Canada's differential dilemma
Wide discounts for Canadian oil lead to unilateral production cuts
Canadian oil producers are price takers, not price makers. But what to do when your main export is selling for less than half of global prices? That was exactly the situation in November last year when the differential — or discount — for Western Canadian Select (WCS) widened to an all-time high of $46/bl to West Texas Intermediate (WTI) and prompted a crisis of confidence in the country's oil patch after nominal Canadian prices fell below $11/bl. Given that fully 99% of exports go to the US, domestic producers are effectively subsidising American refiners to the tune of $2.4/bl per month — both figuratively and literally lining the pockets of US president Donald Trump's economic resurgence.
Also in this section
12 December 2025
The latest edition of our annual Outlook publication, titled 'The shape of energy to come: Creating unique pathways and managing shifting alliances', is available now
12 December 2025
The federal government is working with Alberta to improve the country’s access to Asian markets and reduce dependence on the US, but there are challenges to their plans
11 December 2025
The removal of the ban on oil and gas exploration and an overhaul of the system sends all the right messages for energy security, affordability and sustainability
10 December 2025
The economic and environmental cost of the seven-year exploration ban will be felt long after its removal
