Calgary-based company calls for production cuts as oil price differential reaches ‘absurd’ levels.
Cenovus Energy, a Calgary-based oil sands producer is calling for the Alberta government to order cuts in oil production.
The call is in response to the escalating pipeline bottleneck, which is causing the oil price differential to reach levels the Alberta government understandably calls ‘absurd,’ with Alberta oil selling for far cheaper than comparative oil from energy competitors.
The cost of the price differential – if it continued into next year – would be $5 billion less for the province of Alberta in terms of royalties, and that doesn’t even include the loss of jobs and investment by the oil going for such a low price.
With the continued failures of the Trudeau government to get pipelines approved, and their rejection of pipelines that would have helped to alleviate the glut of oil, the Alberta energy industry is reaching a crisis point, leading to the call for a production cut to get the price up.
As noted by BNN Bloomberg, Cenovus said “This is an extraordinary situation brought on by extraordinary circumstances. The government needs to take this immediate temporary action — which is completely within the law — to protect the interests of Albertans.”
In a statement, the Alberta Energy Department said“The oil price differential right now is absurd, and exactly why Premier Rachel Notley is fighting to build new pipelines and pushing Ottawa to step up and help fix the backlog in rail shipments. We continue to engage industry leaders on a number of different approaches and look forward to having more to say soon.”
A disgraceful, and totally unnecessary crisis
What makes this situation so disgraceful is that it’s a crisis entirely of the federal government’s making. The Trudeau Liberals could have approved more pipelines, and they could have streamlined the regulatory process to bring in more investment, more jobs, and alleviate the glut to get prices up for Canadian oil.
Instead, they’ve done the opposite, costing Alberta, and our entire country many billions of dollars – money that no can’t go towards fixing our roads, strengthen our healthcare system, building up the military, cutting taxes, or reducing the deficit.
A little common sense could alleviate the problem quickly, but common sense isn’t too common in Ottawa these days.
Photo – YouTube