CALGARY, Alberta (Bloomberg) -- Think oil in the $20s is bad? In Canada they’d be happy to sell it for $10.

 

Canadian oil sands producers are feeling pain as bitumen—the substance at the center of the heated debate over TransCanada Corp.’s Keystone XL pipeline—hit a low of $8.35 on Tuesday, down from as much as $80 less than two years ago.

 

Producers are all losing money at current prices, First Energy Capital’s Martin King said Tuesday at a conference in Calgary.

 

Which doesn’t mean they’ll stop. Since most of the spending for bitumen extraction comes upfront, and thus is a sunk cost, production will continue and grow. Canada will need more pipeline capacity to transport bitumen out of Alberta by 2019, King said.

 

Bitumen is another victim of a global glut of petroleum, which has sunk U.S. benchmark prices into the $20s from more than $100 only 18 months ago. It’s cheaper than most other types of crude, because it has to be diluted with more-expensive lighter petroleum, and then transported thousands of miles from Alberta to refineries in the U.S.

 

For much of the past decade, oil companies fought environmentalists to get the pipeline approved so they could blend more of the tar-like petroleum and feed it to an oil-starved world.

 

TransCanada is mounting a $15-billion appeal against President Barack Obama’s rejection of Keystone XL crossing into the U.S.—while simultaneously planning natural gas pipelines from Alberta to Canada’s east coast to carry diluted bitumen. Environmentalists are hoping oil economics finish off what their pipeline protests started.

 

“It’s another one of those instances where the market makes these hot policy topics sort of irrelevant,” said John Auers, executive vice president at Turner Mason & Co. “It’s moved from the top of the docket to the bottom right now.”