After years of blaming limited pipeline access for the low price they’ve had to charge for their product, Alberta fossil producers are running into another problem: U.S. refineries don’t particularly like the product.
“Canadian heavy crude’s price collapsed at the U.S. trading hub of Cushing as refiners shun heavy and higher-sulphur crude for lighter grades that are less expensive to process in refineries,” Bloomberg News reported Friday.
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The news report had the standard Canadian brand of crude oil, Western Canadian Select, selling for US$9 per barrel less than its American equivalent, West Texas Intermediate, the biggest price difference in two years. On Sunday, Oilprice.com was reporting an even bigger differential of $16.51 per barrel.
Bloomberg says the price of Canadian oil “weakened” at the central oil trading hub in Cushing, Oklahoma, after the newly-rebuilt Line 3 pipeline increased the flow of Canadian oil into the U.S. Notwithstanding the relentless hype from Canadian fossils and their political allies, blaming pipeline delays for their poor economic prospects, the refiners who actually have to handle the product “are seeking oil that’s less dense and has less sulphur to avoid processing it through units that run on hydrogen that’s made with natural gas, the price of which has surged in recent weeks,” Bloomberg writes.
Citing International Energy Agency data, the news story says rising gas prices have “added as much as $6 per barrel to the cost of processing more sulphurous crudes.”
