Fraser Institute researchers have written extensively about the costs of pipeline obstructionism in Canada, beginning back in 2013, when we observed that, unlike in previous years, growing opposition to pipelines posed a threat to Canada’s ability to realize the value of its conventional and unconventional oil.

Institute researchers have elaborated on that work over the years, and in our most recent work on pipeline obstructionism we found that, if Canada could export an additional million barrels of oil to world markets, and get $60 a barrel for its oil (the world price as of this writing is about US$65/bbl), Canada could net an additional $4.2 billion in export revenues.

Recent developments show that the costs of pipeline obstructionism aren’t some distant or abstract phenomenon—it’s happening now.

In addition to Kinder Morgan’s recent postponement of non-essential spending on the Trans Mountain pipeline, Cenovus, an oil company headquartered in Calgary, recently announced it will cut production from some of its oilsand projects and accelerate maintenance in response to soft oil prices, and specifically, to a shortage of oil transport capacity and expanded price discount for Canadian crude.

The cut amounts to about six per cent from January volumes, though Cenovus is still projected to be within its annual production estimates for the year. Cenovus, Suncor and Canadian Natural Resources Ltd. all saw falling share prices after the announced production cuts.

And the problem will grow worse. As Bloomberg observes, Canada is 87,000 barrels/day short of pipeline capacity, and that shortfall is expected to hit 338,000 bpd by the end of 2018. Canada’s oil transport crunch is quickly becoming critical. With a lack of world markets driving the oil price discount level to record highs, and with railways unable or unwilling to take up the slack, production cutbacks (with the job losses, revenue losses, and yes, government revenue losses) would seem to be the only option for oilsand producers.

The concerns we voiced in 2013 have seemingly come to fruition. The recent cuts in oilsand production can only underscore the critical need for Canada to build pipelines to tidewater on the east and west coasts. If we don’t, our children will be the poorer for it.