Ottawa won’t fund new rail cars

Federal Finance Minister Bill Morneau is signalling he won’t cough up money for new rail cars to ship Alberta oil, saying it would take months and wouldn’t solve the current price collapse.

Morneau, in an interview with “The West Block” on Global News that aired on Sunday, said Alberta could buy rail cars with industry should it choose to, but that the federal government was focused on building the Trans Mountain oil pipeline expansion. Rail cars take a significant amount of time to acquire, he said.

“Our estimate is it might take at least nine months, perhaps longer, to actually get more rail,” Morneau said, according to an advance transcript. “If that’s a decision that the Alberta government and the industry wants to take, that’s a decision that can be taken.”

The federal government is said not to favour Alberta’s proposal to buy trains to boost crude shipments on rail by 120,000 barrels daily. Alberta Premier Rachel Notley has said she might buy the rail cars herself.

Morneau’s budget update, released Nov. 21, included billions in broad-based tax breaks for business but was criticized for not doing enough to help Alberta during its oil crunch.

Morneau said the government has “been really clear that the decision around Trans Mountain was the first best way for us to get resources to international markets.”

Cheap Alberta oil is having a wideranging effect on the economy, including sowing doubts that the country’s central bank will raise interest rates at its January meeting.

Western Canadian Select crude, the main blend sold by the oilsands, closed at $13.46 a barrel on Nov. 15, the lowest in data compiled by Bloomberg stretching back to 2008.

Its discount to U.S. benchmark crude exploded to as much as $52.40 a barrel this month, also a record.

“The spread is so extreme, the cries of pain from Alberta are so loud, I don’t think they can just put blinders on and carry on as if nothing ’s changed,” Doug Porter, chief economist at Bank of Montreal.