VANCOUVER (NEWS 1130) – Alberta’s Premier is ordering a mandatory cut in oil production to deal with a price crisis she says is costing Canada an estimated $80-million a day.
But contrary to what some might think, one analyst says that may not translate into higher prices at B.C. gas stations.
“All of the gasoline that we use here, right across the country, is referenced based on West Texas Intermediate, and that, of course, isn’t likely to be impacted in any way by the higher value of WCS.”
West Texas Intermediate, he explains, is what is made up of many different oils.
However, when it comes to the possibility of rising prices at the pumps, McTeague says we should turn our eyes to the world stage.
“What we now have is a serious glut in oil, which can’t be resolved until OPEC gets together on Thursday and decides to cut back along with Russia and a few other producing nations,” he explains.
If there is a cut back, he says, gasoline prices will inch up.
“I think what we’re going to see is prices are going to remain pretty stable until Wednesday or Thursday, at which point I think they’re going up about two or three cents a litre next week, especially if OPEC can get its act together.”
Alberta will force oil producers to cut production by just shy of nine per cent staring next year to try to create scarcity by clearing the current stockpile and raise the price of Alberta crude.
“It’s a desperate move to try to at least get some money back… this could have the effect of driving up Alberta oil,” he says.
“This is force majeure for Alberta, not just from an oil point of view, but from an economic point of view. It is an economy in serious decline and collapse, and that could mean perhaps even further pressures on the value of the Canadian dollar, which in turn costs you and I more at the pumps.”
Notley calls the move to cut production “a short-term measure” amid pipeline bottlenecks.
-With files from Renee Bernard