Canada Is World’s Biggest Oil Loser With Price Spread
By Greg Quinn and Doug Alexander - May 8, 2012 12:35 PM ET
Canada buys high and sells low when it comes to crude oil, costing the world’s 10th largest economy billions in lost revenue as it expands production from one of the world’s largest energy deposits.
The gap between Alberta’s exported Western Canada Select and Brent oil imported into Ontario and Quebec was about $30.50 a barrel yesterday, and that difference is creating a drag on growth according to Bank of Canada Governor Mark Carney.
Annual losses of about C$19 billion ($19 billion) may persist for a couple of years amid a lack of ready alternatives for oil sands bitumen. TransCanada Corp.’s (TRP) Keystone XL pipeline to U.S. Gulf coast refineries was delayed by President Barack Obama while Enbridge Inc.’s (ENB) proposed Northern Gateway project to the west coast faces environmental hearings and growing opposition in British Columbia. There are no advanced proposals to ship oil from Alberta east to the rest of Canada.
The price difference “highlights the importance and potentially the value of pipelines in Canada that move our oil on an east-west axis,” said Jim Prentice, vice chairman of Canadian Imperial Bank of Commerce and a former minister for the environment and industry. “That’s lost corporate revenue, government income tax, government royalties.”
CIBC estimates losses to the economy of at least C$18 billion a year, while Bank of Montreal economists say the oil- price gap costs about C$19 billion.
more:
http://www.bloomberg.com/news/2012-05-08/canada-is-world-s-biggest-oil-loser-with-price-spread.html
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