HOW WE GOT HERE
As politicians blame pipelines for Alberta’s oil woes, we look back to see what led to Notley’s 8.7% mandatory production cut
CALGARY—Alberta’s energy minister was on the defensive Monday, fending off accusations the NDP government ignored or downplayed warnings as early as this spring about the price-differential crisis now gripping the oil industry.
Shortly after Premier Rachel Notley announced on Sunday a temporary cut in oil production of 8.7 per cent — a bid, starting in January, to reduce the price gap and increase revenue — Alberta Party Leader Stephen Mandel accused the government of sitting idly by as the differential widened.
“I’m not sure why any government wouldn’t have a program in place that allowed the changes and the reduction and curtailment to happen earlier rather than wait for as long as they have,” Mandel told reporters.
While opposition parties took aim at the NDP and the federal government, political observers and industry watchers say the current crisis was decades in the making. They argue successive Alberta governments are to blame for ignoring advice to pace oilsands development and encourage energy companies to upgrade and refine bitumen into higher-valued petroleum products.
In recent months, the price differential between Alberta crude, known as Western Canadian Select, and West Texas Intermediate has grown due to an oversupply of oil and lack of pipeline access.
The differential is costing the Canadian economy an estimated $80 million a day, according to the province.
Energy Minister Marg McCuaig-Boyd told reporters Monday she wasn’t sure when the provincial government learned about the impending differential crisis but maintained the NDP took action immediately.
“We’ve known that this has been an ongoing issue, this differential,” McCuaig-Boyd said.
“Not sure of the timeline, but it’s certainly not like we sat back and did nothing.” About 35 million extra barrels are waiting in storage due to a lack of pipeline capacity. Read more at thestar.com/calgary
Alberta Premier Rachel Notley announced on Sunday a temporary cut in oil production of 8.7 per cent, which is intended to reduce the price gap and increase revenue.