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.