Alberta crude can’t sell. It’s currently being priced in negative territory, meaning that they (theoretically) pay you to take it on the date it is due to be shipped. They DON’T pay, actually. It (the barrel of oil) was already sold on the ‘futures market’. But you can imagine what negative pricing is going to mean to the oil futures market…..it will cease…for awhile, anyway.
Investors in commodity futures will (theoretically) take the hit. They’ll lose a bundle….for awhile, anyway. But – not to worry – governments rescue THAT kind of industry and, indeed, Trudeau announced some stimulus (free money) that is not enough to do anything but still portends to a tendency to ‘bail out the oil sector’ yet again.
That’s nice……for them, anyway. And, of course, I will do my part by paying several times what Americans pay for gasoline. I am also already paying a great deal more than Ontarians pay. Don’t ask me why. It’s the least I can do.
Covid didn’t do all of this. Saudi Arabia and Russia had gotten into an oil snit already and the prices were going down just as the virus began to wreak havoc. Havoc resulted in everyone staying home, gas not selling normally, planes not flying and supplies piling/filling up storage. Indeed, even the ferries are not running much. Man, oh man! As the price dropped during the snit, the ‘players’ bought oil futures contracts and then watched in dismay as the demand dried up and storage facilities filled up. The ‘players’ are now bidding to lease huge floating tankers to store great volumes of oil at sea.
What could possibly go wrong with that?
Well (#1) just about everything, actually. The oil industry, despite Tesla, was still a viable investment (to those who care not a whit for the planet) and, to be fair, still necessary as the lubricant for the world’s economy. But Covid changed that. In a matter of months, the bottom fell out of their business model. A whole lot of ‘oil guys’ will go out of business even WITH gifts and loans from government. Only the giants will remain. Power in ‘energy’ will consolidate in fewer companies. Think they’ll drop the price to get the consumer back? Or crank it up like monopolies do (and they have done for decades)?
Speaking of wells (#2) the US predicts that the American Southwest will (and already is) in the early throes of a megadrought (started in the year 2000 they say). They also say it could last 100 years (based on geological analysis of previous droughts). From New Mexico to Oregon will become dust-bowl dry. Water is going to be a HUGE commodity in the not-too-distant future. Alberta may never pump oil again.
Hmmm…….Alberta may pump water, tho.
Of course, BC SHOULD pump them some water and likely will but the infrastructure isn’t there. So, we’ll need BIG PLAYERS to finance (own) that resource development. Hmmmm……..the REALLY BIG OIL GUYS will have the money and will want to diversify. Look for BP or SHELL or CHEVRON to ‘buy’ Ocean Falls or something and water tankers plying the inside passage to pipeline heads in Washington State.
What could possibly go wrong with that?
In the meantime, we will pay more for everything from avocados to car parts, from guns to bullets, from anything to everything. We will pay and pay and pay. Ad nauseam. Frankly, I do not mind ‘sharing’ some of our water with our ‘Merican friends (IF they act like friends). But it won’t come to that. The OLD NAFTA had a clause that said that, if a US company invests in something Canadian that requires water, they have first and forever rights to that water. I doubt that Chrystia Freeland managed to fix that stupid deal with the new, bullied trade deal.
‘Well’ (#3) is the money-pipeline from government. They are opening the spigot. Again. They will ‘save’ free enterprise corporations. They will ‘save’ industries. They will ‘save’ the players. With our money. But the little guy will be bled even drier. That is hard to even contemplate. Half of the Canadian population cannot absorb a $500 surprise ‘hit’ to their wallet. There is very little resilience left in the Canadian consumer. They are piled high with debt, loaded deeper with outrageous mortgages and losing their jobs or being down-sized out of the stacked-against-them game of clowns. And now they are sitting at home with a mask on their face. Canadians are patsies with bull-eyes painted on their foreheads and we are led by a spoiled brat who specializes in drama.
The future is going to be different from what was the past and even more different from what was envisioned, planned for and expected. A lot has changed in the last few weeks. But some things don’t change. The wealth and power will still reside with the few, the government will still bleed the serfs to satisfy the elite and the hoi polloi will continue to follow the lead goat.
Literally governments in Canada are major benefactors of tax revenue collected on the sale of oil products. Governments are dependent upon this tax revenue. Governments are addicted to this revenue. This crisis will likely not turn out well as you point out. I agree with you.
Dave, water trading in Australia is massive, huge business. It stinks. Foreign investors and other large corporate entities own a stack of our water on the eastern seaboard and they drive up the price of water such that small farmers cannot afford to buy water. You keep saying to me to get out. But there is nowhere to get out to that has secure water. As a farmer, you can have an entitlement but that only entitles you to bid for so much water. It is not an entitlement to take water up to that amount. Interestingly, PSP is the biggest holder. Interestingly, Canadians are the biggest owners of our water through Canadian pension fund PSP. They own a big stake in that smelly company, Webster Limited (big political links). Websters are involved in cotton and Australia’s fastest growing ag sector, almonds. Huge tracts of almond orchards have been established in fricken desserts ffs, and the water is piped there or held in massive irrigation dams. So, the bloody Canadians are experts in water speculation, don’t you worry about that, and they know how to design systems to suit themselves. https://www.abc.net.au/news/rural/2020-02-18/canadian-pension-funds-aussie-farm-buying-spree/11950312 and https://www.smh.com.au/business/companies/canadian-pension-fund-loads-up-on-australian-water-rights-and-almond-farms-20191203-p53gfi.html and https://www.farmonline.com.au/story/6524180/canadians-buy-again-psp-gets-orchards-and-water-worth-490m/ and https://www.abc.net.au/news/2019-07-08/taxpayers-helping-fund-murray-darling-basin-expansion/11279468 and https://www.abc.net.au/news/2019-07-13/water-trade-in-murray-darling-basin-has-unintended-consequences/11291450.
We have capitalistic, inhuman, greedy corporate bastards in Canada, too. I am ashamed of them. Me and other ordinary Canadian folks apologize. The system made the bastards do it. And they, too, shall sit in Hell. It will be standing room only. No one should control, influence, pollute or profit from air or water…..but so many bastards do. Or TRY to. It will be crowded down there.
And that is why Sal and i wonder if we have gone FAR enough. How do you leave your own species? What an ugly thing we mostly are. Disgusting. Revolting. Get out now means: leave this planet to the pigs. Let them wallow in their own filth. We are alll foresaken, I think. Run if you can……
…..we have…..but maybe not far enough. DEFINITELY NOT FAR ENOUGH!
Unfortunately, it is all legal. At least that we know about. Water is gold and a 40% ROI is not bad if you can get it. Australian taxpayers will no doubt have to pay outrageous compensation for lost earnings, etc, to fix this mess.
Only one way out, Dave.
The Janus Face of Canada’s economy!
OOoohhhhhhhh Canada’s economy…? Do NOT get me started. Two-faced is a very low estimate of faces. Our official economy is more hypocritical than probably intended – because we lose so much energy in the push-me, pull-you world of government ‘give’ and ‘take’.
We also lose in industry. We have companies in Ontario that sell cheaper to Arizona than they do to BC. In fact, one propane freezer manufacturer sells EXCLUSIVELY to an Arizona company which then sells to Canadians for profit and shipping costs. And that insanity is common. Hell, we do that with oil!
Canada has been ‘cheated’ so much and so often we do not even know how much and, if we do care, we can do nothing about it. The only way to create a successful mfg’ing business in Canada is to buy a failed one for pennies on the dollar. For every time the business failed before you bought it, the better chance you have because it has been discounted multiple times.
Start building oil storage tanks. They will pay you to fill them. You are absolutely correct in your analysis. The meme of “Free Enterprise” is a lie. What sort of society puts a price on everything? Everything has a price. Soon even air consumption will taxed. Dave breaths sea air…tax him higher.