Wednesday , April 21 2021

Oil production is cut on the table. That's what this means for Alberta

Prime Minister Rachel Notley says the price of oil has become a crisis for Alberta, and she will announce a solution shortly Sunday evening.

The CBC's political analyst, Graham Thomson, said he was under the impression. Notley will require mandatory patios to oil.

"If she does not do anything, she will not continue this long time to try and mitigate us before," he said, highlighting a letter Notley wrote about the fighting industry.

"She tries to show Albertians that she does everything she can … raise the price of oil."

Notley said 35 million barrels of oil sitting in storage, unable to do it to market because tubes are getting together. Oil is sold at "fire sales prices, about $ 10 barrel" to move.

This is not just the NDP, being the Nana State and demands its will on the free market.– Graham Thomson, political analyst

There are two short solutions to reduce the supply and closing the price, Notley said: Let a free market "order itself" or temporarily restrict oil production.

The United Conservative Party and Alberta Party are to reduce production.

"This is not just the NDP, which is the Nana State and demands its will on the free market. This is the NDP supported by other parties, in particular the Conservative Party United," said Thomson.

"If this does not work as planned, they will all be involved in guilty. But if it works as planned, they will all try to demand the credit for that."

Tubes: the problem and solution

The Federal Court canceled Cabinet approval of the Trans Mountain expansion project this summer. (Dennis Owen / Reuters)

Notley expects to announce whether the province will take part or let the free market handle the differential on Sunday at 6 p.m.

Barbara Engelbart McKenzie, executive director of Leduc Nisku Economic Development Association, said production cut is not ideal.

"Making a cut does not promote capital investment. It will not promote growth in the sector. It is not about new projects," she said. "It will only go … to deal with what we are going on today, which is the big difference."

The best case would have acquired more tubes built – a solution that requires federal support, she said. In her letter, Notley said the province would continue to fight for tubes that are the long term repair to increase the price of oil.

University of Calgary Economist Professor Trevor Tombe said that tuberculosis are the root of the problem, noticing more expensive transport methods such as motorcycles are used when tubes are capable.

"It's because added transport costs that really behind the expanding differential we've just seen," he said.

Possible reductions

Notley noted that there is no industrial agreement on whether production cut is the right movement.

It could help some producers increase prices, said Richard Dixon, a professor at Athabasca University's business faculty. But he noticed that it could also hurt refinements that benefit from lower prices, as well as smaller producers that do not anticipate cuttings.

"For Suncor and other companies that have refineries that have the front and capability, Shell and others, this will hurt. For now they can do good," said Dixon.

"So what do we help and we are hurting? The Prime Minister refers to that, [but] It needs to be much deeper. "

Tombe points out the effects of potentially decreasing production will depend on the details intended to be annexed on Sundays.

CBC will announce Notley's announcement Facebook and online Sunday at 6 p.m. MT

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