Tuesday , May 11 2021

Reduction of oil production is on the table. Here's what it might mean for Alberta

Prime Minister Rachel Nothelli says the reduction in oil prices has become a crisis for Alberta, and it will announce a short-term solution Sunday night.

PSC political analyst Graham Thomson said it was under the impression that Noti would impose mandatory cuts in oil production.

"If she does not do anything, she will not go to this great length to try to soften us in advance," he said, emphasizing the letter that Nutelli wrote for the industry that struggles.

"She is trying to show Albertans that she is doing everything she can to … raise the price of oil."

Notebooks said 35 million barrels of oil are seated in a warehouse, unable to reach the market because the pipes are overcrowded. Oil is sold at "cost of fire, about $ 10 a barrel" to move.

This is not just a NDP to be a nanny state and imposing its will on the free market.– Graham Thomson, a political analyst

There are two short-term solutions to reduce inventories and close the gap in prices, said Nepali: let the free market be released "or hence limit production of oil.

Both Conservatives and the Alberta Party are pushing for a cut in production.

"This is not just a NDP to be a nanny state and imposing its will on the free market. This is a NDP supported by other parties, especially the United Conservative Party," Thomson said.

"If this does not work as planned, they will all take part in the blame. But if it works as planned, everyone will try to seek credit for this."

Piping: the problem and the solution

The federal court has lifted the government's approval of the Transca Mountain expansion project this summer. (Denis Owen / Reuters)

Notebooks are expected to announce whether the province will intervene or allow the free market to deal with the differential on Sunday at 6 o'clock.

Barbara Engelbart McKenzie, executive director of Leduc Nis's Economic Development Association, said production was not ideal.

"Making the cut does not promote capital investment, will not promote growth in the sector, will not launch new projects," she said. "It will only … deal with what we are facing today, which is a great differential."

The best scenario will be the construction of multiple pipelines – a solution that requires federal support, she said. In his letter, Notty said the province will continue to fight for oil pipelines, which are long-term fixes to raise oil prices.

Professor of Economics at the University of Calgary, Trevor Tom, said the overcrowded oil pipelines are the root of the problem, noting that more expensive methods of transportation, such as carriages, are used when pipes are in capacity.

"It's that the added transport costs that are really behind the expanded differential we've seen recently," he said.

Possible flaws

Notebooks noted that there is no industrial consensus on whether the reduction in production is the right move.

That could help some manufacturers with price increases, said Richard Dickson, professor at the Business School at Atabasca University. But he noted that it could also hurt refiners that benefit from lower prices, as well as smaller producers who do not expect a reduction.

"For Suncor and other companies that have front-side capacity and capacity, Shell and others, this will be hurt, because right now they can make very good profits," Dixon said.

"Well, who are we helping and who are we hurting?" The prime minister alludes to it, [but] it should be much deeper. "

Tombo pointed out that the effects of potentially reduced production will depend on the details expected to be released on Sunday.

The PSC will publish Notley's notice Facebook and online Sunday at 6 o'clock. MT.

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