in Atlanta. Nassib on Monday, June 21, 2021, became the first active NFL player to come out as gay. Nassib announced the news on Instagram, saying he was not doing it for the attention but because “I just think that representation and visibility are so important.” (AP Photo/John Bazemore, File)
Nassib becomes first active NFL player to come out as gay

More than a dozen NFL players have come out as gay after their careers were over

Penticton Indian Band Chief Greg Gabriel speaks to the Sacred Hearts Catholic Church burning down early Monday morning, June 21, 2021. (Monique Tamminga Western News)
Penticton band chief condemns suspicious burning of 2 Catholic churches

Both Catholic church fires are deemed suspicious, says RCMP

COVID-19 daily cases reported to B.C. public health, seven-day moving average to June 17, 2021. (B.C. Centre for Disease Control)
B.C.’s COVID-19 infections drop to 90 on Sunday, 45 Monday

Pandemic spread dwindles as 77% of adults receive vaccine

Emergency vehicles are parked outside of the Wintergreen Apartments on Fourth Avenue. (SUSAN QUINN / Alberni Valley News)
Port Alberni RCMP investigate stabbing on Fourth Avenue

Two men were found with ‘significant’ injuries near Wintergreen Apartments

By protesting uninvited in First Nations’ territories, conservationists are acting in a neocolonial or paternalistic manner, says Huu-ay-aht Chief Robert Dennis. Photo by Heather Thomson
A closer look: do Vancouver Island First Nations support the war in the woods?

First Nations/environmentalist old growth alliance uneasy, if it exists at all

Most Read