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Oil prices are rising, but Canada is getting comparatively less for every barrel — here's why – CBC News

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Oil prices around the world have risen to their highest levels in years, but Canadian oilsands producers are seeing comparatively less for every barrel because of imbalances in supply and demand.

The benchmark North American oil price, a crude blend known as West Texas Intermediate or WTI, was changing hands for $119 US a barrel on Tuesday — within striking distance of the multi-year high of $120.99 US after Russian President Vladimir Putin’s invasion of Ukraine in February sent the market into turmoil.

WTI is what’s known as a “light, sweet” blend, so-named because it is less dense than “heavy” oils and has much less sulphur content than others that are considered to be “sour” ones. Those chemical qualities make it easier and cheaper to refine, store and ship, which is why WTI has become the prized benchmark for oil prices.

But countless other blends exist, including the type of oil that comes out of Alberta’s oilsands, a heavy and sour mix that’s known as Western Canada Select or WCS. Oilsands crude from Canada almost always trades at a discount to blends like WTI, because it must be diluted before being shipped, and many parts of the world won’t accept it as an import because of its high sulphur content.

It’s also generally cheaper because of the many transportation difficulties with getting it out of landlocked Alberta and into pipelines or railcars bound for refineries on the U.S. Gulf coast.

Typically that discount is about $10-$15 US a barrel, but recent events have pushed the gap to beyond $20. That’s the widest it’s been since November, and close to the $22-spread seen in the very early days of COVID-19 when the price of oil plunged.

That means that even as WTI flirts with $120 US a barrel, Canadian oilsands producers are still only getting $99 US for their product.

There are a few reasons why, but they all boil down to one basic rule of economics: supply and demand. 

Different oil blends require refineries to be calibrated differently to process them, and many refiners aren’t set up to process heavy blends like WCS. During the pandemic, production of many heavy blends slowed to a crawl, which inadvertently helped ensure buyers for WCS.

“For a long time WCS really benefited from the lessened availability of Mexican heavy crude and Venezuelan crude,” said Rory Johnston, founder of oil market data service Commodity Context. “All the other heavy crudes in the region they traditionally competed against, they weren’t there anymore, so WCS was near the only game in town.”

A cup of heavy oil extracted from Canadian oilsands is shown. Canadian oilsands crude always trades at a discount to more prized U.S. blends, but that price gap has widened in recent weeks. (Reuters)

But that’s no longer the case. Production of a heavy Mexican blend known as Mayan crude is surging, as are medium-heavy blends from offshore platforms like Mars and Poseidon.

The result is that refiners who take those heavy blends have no shortage of supply, so they can afford to be choosier on what to pay for it and who to buy it from. 

“You have more options, so you’re not taking as much as you’re used to,” is how energy analyst Fernando Valle with Bloomberg Intelligence describes the mindset of U.S. heavy crude refiners right now.

That demand slowdown is coming against the backdrop of an uptick in supply out of Alberta, too. May is typically a slower month for oil production in Canada’s oil patch because the changing weather results in what Valle calls a “melt-off.”

“It’s hard to move rigs because the ground thaws, so there’s typically a decline,” he said in an interview. It’s why many facilities shut down either voluntarily or involuntarily every spring, but early indications are that production is going to rebound strongly this summer. And all that excess Canadian oil is already starting to pile up. 

Canadian oil inventories are already at their highest level since 2019, and they’re poised to increase this month, according to Bloomberg data. Against the backdrop of that excess supply and lower demand, a widening price gap for Canadian oil makes perfect sense.

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“Inventories in Hardisty, Alberta, are more full than the inventories in Cushing,” Valle said, referring to the oil hub of Cushing, Oklahoma, the central transport hub of the U.S. energy industry, home to about 15 per cent of all the oil storage in the U.S.

“That’s ultimately what that differential is telling you.”

Biden plan will release even more barrels

That imbalance could be set to get worse before it gets better because of a plan announced earlier this year by the Biden administration to release millions of barrels of crude oil from the Strategic Petroleum Reserve to offset the tumult caused by Putin’s invasion.

Almost 40 million of barrels of crude is set to be released to the market starting July 1, the U.S. Department of Energy said last month, and the blend of crude being released is sour, which makes it similar to the type of oil the oilsands offers — and all of it will be released near the cluster of refineries on the U.S. Gulf Coast that Canadian producers also sell to.

Although it will happen slowly, at a pace of about 1 million barrels per day, the total planned release is more than 10 times what Canada’s oilsands produce on a typical day, so a market flooded with that much sour crude is likely to drive down the price of Canadian products even more.

“That Alberta stuff is still going to be shipped down there,” Johnston said. “They’re just going to have to discount it more to sell.”

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Bad traffic, changed plans: Toronto braces for uncertainty of its Taylor Swift Era

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TORONTO – Will Taylor Swift bring chaos or do we all need to calm down?

It’s a question many Torontonians are asking this week as the city braces for the arrival of Swifties, the massive fan base of one of the world’s biggest pop stars.

Hundreds of thousands are expected to descend on the downtown core for the singer’s six concerts which kick off Thursday at the Rogers Centre and run until Nov. 23.

And while their arrival will be a boon to tourism dollars — the city estimates more than $282 million in economic impact — some worry it could worsen Toronto’s gridlock by clogging streets that already come to a standstill during rush hour.

Swift’s shows are set to collide with sports events at the nearby Scotiabank Arena, including a Raptors game on Friday and a Leafs game on Saturday.

Some residents and local businesses have already adjusted their plans to avoid the area and its planned road closures.

Aahil Dayani says he and some friends intended to throw a birthday bash for one of their pals until they realized it would overlap with the concerts.

“Something as simple as getting together and having dinner is now thrown out the window,” he said.

Dayani says the group rescheduled the gathering for after Swift leaves town. In the meantime, he plans to hunker down at his Toronto residence.

“Her coming into town has kind of changed up my social life,” he added.

“We’re pretty much just not doing anything.”

Max Sinclair, chief executive and founder of A.I. technology firm Ecomtent, suggested his employees avoid the company’s downtown offices on concert days, saying he doesn’t see the point in forcing people to endure potential traffic jams.

“It’s going to be less productive for us, and it’s going to be just a pain for everyone, so it’s easier to avoid it,” Sinclair said.

“We’re a hybrid company, so we can be flexible. It just makes sense.”

Swift’s concerts are the latest pop culture moment to draw attention to Toronto’s notoriously disastrous daily commute.

In June, One Direction singer Niall Horan uploaded a social media video of himself walking through traffic to reach the venue for his concert.

“Traffic’s too bad in Toronto, so we’re walking to the venue,” he wrote in the post.

Toronto Transit Commission spokesperson Stuart Green says the public agency has been working for more than a year on plans to ease the pressure of so many Swifties in one confined area.

“We are preparing for something that would be akin to maybe the Beatles coming in the ‘60s,” he said.

Dozens of buses and streetcars have been added to transit routes around the stadium, and the TTC has consulted the city on potential emergency scenarios.

Green will be part of a command centre operated by the City of Toronto and staffed by Toronto police leaders, emergency services and others who have handled massive gatherings including the Raptors’ NBA championship parade in 2019.

“There may be some who will say we’re over-preparing, and that’s fair,” Green said.

“But we know based on what’s happened in other places, better to be over-prepared than under-prepared.”

Metrolinx, the agency for Ontario’s GO Transit system, has also added extra trips and extended hours in some regions to accommodate fans looking to travel home.

A day before Swift’s first performance, the city began clearing out tents belonging to homeless people near the venue. The city said two people were offered space in a shelter.

“As the area around Rogers Centre is expected to receive a high volume of foot traffic in the coming days, this area has been prioritized for outreach work to ensure the safety of individuals in encampments, other residents, businesses and visitors — as is standard for large-scale events,” city spokesperson Russell Baker said in a statement.

Homeless advocate Diana Chan McNally questioned whether money and optics were behind the measure.

“People (in the area) are already in close proximity to concerts, sports games, and other events that generate massive amounts of traffic — that’s nothing new,” she said in a statement.

“If people were offered and willingly accepted a shelter space, free of coercion, I support that fully — that’s how it should happen.”

This report by The Canadian Press was first published Nov. 13, 2024.



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‘It’s literally incredible’: Swifties line up for merch ahead of Toronto concerts

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TORONTO – Hundreds of Taylor Swift fans lined up outside the gates of Toronto’s Rogers Centre Wednesday, with hopes of snagging some of the pop star’s merchandise on the eve of the first of her six sold-out shows in the city.

Swift is slated to perform at the venue from Thursday to Saturday, and the following week from Nov. 21 to Nov. 23, with concert merchandise available for sale on some non-show days.

Swifties were all smiles as they left the merch shop, their arms full of sweaters and posters bearing pictures of the star and her Eras Tour logo.

Among them was Zoe Haronitis, 22, who said she waited in line for about two hours to get $300 worth of merchandise, including some apparel for her friends.

Haronitis endured the autumn cold and the hefty price tag even though she hasn’t secured a concert ticket. She said she’s hunting down a resale ticket and plans to spend up to $600.

“I haven’t really budgeted anything,” Haronitis said. “I don’t care how much money I spent. That was kind of my mindset.”

The megastar’s merchandise costs up to $115 for a sweater, and $30 for tote bags and other accessories.

Rachel Renwick, 28, also waited a couple of hours in line for merchandise, but only spent about $70 after learning that a coveted blue sweater and a crewneck had been snatched up by other eager fans before she got to the shop. She had been prepared to spend much more, she said.

“The two prized items sold out. I think a lot more damage would have been done,” Renwick said, adding she’s still determined to buy a sweater at a later date.

Renwick estimated she’s spent about $500 in total on “all-things Eras Tour,” including her concert outfit and merchandise.

The long queue for Swift merch is just a snapshot of what the city will see in the coming days. It’s estimated that up to 500,000 visitors from outside Toronto will be in town during the concert period.

Tens of thousands more are also expected to attend Taylgate’24, an unofficial Swiftie fan event scheduled to be held at the nearby Metro Toronto Convention Centre.

Meanwhile, Destination Toronto has said it anticipates the economic impact of the Eras Tour could grow to $282 million as the money continues to circulate.

But for fans like Haronitis, the experience in Toronto comes down to the Swiftie community. Knowing that Swift is going to be in the city for six shows and seeing hundreds gather just for merchandise is “awesome,” she said.

Even though Haronitis hasn’t officially bought her ticket yet, she said she’s excited to see the megastar.

“It’s literally incredible.”

This report by The Canadian Press was first published Nov. 13, 2024.

The Canadian Press. All rights reserved.



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Via Rail seeks judicial review on CN’s speed restrictions

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OTTAWA – Via Rail is asking for a judicial review on the reasons why Canadian National Railway Co. has imposed speed restrictions on its new passenger trains.

The Crown corporation says it is seeking the review from the Federal Court after many attempts at dialogue with the company did not yield valid reasoning for the change.

It says the restrictions imposed last month are causing daily delays on Via Rail’s Québec City-Windsor corridor, affecting thousands of passengers and damaging Via Rail’s reputation with travellers.

CN says in a statement that it imposed the restrictions at rail crossings given the industry’s experience and known risks associated with similar trains.

The company says Via has asked the courts to weigh in even though Via has agreed to buy the equipment needed to permanently fix the issues.

Via said in October that no incidents at level crossings have been reported in the two years since it put 16 Siemens Venture trains into operation.

This report by The Canadian Press was first published Nov. 13, 2024.

Companies in this story: (TSX:CN)

The Canadian Press. All rights reserved.



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