Veren Inc T.CPG

Say goodbye to dirt cheap Canadian oil

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For years U.S. drivers have been getting a gift at the expense of their northern neighbor—artificially cheap oil. That could change in the coming months when a major pipeline expansion will allow Canadian oil more access to global markets.

The U.S. imports about 4 million barrels a day of Canadian crude oil, which represents more than a fifth of the country’s operating refining capacity. Western Canadian Select was on average about $18 to $19 a barrel cheaper than the U.S. benchmark West Texas Intermediate in 2022 and 2023, according to data from the Alberta Energy Regulator. Part of that discount is because the WCS is a heavier blend that requires more processing and involves higher operating costs, but lack of pipeline capacity was another reason.

That will change in the coming months when Canada opens up its expanded Trans Mountain pipeline, adding 590,000 barrels-a-day of takeaway capacity. Startup is expected in the second quarter, according to a spokesperson for the project. The expanded capacity is expected to start up gradually, which should prevent sudden price surges, according to John Auers, managing director of refined fuel analytics at RBN Energy.