Market Snapshot: The cost of importing crude oil has decreased
Release date: 2019-05-08
In 2018, Canada imported 593 000 barrels per day (Mb/d) of crude oil at a total cost of over C$18 billion. Most crude oil imports came from the United States (U.S.), Saudi Arabia, and Azerbaijan. Over 60% of crude oil imports were from the U.S.
In recent years, global crude oil prices have fallen significantly (Figure 1). Given that crude oil import volumes have fallen as well, the total cost to import oil has also significantly decreased (Figure 2). The value of crude oil imports peaked in 2012 at almost C$30 billion. In 2018 the value of crude oil imports fell to C$18 billion. When crude oil is imported by tankers, the crude oil price is based on Brent, a benchmark for light crude oil produced in the North Sea. When crude oil is imported from within North America by pipeline or by rail, its price is based on West Texas Intermediate (WTI).
Canada produces more crude oil than we refine, but Canadian refineries still import crude oil for a few reasons. Canada produces mostly heavy oil and refineries located in central and Atlantic Canada are not capable of refining it in large quantities. Even if refineries in Atlantic Canada could process heavy crude oil, they do not have pipeline access to western Canadian crude oil.
Figure 1: Price of Brent and WTI – 2010 to 2018
Source and Description
Source: Energy Information Agency
Description: This chart shows the Cushing, Oklahoma West Texas Intermediate (WTI) Spot Price FOB in U.S. dollars per barrel and the Europe Brent Spot Price FOB in U.S. dollars per barrel. Between January 2010 and mid-2014, the price of WTI and Brent were high. Prices for WTI were about US$100/bbl until mid-2014, after which they have been around US$60/bbl. Prices for Brent were around US$110/bbl, until mid-2014, after which they have been around US$60/bbl.
Figure 2: Crude Oil Imports
Source and Description
Description: Figure 2 shows crude oil imports by volume (left) and value (right) from 2010 to 2018. Crude oil import volumes have declined since 2010. In 2010, Canada imported over 800 000 barrels per day (b/d) of crude oil, mostly from overseas. In 2018, Canada imported almost 600 000 b/d of crude oil, mostly from the U.S. The value of crude oil imports peaked in 2012 at almost $30 billion (Canadian). In 2018, however, the value of crude oil imports fell to $18 billion.
Since 2010, two refineries in Canada closed, one in Montreal and another in Nova Scotia. Both of these refineries relied on crude oil imports. In addition, the reversal of Enbridge’s Line 9 to Montreal increased the amount of western Canadian and U.S. crude oil flowing into Ontario and Quebec, displacing imports from elsewhere. Because WTI tends to be lower priced than Brent, oil flowing into Ontario and Quebec through Line 9 is less expensive than crude oil imported from overseas. These are some of the reasons why crude oil imports into Canada have been declining.
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