By GRAHAM HICKS
What in God’s name is this spend-until-we’re-bankrupt socialist Alberta government doing, announcing a purchase of $350 million worth of railroad oil tankers to move an extra 120,000 barrels of dilbit (diluted bitumen oil) a day – about 4% of Alberta’s current daily oil output?
Look – we all knew the oilsands crisis was going to happen, as sure as night follows day.
And now the day of reckoning has arrived.
Oilsands production has grown. New extraction plants started before the 2014 oil-price collapse are now on stream. The ability to move additional oil from Fort McMurray via pipeline, as has been explained ad nauseum, has not.
The smart oil-patch money knew this would happen.
They knew the soft and wishy-washy Justin Trudeau federal government, for political reasons, would passively allow this economic crisis to happen.
The smart oil-patch money – like Suncor – went to the pipeline companies years ago, pre-booking the additional pipeline capacity they knew would be needed when their latest expansions came into production.
The smart money also invested in upgraders and refineries to convert bitumen into gasoline, diesel and other oil products that – unlike today’s bitumen – are quite profitable. All is happening within ever-higher environmental standards.
Suncor’s 2009 multi-billion-dollar purchase of Petro-Canada – with its Western Canada refineries and gas stations – was brilliant. Most of Suncor’s bitumen isn’t being shipped out-of-province at rock-bottom prices. It’s turned into gasoline and diesel for Western Canadian consumption, where there’s still plenty of profit margin!
When Suncor does ship additional bitumen out-of-province, it has reserved space on existing pipelines to do so.
That’s why Suncor’s shares have moved up from $14 in 2014 to a surprising $43 today. Shares in most other publicly-traded Canadian oil companies tanked in 2014 and have stayed in the toilet ever since.
Back to rail: The smart money knew the pipeline crunch was coming – everybody knew the pipeline crunch was coming! They weren’t happy about it, given rail transport of dilbit (bitumen diluted so it will flow) is twice as costly as moving the stuff by pipeline.
But, looking reality in the face, they invested in rail terminals around Edmonton to ensure their bitumen could be shipped by rail if the pipelines were full.
So why should Premier Rachel Notley barge in, and spend $300 million for her government to buy railway oil tankers?
STOP SPENDING OUR MONEY!!!
Is this not a straight give-away to the oil and railroad companies?
If pipelines finally get built and shipping by rail is no longer needed (remember rail is twice as costly), what will the provincial government do with the railway tankers? Sell them for pennies on the dollar?
If rail is the answer, the private sector is perfectly capable of building more oil-by-rail infrastructure.
Won’t across-the-board production cut-backs, as proposed by United Conservative Party leader Jason Kenney, simply penalize those oil companies that thought ahead?
Let those other oil companies face the consequences of their own actions! Those that did not think ahead can shut down until conditions improve – natural gas producers have been in that boat for years. Or they can go bankrupt. Or sell to other, better-run, oil companies.
Why should government prop up weak, short-sighted and just-plain-stupid energy companies?
Why does the Alberta government need to pretend it’s coming to the rescue?
Oh, how could I forget! A provincial election is in the wings, and Notley is desperate.