The rapidly falling oil prices have finally claimed the first victim, but it won’t be the last. The Alberta Canadian government announced late yesterday for a substantial cut in tar sands oil production to stem the hemorrhaging low oil price. The price paid for tar sands oil has fallen a stunning 77% from its peak just two months ago.
While the Canadian tar sands oil price has fallen the most, various U.S. benchmarks are also experiencing substantial discounts to the standard West Texas Crude Oil price. For example, the price paid for Bakken oil has dropped by 42% from its peak in October. This is terrible news for the shale oil producers in North Dakota.
However, as bad as the situation is becoming for the U.S. oil industry, it isn’t as bad as the disaster taking place in Alberta, Canada. According to the Zerohedge article, Alberta Orders “Unprecedented” Oil Output Cut To Combat Crashing Prices:
So in a long-awaited and according to local energy traders, overdue response, Canada’s largest oil producing province ordered what Bloomberg called “an unprecedented output cut”, an effort to ease a worsening crisis in the nation’s energy industry and adding to global actions to combat a recent price crash ahead of this week’s OPEC+ summit where oil exporters will similarly seek to slash output.
… The plan, which was announced late on Sunday, will reduce production of raw crude and bitumen from Alberta by 325,000 barrels a day, or 8.7% from January until excess oil in storage is drawn down. The reduction would then drop to 95,000 barrels a day until the end of next year at the latest.
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