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article imageAlberta is in an 'oil crisis' as prices hit rock-bottom

By Karen Graham     Nov 23, 2018 in Politics
Calgary - Prime Minister Justin Trudeau said the current low price of Canadian oil is a "crisis" for Alberta, but brought nothing in the way of new help for the industry during a visit to Calgary on Thursday.
Speaking at a Chamber of Commerce meeting in Calgary on Thursday, Prime Minister Justin Trudeau acknowledged that current the low prices for Canadian oil are a "crisis" for Alberta, however, according to CBC Canada, Trudeau had nothing new to offer in the way of any help for the industry.
Trudeau's trip into the oilpatch came a day after his Liberal government released its fiscal update which the Alberta government and oil industry did not like, arguing it did not do enough to help the oil sector.
Even as crowds of pro-pipeline protesters shut down the area where Trudeau was speaking, the Prime Minister reaffirmed that he was committed to listening to energy industry leaders. He also talked up his new tax changes that came out in the fiscal report.
As for the price discount on Canadian oil, "There is no question that folks in Alberta, folks here in Calgary, are living through extremely difficult times. This is very much a crisis," Trudeau said.
"When you have a price differential that's up around $42, $50 even, that's a massive challenge to the local industry, to the livelihood of a lot of Albertans. I hear that very, very clearly," he said while talking to reporters after making an affordable housing announcement Thursday morning.
What is Premier Notley doing about the oil crisis?
Of course, it is now well known that there is not enough pipeline capacity to move Canadian oil. In late August, a federal court of appeal ruling stopped further construction of the Trans Mountain Pipeline Extension. In 2017, the federal government scrapped the Northern Gateway pipeline; and the Keystone XL is still hung up in legal wrangling in the United States.
With all the pipeline woes going on, it didn't stop new oil sands projects from coming online, and this created a huge glut of excess oil that has been sitting around. By 2017, the oil sands were filling up some 2.7 million barrels per day, according to Natural Resources Canada. When that’s combined with other oil sources, this creates a pinch point.
If pipeline capacity is reduced for maintenance, or if companies book pipeline space, but don’t actually send oil — so-called air barrels — then there’s a backlog. Even though rail can reduce a portion of the backlog, transporting about 230,000 to 300,000 barrels per day - that is still not enough.
Dinara Millington, the vice president of research at the Canadian Energy Research Institute, says that tossing all those extra barrels of oil into storage is not the answer, either. The storage facilities are full, reports the National Post.
Alberta Premier Rachel Notley has called the oil crisis a “real and present danger to the Canadian economy.” Notley has gone so far as to ask the Liberal government to help pay for additional rail capacity to move an additional 120,000 to 140,000 barrels per day. Ottawa has yet to respond, reports Reuters.
Reuters does say that officials in the Liberal government are not too keen on the idea, suggesting that the oil glut should be over by 2019. McMillan said they’re predicting about $50 million per day in lost revenue to the Canadian economy, while Notley says the problem is worse than that - more like $80 million a day.
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