Abstract
In an earlier report, changes in bitumen prices at Hardesty, Alberta, Canada, were modeled as the responses to changes in monthly prices of Hardesty light/medium crude oil for the period 2000–2006 with a simple error correction econometric model. This note re-examines that price relationship for the period 2009–2014. Over the period 2006–2014, there was also rapid growth in North American light oil production from low-permeability carbonate, sandstone, and shale reservoirs. During that period, Canadian raw bitumen production grew by more than 12% per year and there was significant geographical diversification in its markets. Results of the statistical analysis showed that the change in the dynamic relationships between bitumen prices and Hardesty light oil prices probably reflected, in part, the maturation of bitumen markets and closer integration with North American light oil markets. The analysis also examines the dynamic relationships between bitumen prices and West Texas Intermediate and Brent international benchmark crude oil prices. Ideally, if bitumen prices are found to be closely related to a widely traded benchmark crude oil, the benchmark crude oil price forecasts could be used as a basis for predicting bitumen prices. However, neither of international benchmark crude oils tested had high explanatory power.
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