Production cuts are short-term only

The oil-producing provinces (namely Alberta and Saskatchewan) seem to be in a bad situation with Ottawa, and this is not the first time this has happened in Canada. If one hearkens back to the days of Pierre Trudeau and the National Energy Program, then-Premier Peter Lougheed of Alberta had a showdown in regards to the oil industry.
It won’t surprise many people that now another showdown is brewing with Pierre’s son Justin, other than the fact that an NDP government is the one starting to apply the pressure.
This unlikely scenario now has Premier Rachel Notley asking that province’s oil producers to begin reducing their production starting in January by around nine per cent, in a bid to get the price of oil back up to where it should be. The scenario is unlikely because she has all-party support in Alberta for her move.
Here in Saskatchewan, the government has not seen fit to follow suit with the oil producers here as yet.
The move by the Alberta NDP is a risky one that not all oil companies support. Some, like Cenovus, are supportive, but others like Imperial Oil and Suncor do not support the move.
Notley says this is a temporary measure — but what does that mean? Markets and prices, and subsequently levels of production and employment, all move slowly, and it would take a long space of time to effect any real benefit for the oil industry and to those employed (and, currently, unemployed) by that industry.
What is needed, and all players outside of Ottawa agree on this, are pipelines, to enable crude petroleum to be moved to tidewater so it can be shipped to foreign markets.
Right now, the U.S. has Canada by the throat and that is why there is a huge differential between the heavy crude produced out of Alberta and the West Texas Intermediate price. The U.S. knows that producers here have no other market they can send their oil to, so they can cripple our economy and pay ridiculously low prices for our resource.
Even if the federal government had any sense and compassion for the West (which they clearly don’t), it takes time to build pipelines, and for those pipelines to then be able to move large amounts of crude oil that can be shipped elsewhere.
The cuts in production is a short-term solution, by Notley’s own admission, but what is needed is a long-term solution: more pipelines. — Greg Nikkel

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