Each Canadian is providing each American with an approximately $1,200 energy discount thanks to the lack of crude oil infrastructure, according to the CEO of a Canadian oilsands company.The Canadian Press news agency says Cenovus chief Brian Ferguson told a CIBC investor conference that producers operating in Alberta’s oil sands have practically run out of markets because all existing pipelines are at full capacity.
In other words, the Canadian supply cannot reach other international export markets.
As a result of this supply overload, Canadian crude product prices have been severely discounted.
A similar scenario just got resolved in the U.S. with the construction of the Oklahoma-to-the-Gulf Seaway Pipeline: too much idling product was bringing down prices, but the new infrastructure will allow some of the so-called Midcontinent market to clear.
“A lack of pipeline capacity is a major issue not just for the industry, but for Canadians,” the Press quotes Ferguson as saying.
“The differentials have had a big impact on Alberta’s all-important oil revenues, with Finance Minister Doug Horner warning earlier this week that his March 7 budget will not be a ‘fun’ one,” the agency reports.
The U.S. imports a little more than 80 million barrels of oil a month from Canada.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.