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P.R.C.'s Price Reform and the Trend in Energy Prices

Li Zheng, Zhang Jian

Year: 1988
Volume: Volume_9
Number: Special Issue 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol9-NoSI1-3
No Abstract



Pipeline Capacity Rationing and Crude Oil Price Differentials: The Case of Western Canada

W.D. Walls and Xiaoli Zheng

Year: 2020
Volume: Volume 41
Number: Number 1
DOI: 10.5547/01956574.41.1.wwal
View Abstract

Abstract:
This paper examines the impact of pipeline capacity constraints on the discount of Canadian oil prices relative to U.S. benchmark oil prices. Using a panel of monthly data for Canadian oil exporting pipelines, we estimate that price differentials between U.S. markets and Western Canada would increase by 3.6% for 1% increase in pipeline capacity constraints. Pipeline capacity constraints in Canada have resulted in an average loss of $5.53 for every barrel of crude oil exported to the U.S. between 2009 and 2017. In 2015 and 2016, the losses due to insufficient pipeline capacity were equivalent to 3%-5% of the Canadian oil and gas industry's sales revenue and 69%-102% of its royalty payments to provincial governments. Western Canadian oil refiners and refined products' consumers benefit from the depressed crude oil prices. However, the total gains captured by local refiners and consumers are much smaller than the losses of the upstream sector.





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