The NDP-adopted, UCP plan to curtail Alberta oil production is blowing up in all of our faces in huge and potentially expensive ways.
The decidedly un-conservative idea to have Alberta’s inept NDP government take command of the oil economy in order to manipulate prices, came from an unlikely source: United Conservative Party leader, Jason Kenney.
And because it came from the right side of the aisle, the embargo on Alberta oil was embraced with little skepticism or analysis from some (usually) smarter conservatives.
Premier Notley ran with Kenney’s idea and imposed government-mandated production cuts beginning January 1. At the time, I predicted upstream job losses. You can watch my original coverage of Notley’s OPEC-style supply management of the oil industry at www.LiftTheEmbargo.com.
The problems the curtailment would cause were predicted — and are now upon us.
Late in January, less than one month into the embargo, the Lakeland Connect reported that without changes to Notley's the formula by February 1st, oil company CNRL would be shutting down their assets in Bonneyville, Elk Point and Lloydminster including their ECHO pipeline.
The company estimated that approximately 500 to 1,000 direct employees, and up to 2,400 contractors and service providers, would be out of work in the Lakeland region without a change to the rationing.
By February 1st, the government announced that it would ease limits on production in February and March for CNRL, allowing the company to avoid massive layoffs and keep their pipeline open.
But nearly 3,400 hundred jobs and a pipeline, isn't all that the curtailment put in jeopardy.
Notley’s plan to buy 7,000 rail cars and 80 locomotives to ship oil by rail in lieu of a pipeline - which according to Notley would cost $350M, and according to rail experts would cost up to $1B - is now basically valueless.
Imperial oil is cutting its crude-by-rail shipments from 168,000 barrels per day in December to near-zero this month. CEO Rich Krueger said the “ill-advised, ill-informed” production cuts ruined the economic case for shipping oil by rail to customers in the United States.
The Financial Post is reporting that oil by rail volumes fell fifty-six per cent in the first week of February compared with three weeks earlier.
I guess Notley’s dreams of being the Fat “Thomas the Tank Engine” Conductor, are being curtailed too.
None of Alberta’s major political parties are talking about this extreme boondoggle… because they’re all to blame.