Alberta Drivers Get Relief, Producers Left Behind

Alberta drivers are set to receive relief at the pump as the province suspends its 13-cent-a-litre fuel tax from October 1 through the end of the year. This move comes after North American oil prices averaged nearly US$91 a barrel over the last month, triggering the relief. However, for Alberta's oil producers, this is not the case.

According to Richard Masson, former chief executive of the Alberta Petroleum Marketing Commission, producers will sell their heavy crude at discounted prices until at least February. 'We've had production growth; the pipelines are full, and we're likely to have wider discounts over the course of the winter,' he said.

The reason for this disparity lies in the recent power outage at ExxonMobil Holdings Corp.'s refinery in Joliet, Illinois. This refinery can process up to 275,000 barrels a day and was built in 1972 to receive Canadian crude by pipeline. When it goes down, Alberta's oil loses a home.

Matthew Lewis, founder of Plainview Energy Analytics, sees room on pipelines out of southern Alberta this winter, even as producers grow output. 'If there's no constraint on the pipelines and the refineries are back up, I think you're in a pretty good position to see that differential narrow back to what it was a month or so ago,' he said.