Is Canada's Oil Pipeline Bottleneck Choking the Economy?

Oil production is surging in Canada but producers are far from happy as their profit margin is sinking and they are striving to stay competitive with their U.S. counterparts. While upstream companies like Marathon Oil Corporation MRO, Hess Corporation HESand others are enjoying the shale boom and rebound in prices in the United States, their Canadian counterparts like Cenovus Energy Inc.

CVEand others are thinking of reducing production. The primary reason behind this is the shortage of pipelines in the country. In short, pipeline construction in Canada has failed to keep pace with rising domestic oil production – the heavier sour variety churned out of the oil sands –  resulting in infrastructural bottlenecks. This has also forced producers to give away their products at a discounted rate.