Quote:
Originally Posted by fd-guy
Remarkable prediction. The markets, OPEC, and every energy economist on the planet will be watching your insightful posts with interest.
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When Canada could not sell its oil and it "backed up in the pipes" (bottlenecked) due to lack of pipeline capacity—reaching a crisis point in late 2018—the country suffered a massive, localized economic shock. The inability to transport oil to US or global markets caused Canadian heavy oil prices to plummet, forcing the government to intervene to prevent a complete collapse of the sector.
Bloomberg.com
Bloomberg.com
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Key impacts included:
Historic Price Discount (The "Price Gap"): Because Canadian oil could not move, it built up in storage, leading to a massive discount. The Western Canadian Select (WCS) price fell to roughly $10 per barrel in late 2018, while the US benchmark (WTI) was much higher.
Massive Revenue Losses: The pipeline bottleneck was estimated to cost the Canadian economy approximately C$80 million to C$100 million per day at the height of the crisis. The Fraser Institute estimated that the shortage cost Canada's energy sector $20.6 billion in lost revenue in 2018 alone.
