Canadian crude oil industry in crisis as prices plunge to record low
The Canadian crude oil industry has declared a national emergency after prices plunged to record lows.
The American benchmark price for oil is now well below $60 a barrel, having dropped $20 in the last six weeks. While that’s good news for prices at the pump, it’s causing misery for producers. The price of Western Canadian Select closed just under $14 a barrel Thursday.
The crisis has been blamed on a surplus of product and not enough pipeline to move it.
If prices remain low through 2019, Alberta’s government could lose up to $5 billion in revenue or 10 per cent of the province’s budget.
“We are in what we would describe as nothing short of a crisis,” Tim McMillan, a spokesperson for the Canadian Association of Petroleum Producers, told CTV News.
The average national gas price is just above $1.12 a litre, the cheapest since last December.
And with the oil industry on life support, it could have a knock-on effect on jobs.
Cenovus, one of Canada’s largest oil companies, has announced a production cut of around 10 per cent to boost prices.
It’s chief executive Alex Pourbaix is urging the Alberta government to order all oil companies to make a similar move.
“This is an extraordinarily serious situation both for the province of Alberta, the people of Alberta and I would say Canada also,” he told CTV.
Rival companies Suncor and Husky have rejected the call in favour of a free market.
Alberta Premier Rachel Notley has not ruled out government intervention.
“We have a suite of options at our disposal,” she said.
“You'll see something certainly within weeks and perhaps sooner.”
Industry pressures could ease once Enbridge expands its main export pipeline to the U.S. late next year.
But legal hurdles are blocking progress on the Keystone XL and Trans Mountain pipelines, now owned by the Canadian taxpayer.
Finance Minister Bill Morneau said: “We obviously have taken really important measures to try and make sure that we have the ability to get our resources to market.”
With a report from CTV’s Omar Sachedina in Ottawa.