All the certainties of tomorrow are dead. We live in an uncertain future.
Events surrounding the COVID-19 pandemic are moving so fast that hundreds of millions of people are having their lives turned upside down, inside out and back to front. Every day brings terrifying news and a new distorted reality.
Thousands of businesses are struggling to cope, as people are voluntarily or forcibly increasingly self-isolating, working from home, and canceling travel and leisure activities. An unknown number will be needed to be bailed out by tax payers across the world.
For the oil industry the whole COVID-19 pandemic is exacerbated by the price war between Saudi Arabia. Once again, the pandemic shows the intense vulnerability of nations highly dependent on oil.
As Bloomberg reports, “In the oil price war between Saudi Arabia and Russia, the first big victim is likely to be Canada.” It added that due to the fact that the blend of crude produced from Canada’s oil sands plunged to a record low of US$7.47 a barrel on Wednesday, “virtually every barrel of oil now produced there will come at a loss.”
Indeed, due to the falling oil price, the National Observer reported yesterday that the tar sands were now on “life support.”
The paper stated: “In the face of an economic crisis triggered by the global spread of COVID-19 and worsened by the Saudi Arabia-Russia price war, the outlook for new projects in Alberta’s oil patch – even those already approved – is bleak.”
It added: “For Alberta’s oil and gas industry, the situation is nothing short of a crisis, one that’s left the fate of multiple project uncertain.” Kevin Birn, a crude oil market analyst with IHS Markit, told the paper he thought “it’s very unlikely that” that any tar sands projects will “advance at this point.”
As many NGOs, First Nations, and community groups call on the Canadian Government to address both COVID-19 and climate change, and help push for a transition away from fossil fuels, the Canadian Government is set to do the opposite.
According to the Globe and Mail newspaper, the federal government is “preparing a multibillion-dollar bailout package for Canada’s oil and gas sector that is expected to be unveiled early next week.”
The paper notes that, although details at the moment are scant, the overall package could amount to some CAD 15 billion. The “oil and gas sector can expect to get more access to credit, especially for struggling small and medium-sized operations, and significant funding to create jobs for laid-off workers to clean up abandoned oil and gas wells,” reported the paper.
To this end, Alberta businesses have been lobbying Justin Trudeau calling for lucrative loans and loan guarantees and suspension of the carbon tax.
The Canadian Association of Petroleum Producers (CAPP) President and Chief Executive Officer, Tim McMillan, said: “While the details still need to be developed, CAPP is encouraged by the federal and Alberta governments’ economic-stimulus announcements to date.”
So all the indications are that Justin Trudeau, who likes to see himself as a poster boy climate politician, will miss this golden opportunity to fund a just transition rather than continue the boom bust dirty tar sands cycle.
Bronwen Tucker, Edmonton-based research analyst with OCI, said of the proposed bailout: “We’re in the middle of an unprecedented global health emergency and economic crash, we can’t afford for the federal government to bail out a sector in terminal decline. Workers and communities are struggling right now – there are still massive gaps in the COVID-19 response packages that are putting millions at risk of losing their homes, jobs, and health. It is criminal for Trudeau to be pursuing a massive handout to Big Oil instead of ensuring these basic needs are met.”
She added “Trillions of dollars will be needed to build a resilient economy through this crisis, but handing them over to oil and gas will leave us more vulnerable instead. This is a critical opportunity to fund a just transition from oil and gas that protects workers, communities, and the climate instead of tying their future to a sunsetting and volatile commodity.”
- A press release from Oil Change International criticizing Justin Trudeau’s proposed bailout for oil and gas can be found here