What's going to happen to crude oil

@terminal

Do you have any figures on the impact the low oil prices will have on the Canadian Government's budget projections for the future and how that money will be allocated to the other provinces?
 
@terminal

Do you have any figures on the impact the low oil prices will have on the Canadian Government's budget projections for the future and how that money will be allocated to the other provinces?
Some info coming from Alberta:

Residents in the Canadian province of Alberta are being warned to expect a grim future as the coronavirus pandemic— and collapse in oil prices—hit at the same time, Leyland Cecco reports.

Speaking in a televised address on Tuesday evening, premier Jason Kenney said medical experts in his government anticipate Alberta could see as many as 800,000 cases of Covid-19 by the end of summer on the current trajectory, with as many as 3,100 deaths, or as few as 400. An “elevated” scenario would see one million infections and as many as 6,600 deaths.

“I know that these numbers can be overwhelming,” Kenney said. “But these models are not a done deal. I want Albertans to see them as a challenge.”

Currently, the province has 1,373 reported cases and 26 deaths.

Kenney also warned a collapse in oil prices has left the province has left the province in a dangerous situation, projecting as much as a quarter of the workforce could be out of a job.

“The shutdown in much of our economy is having a devastating impact,” Kenney told to an online energy conference earlier in the day.

An unemployment rate of 25% would be double Alberta’s worst numbers — set in 1984 — and worse than anything experienced in the rest of the country.

 
Some info coming from Alberta:

Residents in the Canadian province of Alberta are being warned to expect a grim future as the coronavirus pandemic— and collapse in oil prices—hit at the same time, Leyland Cecco reports.

Speaking in a televised address on Tuesday evening, premier Jason Kenney said medical experts in his government anticipate Alberta could see as many as 800,000 cases of Covid-19 by the end of summer on the current trajectory, with as many as 3,100 deaths, or as few as 400. An “elevated” scenario would see one million infections and as many as 6,600 deaths.

“I know that these numbers can be overwhelming,” Kenney said. “But these models are not a done deal. I want Albertans to see them as a challenge.”

Currently, the province has 1,373 reported cases and 26 deaths.

Kenney also warned a collapse in oil prices has left the province has left the province in a dangerous situation, projecting as much as a quarter of the workforce could be out of a job.

“The shutdown in much of our economy is having a devastating impact,” Kenney told to an online energy conference earlier in the day.

An unemployment rate of 25% would be double Alberta’s worst numbers — set in 1984 — and worse than anything experienced in the rest of the country.

That is pretty grim news indeed.
 
@terminal

Do you have any figures on the impact the low oil prices will have on the Canadian Government's budget projections for the future and how that money will be allocated to the other provinces?
To start with, the federal government gets no revenue directly from oil production. Natural resources belong to each province, and they collect and keep all royalties and fees associated with them.

The federal government does collect a share of personal income tax and a share of corporation taxes from people and companies working in the oil industry, and GST (similar to VAT), but that is the same as with every other industry.

So, the Government of Canada's revenues are affected to the degree that personal incomes and corporate profits decline in oil producing provinces. Corporate profit taxes are low in Canada, so that's not a huge source of revenue.

I believe I mentioned up thread somewhere that Newfoundland just had to be bailed out by the federal government, as their attempted bond sale fell flat in the current environment. Newfoundland is probably the most exposed to the collapse in oil revenues.

Alberta has been feeling a financial squeeze for a few years now, due to an over-reliance on the American market. The US had been a good market for heavy oil, as Canadian producers filled a void that was being vacated by Venezuela as that country slowly circled the drain under the weight of misguided socialism. However, once pipeline capacity was reached the industry faced bottlenecks in getting to market and the result was low oil prices and a cap on production. Environmental opposition in the US has made building new pipelines there nearly impossible in most of the country. The result is that plans for a new export pipeline from Alberta to the west coast and Asian markets have been advanced forward, and the federal government has poured billions into it to help out Alberta. This all happened well before the COVID-19 crisis.

Alberta produces a lot of oil, but royalties for the province are not as great as you might think, as the majority of it is from non-conventional sources such as oil sands which are expensive to produce and aren't levied a high royalty. Saudi Arabia rakes in lots of cash because their oil is cheap to produce, so most of the revenue goes into state coffers. This is not the case in Alberta, due to the higher production costs and lower price they get for it (due to pipeline bottlenecks and the lower grade of the oil).

The majority of the country actually does better economically when oil prices are low, as high prices push up the Canadian dollar making non-oil exports less competitive. Look up "Dutch disease" if you want an explanation of that.

Coincidentally I was about to post this story on this thread.
Canadian oil production could fall 25% before post-COVID 'resurgence'
Long story short, Canadian pipeline company Enbridge are estimating that Canadian oil production could fall 20-25%. Canada currently produces roughly 5 million barrels per day.
"It could see about maybe 20 per cent, 25 per cent, somewhere in that range, come off from there," said Enbridge's Al Monaco, adding the magnitude of how deep the production cuts will reach is difficult to predict.
However, once the pandemic is over Enbridge is expecting production to bounce back, and to do ever better because new pipeline capacity will be coming on stream at about the same time.
When the pandemic is over, Monaco expects the oilpatch in Western Canada to thrive in the coming years because oil producers will have more ability to export their product on pipelines.
Actually if COVID-19 keeps the environmental protesters at home in the US, that might be of help in getting pipelines to the US done. The first one, Line 3, is already built up to the border, and they hope to get approval in the US in the June or July time frame. Construction in the US will take 6 to 9 months. Once that's running then capacity limits in Alberta will be eased, and prices to producers will go up.

At the moment though, things are bad in Alberta due to a combination of the above factors along with the fall in demand due to COVID-19 and also Saudis and Russians getting into a pissing match with one another.
 
To start with, the federal government gets no revenue directly from oil production. Natural resources belong to each province, and they collect and keep all royalties and fees associated with them.

The federal government does collect a share of personal income tax and a share of corporation taxes from people and companies working in the oil industry, and GST (similar to VAT), but that is the same as with every other industry.

So, the Government of Canada's revenues are affected to the degree that personal incomes and corporate profits decline in oil producing provinces. Corporate profit taxes are low in Canada, so that's not a huge source of revenue.

I believe I mentioned up thread somewhere that Newfoundland just had to be bailed out by the federal government, as their attempted bond sale fell flat in the current environment. Newfoundland is probably the most exposed to the collapse in oil revenues.

Alberta has been feeling a financial squeeze for a few years now, due to an over-reliance on the American market. The US had been a good market for heavy oil, as Canadian producers filled a void that was being vacated by Venezuela as that country slowly circled the drain under the weight of misguided socialism. However, once pipeline capacity was reached the industry faced bottlenecks in getting to market and the result was low oil prices and a cap on production. Environmental opposition in the US has made building new pipelines there nearly impossible in most of the country. The result is that plans for a new export pipeline from Alberta to the west coast and Asian markets have been advanced forward, and the federal government has poured billions into it to help out Alberta. This all happened well before the COVID-19 crisis.

Alberta produces a lot of oil, but royalties for the province are not as great as you might think, as the majority of it is from non-conventional sources such as oil sands which are expensive to produce and aren't levied a high royalty. Saudi Arabia rakes in lots of cash because their oil is cheap to produce, so most of the revenue goes into state coffers. This is not the case in Alberta, due to the higher production costs and lower price they get for it (due to pipeline bottlenecks and the lower grade of the oil).

The majority of the country actually does better economically when oil prices are low, as high prices push up the Canadian dollar making non-oil exports less competitive. Look up "Dutch disease" if you want an explanation of that.

Coincidentally I was about to post this story on this thread.
Canadian oil production could fall 25% before post-COVID 'resurgence'
Long story short, Canadian pipeline company Enbridge are estimating that Canadian oil production could fall 20-25%. Canada currently produces roughly 5 million barrels per day.


However, once the pandemic is over Enbridge is expecting production to bounce back, and to do ever better because new pipeline capacity will be coming on stream at about the same time.


Actually if COVID-19 keeps the environmental protesters at home in the US, that might be of help in getting pipelines to the US done. The first one, Line 3, is already built up to the border, and they hope to get approval in the US in the June or July time frame. Construction in the US will take 6 to 9 months. Once that's running then capacity limits in Alberta will be eased, and prices to producers will go up.

At the moment though, things are bad in Alberta due to a combination of the above factors along with the fall in demand due to COVID-19 and also Saudis and Russians getting into a pissing match with one another.

I do believe you are correct about the virus keeping the protestors in check. But Trump is making this pipeline a priority. I don’t imagine anybody trying to stop it and put thousands of people out or work will be on the cards at this moment in time.

Do you know how what the max production in Alberta could be ramped up to?
 

green_slime

Old-Salt
Venezuela must be a complete mess at the moment with the virus, low demand and low prices. Or at least they would be as this is just a capitalist conspiracy that socialism will resolve.
 

I do believe you are correct about the virus keeping the protestors in check. But Trump is making this pipeline a priority. I don’t imagine anybody trying to stop it and put thousands of people out or work will be on the cards at this moment in time.

Do you know how what the max production in Alberta could be ramped up to?
In terms of existing production, here's the official figures:

PUBLISHED - Apr 3, 2020

Oil production in Alberta was 16.9 million cubic metres in February 2020, up10.2% compared to February 2019. Non-conventional (or oil sands) production, which constituted 83.8% of all oil production in Alberta in February 2020, increased by 10.5% year-over-year, while production of conventional oil was up 8.8% over the same time frame.
In terms of adding capacity, that takes time due to the nature of oil sands production. It's not a matter of just drilling a hole in the ground. Each project is a big construction project which takes years of planning and building.

Just what is involved in each project varies as well, as there are different production technologies which in turn are applied to different size projects and different geological conditions.
 
Venezuela must be a complete mess at the moment with the virus, low demand and low prices. Or at least they would be as this is just a capitalist conspiracy that socialism will resolve.
They seem to have fallen completely out of the news lately, haven't they?
 
Venezuela must be a complete mess at the moment with the virus, low demand and low prices. Or at least they would be as this is just a capitalist conspiracy that socialism will resolve.
I’m under lockdown until next Monday (13th), so can’t talk to my Vz friends but ‘El Pais’ has this:

Maduro government agencies have used the virus as an excuse to enter houses and detain people. (5 members of Guaido’s staff, a journalist who cast doubts on the official number of infected etc)

‘Preventative Isolation’ that happened to detain some Colombians who were on their way back to Colombia.

11 journalists have been detained in total, maybe more.
 
OPEC and Russia have agreed to production cuts to try to stabilise the oil market. They are now looking for other oil producers to also cut production. They say that their cuts are not dependent upon other producers to cut production as well, but I would speculate that the OPEC/Russia agreement may fall apart if other major producers do not support it with cuts of their own.
Saudi Arabia, Russia agree on record oil cut deal to end price war
OPEC and its allies led by Russia agreed on Thursday to cut their oil output by more than a fifth and said they expected the United States and other producers to join in their effort to prop up prices hammered by the coronavirus crisis.

The cuts by OPEC and its allies, a group known as OPEC+, amount to 10 million barrels per day (bpd) or 10 per cent of global supplies, with another five million bpd expected to come from other nations to help deal with the deepest oil crisis in decades.
The OPEC + Russia cuts amount to 10 million barrels a day. This is a fraction of the 30 million barrels a day of surplus oil being produced.
 
Non-OPEC countries have been reaching an agreement with OPEC to cut oil production to help stabilise the market. There's not a lot of information on just who is involved and how much they are cutting.
Mexico reaches deal paving way for OPEC, Russia oil output cuts
This story concentrates on Mexico. OPEC proposed that Mexico cut 400,000 barrels. The Mexicans said they couldn't cut more than 100,000 barrels, so the US said they would make up the difference in their cuts.

There is nothing in the story which says how much the US are cutting on top of the additional cuts they agreed to in this. The story said that during the phone call between presidents Obrador and Trump, Trump read a long list of other countries who have agreed to make cuts, with only Mexico being the hold out.

In other stories Canada was involved in talks as well, but there is no news yet on how big of a cut Canada will be making.
 

Dread

LE
Countries like Venezuela and Egypt could agree to cut their production to zero and it wouldn't affect the price of oil: they produce high-sulphur shite and have very suspect quality control (from what I've been told).
 
I think out of the whole fleet of rigs my employing company owns, the rig I am on is currently the only one working.

Yesterday and today they put a lot of rigs and crews out of action. Contracts getting pulled etc.

Interesting times.

I think we can ride it out till August, then its game over. JobcentrePlus.
 
A global pack has supposedly been formed to cut oil production in order to prop up prices. It sounds a bit shaky however.
Global pact forged to drastically cut oil production to contain price crash
The OPEC cartel and other oil producers agreed Sunday to cut crude production by a tenth of global supply, an unprecedented move to stabilize the market, according to several energy officials who participated in the talks.

Russian President Vladimir Putin, U.S. President Donald Trump and Saudi Arabia's King Salman all support the deal, which would see global crude output cut by 9.7 million barrels a day, the Kremlin said Sunday.

Mexico's energy minister said Sunday on Twitter that the cuts will begin May 1. Energy officials from other countries shared similar information confirming the cut for May and June.
Taking OPEC and non-OPEC producers into account, the cuts may amount to 20 million barrels per day.
Three OPEC+ sources told Reuters that effective oil output cuts could be close to 20 million barrels of oil equivalent per day if contributions from non-members, steeper voluntary cuts by some OPEC+ members and strategic stocks purchases were taken into account.
Several oil market analysis are quoted in the story saying that they don't think this will be enough to turn the market around.
 
Do any of the few hundred members of the SWP actually have a job? Not counting the head honchos who are employed by the organisation itself, not really a job but I guess they get paid from subs contributed from the other members Social Security payments.
I know one who is a writer, translator, drug dealer, picture restorer and is currently giving the NHS the benefit of his medical expertise.
 
I know one who is a writer, translator, drug dealer, picture restorer and is currently giving the NHS the benefit of his medical expertise.
should like a multiple personality disorder ?

would each of these personality's be a prick...
 
Maybe peeps should clap for HM corona and Funeral directors, grave diggers , crem staff et al ..

Anyhow apparently bags need to be produced to keep up .


Also as one supplier is running out, (screenshot from article ) one does like the bit that says ‘economy bags’

65992E4F-9F57-4A75-87EE-E483411EBED9.png
 
Several oil market analysis are quoted in the story saying that they don't think this will be enough to turn the market around.
Given WTI futures just hit $4.46/bbl - although Brent is still near $27/bbl - it's a fair bet that it hasn't worked, or at least not in the way people had hoped. There will however be a significant number of US companies stopping production which will feed through in due course and suit other agendas.
 

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