EDMONTON — Premier Jason Kenney says a global oil glut means Alberta’s main industry will be dealing with low prices for a year or longer after the COVID-19 crisis abates.
Kenney says reduced demand for oil and gas during the pandemic, coupled with a destructive price war between Saudi Arabia and Russia, has left the world awash in oil.
“Our best intelligence is that those extremely depressed prices are likely to continue for the better part of a year at least given global inventories,” Kenney said Wednesday.
He said supply is so high, holding tanks are at the brim and tankers on the U.S. Gulf Coast can’t unload.
West Texas Intermediate, the benchmark price for North American oil, is hovering around $US15 a barrel, while Alberta had banked on it being US$58 a barrel this fiscal year.
The province, with an economy heavily dependent on oil and gas, has been hit hard. Its budget deficit was expected to be $7 billion before the novel coronavirus spread worldwide. Kenney has said it is now likely to be closer to $20 billion.
The federal government offered help to the industry on April 17. Prime Minister Justin Trudeau said his government would spend $1.7 billion in Alberta, Saskatchewan and British Columbia to clean up inactive and “orphan wells” — oil and gas wells that have been abandoned by their often-bankrupt owners without being remediated.
Another $750 million to help cut emissions of methane, a potent greenhouse gas that leaks from energy facilities, was also promised.
The cash is expected to support 10,000 jobs across the country.
Kenney reiterated Wednesday that the aid is appreciated but more must be done to help Alberta’s core industries — including oil and gas, aviation, and tourism — during the pandemic.
He called again for the federal government to provide between $15 billion and $30 billion in the form of loan guarantees to help those businesses get access to cash to stay afloat.
He reminded Trudeau that Alberta’s energy sector supports jobs across the country and has benefited all Canadians through transfer payments.
“We will continue at every opportunity to raise the alarm with the federal government about the need for urgent action,” said Kenney.
“After the $600 billion net that we’ve given the rest of the country in recent decades, it’s time for the rest of the country to be there for Alberta.”
This report by The Canadian Press was first published April 29, 2020
Dean Bennett, The Canadian Press