Alberta Rachel Notley announced on Sunday (December 2, 2018) that Edmonton has forcibly stopped oil production to address a $ 80 million cost-per-day crisis in Canada.
The imposition of cuts in oil production in Alberta is not a signal of a problematic province. It is evidence of a country in trouble.
The government is doing this because it is the only way to raise prices and narrow the gap between oil prices in Alberta and West Texas.
No other authority in the country – no provinces, nor the Trudeau government – is willing to help with a huge loss of income of $ 80 million a day. The federal government calls it "crisis" but does nothing.
The government has ordered a total reduction of 325,000 barrels, or 8.7% of its current output.
It starts on January 1 and is expected to last until the end of 2019.
This behavior is natural, awkward, and invasive. It is a necessary exercise in absurdity. It orders not to produce oil to the world's most efficient oil producers.
These cuts punish industry players who are victims of price collapse. It drives the wedge between SMEs. The smallest company is not affected.
The wound is like an ancient medical practice. If enough blood is removed, the patient can get better.
But there is a risk that almost everyone will agree that these cuts are necessary. Given the reality, this plan is reasonable and well considered.
If it works, the government expects the price difference to be about $ 4 per barrel.
Given that the real-life gap is $ 40, this seems to be a minor impact. But even if they earn $ 4 a barrel, the government 's revenue is $ 1.1 billion a year.
Over time, other factors such as the purchase of rail cars and the completion of Route 3 are expected to further reduce the price gap. Notley is also focusing on diversification through its new refinery.
But as most Albertaers know, Ottawa is a long-term solution to the $ 4.5 billion purchase of transac- tions that can be fundamentally delayed through incompetent consultations.
After the pipeline is opened for business – if that is possible, the shipping capacity will be fully consistent with production and will eventually liberate US West Canadian oil from the US market.
Jason Kenney's United Consvative Party blames Nottingham for many of the problems it has experienced and firmly supports cutbacks. He did not mention that ministers and some of the MLA were semi-pipeline activists.
In the 1980s when Ontario and the federal government attempted to pirate the industry in Alberta, the bill was already compared with Alberta's production and transportation constraints.
Withholding oil and gas was very effective in that struggle. When former Prime Minister Don Getty refused permission to export gas, Ontario Prime Minister Bill Davis soon called to beg for mercy.
But Who won the money at the time?
Even today have money.
The Trudeau Liberals campaign, which is trying to curb the Alberta industry gradually, succeeds much faster than anticipated, effectively restraining value and putting pressure on investment.
The government of the country guaranteed all victories to go to hell. Even these cuts will seem like a victory for them.
The history of this crisis is clear.
First, Harper 's Conservatives messed up the northern gateway approval, and liberals completely canceled the project.
Liberals effectively stopped the Energy East project by changing environmental rules during the approval process.
A federal court that suspended Trans Mountain on August 30 accused the shoddy federal advisers.
Now, B.C. In the proposed gateway port (Kitimat) you will see the benefits of a giant liquid natural gas terminal.
Ottawa's preference for B.C. In particular, the Hogan government was sick because it continued its efforts to control all aspects of bitumen transport in the province.
Because Alberta has suffered the greatest crisis for 40 years, Ottawa depends heavily on the power of the federal government as a car factory in Ontario is closed.
It is a way to work in Alberta these days. Not very good.
Don Braid's columns appear regularly in the Herald.
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