Monday , December 6 2021

Oil production cuts on the table. What does it mean for Alberta


Premier Rachel Notley will announce that the decline in oil prices has become a crisis for Alberta and will be a short-term solution on Sunday evening.

Graham Thomson, a political analyst at CBC, said Notley would implement mandatory cuts in oil production.

Dı If he hadn't done anything, he wouldn't go to this great length to try and soften us before,, Notley said, stressing a letter he wrote about the fighting industry.

"He's trying to show Albertans that he's doing all he can to raise the oil price."

Notley, 35 million barrels of oil in the warehouse, and the pipeline could not be released because of the bottlenecks, he said. Oil is sold for a price of about $ 10 a barrel at the sale price of the fire.

This is not just the NDP being the state and imposing the will on the free market.– Graham Thomson, political analyst

Ası There are two short-term solutions for lowering the stock and closing the price gap, ın Notley said: the free market dedi dissipating iki or temporarily limiting oil production.

Both the United Conservative Party and the Alberta Party are in favor of restricting production.

Thomson said, "This is not only the NDP state and the imposition of the will of the free market. This is the NDP supported by the other parties, especially the United Conservative Party." Said.

"If this does not work as planned, they will all share it in the blame. But if they work as planned, they will try to demand credit for it."

Pipelines: problem and solution

Federal Court this summer the Trans Mountain expansion project's cabinet approval was broken. (Dennis Owen / Reuters)

Notley is expected to announce whether the province will intervene, or whether the free market will allow it to meet the difference on Sunday, December 6th.

Barbu Engelbart, managing director of Leduc Nisku Economic Development Association, said McKenzie's production cut is not ideal.

"Cutting does not encourage capital investment. It will not support growth in the sector. New projects will not start," he said. ”We'll just deal with what we're facing today, which is a big difference.“

The best-case scenario would be to build more pipelines – a solution that requires federal support, he said. In his letter, Notley said he will continue to fight for pipelines, a long-term road to boost the price of provincial oil.

Trevor Tombe University of Calgary economics professor says that the pipelines with which congested are the origin of the problem, and that more expensive means of transport, such as wagons, are being used when the pipelines enter capacity.

”There is this added shipping cost behind the expanding difference that we have seen recently,“ he said.

Possible downsides

Notley said there was no industry consensus about whether a production cut was the right move.

Richard Dixon, professor of business school at Athabasca University, said that some producers could help by raising prices. However, the small prices, which do not foresee a cut, as well as the refineries taking advantage of low prices, could be harmed.

"For other companies with Suncor and refineries with front-end and capacity, Shell and others will suffer, because right now, they can make a very good profit," Dixon said.

"And who are we helping and blind?" [but] It has to be much deeper. "

The effects of potentially restrictive production will depend on details expected to be released on Sunday, Tombe said.

CBC will release Notley & # 39; s announcement live Facebook and online Sunday morning at 6am. MT.

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