Canada ‘subsidizes’ U.S. with cheap crude: CEO

CALGARY — Each Canadian is subsidizing U.S. energy consumers to the tune of $1,200 annually through cheap Alberta crude, the CEO of oilsands company Cenovus Energy Inc. said Thursday.

“This is a major, major issue, not just for our industry but I think for all Canadians,” Brian Ferguson told a CIBC investor conference in Whistler, B.C.

A report by CIBC last year said Canada’s oil industry was missing out on $18 billion a year because of the big discount its crude gets in relation to both U.S. and global benchmarks.

Ferguson figures the price gap, or differential, has since widened to $36 billion.

“Math on that is roughly $1,200 per Canadian in a subsidy to the United States, that’s because of a lack of takeaway capacity,” Ferguson said.

Alberta crude tradition- ally fetches a l ower price than West Texas Intermediate (WTI), a key U.S. light oil benchmark, because it is more difficult to process and is farther away from market.

But that discount has been painfully steep lately, at around $40 lower than WTI. Landlocked WTI itself has been garnering lower prices than global crudes that can reach the most lucrative markets by sea, which effectively means Alberta producers face a double whammy.

Those market dynamics have added a sense of urgency for industry and government alike to seek out new ways for Alberta crude to reach coastal waters.

Pipeline projects are in the works to link Alberta crude to the West Coast for export to Asia, a major refining complex on the U.S. Gulf Coast and markets along the eastern seaboard that currently import pricey overseas crude.

“I’m in favour of all pipelines going everywhere,” Ferguson said.