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Oil prices rose on Monday, buoyed by coordinated production cuts – cuts that did not come from Vienna (although that too could occur later this week).

Instead, the mandatory reductions were handed down by the provincial government of Alberta. “Perhaps OPEC should therefore consider inviting Canada to its meeting on Friday,” Commerzbank said in a note.

Alberta Premier Rachel Notley announced the production cuts “in response to the historically high oil price differential that is costing the national economy more than $80 million per day,” her office said in a statement. Western Canada Select (WCS) has plunged below $15 per barrel, representing a discount to WTI that has hovered at around $40 per barrel.

“The price gap is caused by the federal government’s decades-long inability to build pipelines. Ottawa’s failure in this area has left Alberta’s energy producers with few options to move their products, resulting in serious risks for the energy industry and Alberta jobs,” the Alberta Premier’s office said.

Alberta’s oil industry is producing roughly 190,000 bpd in excess of available takeaway capacity. The surplus is filling storage up quickly. Oil producers will be required to make cuts on the order of 8.7 percent, or 325,000 bpd, beginning in January. Once the storage glut is reduced, the cuts will narrow to just 95,000 bpd, which will stay in place through the duration of 2019.

The first 10,000 bpd for each producer will be excluded from the mandatory cuts, intended to avoid negatively impacting small producers. The baseline used to calculate the cuts will be the highest level of production for each producer over the past six months.

Notley expects the production cuts to boost prices for WCS by roughly $4 per barrel, adding $1.1 billion to government revenue between 2019 and 2020.

…click on the above link to read the rest of the article…

Alberta Orders “Unprecedented” Oil Output Cut To Combat Crashing Prices

December 3, 2018

Alberta Orders “Unprecedented” Oil Output Cut To Combat Crashing Prices

While just a few hundred miles south, WTI is flirting with the one year low price of $50/barrel, Canada’s oil-producing hub, Alberta, would be ecstatic to have its oil trade at anything even remotely close to this level.

As we reported recently, Canadian oil producers are in an increasingly tough predicament. With high and increasing oil demand around the globe over the last year, Canadian oil production has increased accordingly. All of this is simple and predictable economics, but in the process Canadian oil hit a massive roadblock. Producers have the supply, and they have more than enough demand, but they don’t have the means to make the connection. Canadian export pipelines simply don’t have the capacity to keep up with either the supply or the demand.

Canadian oil producers have now maxed out their storage capacity, and the Canadian glut continues to grow while they wait for a solution to the pipeline problem to materialize. As pipeline space is at a premium and storage has hit maximum capacity, oil prices have fallen dramatically, and the differentials that had previously been hitting heavy oil hard in Canada (now at below $14 a barrel for the first time since 2016) have now spread to light oil and upgraded synthetic oil sands crude as well, leaving overall Canadian oil prices at record lows.

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 (something which all OPEC+ nations agree upon, but nobody wants to be the first to cut its own production).

…click on the above link to read the rest of the article…

Canada’s Treacherous “Faustian Bargain”

November 28, 2018

Canada’s Treacherous “Faustian Bargain”

Canadian Prime Minister Justin Trudeau, it seems, adheres to the principle of globalism, according to which the world is borderless, and the idea of sovereign nation-states is both reactionary and obsolete. In this borderless world, the governing body is the unelected, untransparent, unaccountable and deeply corrupt United Nations and its agencies, which possess the authority to legislate international law that is then enforced by member states.
The Global Compact for Safe, Orderly and Regular Migration is a document detailing the requirements for UN member-states to adopt as policy that amounts to unfettered global migration. Trudeau has bought into this UN agenda and has decided to impose it on the Canadian people without their prior knowledge or consent.
The Global Compact requires the media outlets of member-states to adhere to the objectives and refrain from any critical discussions of these objectives that would be deemed as not “ethical” and against UN norms or standards consistent with the ideology of globalism.
This helps to explain the Trudeau government’s generous handout to the Canadian media. In this light, the $600 million can be viewed as a form of secretive soft control and censorship, ensuring that the Canadian press abides by the requirements of the Global Compact.

Canadian Prime Minister Justin Trudeau seems to adhere to the principle of globalism, according to which the idea of sovereign nation-states is both reactionary and obsolete. In this borderless world, the governing body is the unelected, untransparent, unaccountable and deeply corrupt United Nations and its agencies, which possess the authority to legislate international law that is then enforced by member states. Pictured: Trudeau holds a press briefing at the United Nations headquarters in New York City, September 21, 2017. (Photo by Drew Angerer/Getty Images)

…click on the above link to read the rest of the article…

The Scourge of the American Petroleum Tankers That Prowl the British Columbia Coast

November 27, 2018

The Scourge of the American Petroleum Tankers That Prowl the British Columbia Coast

November 26 marked a dreadful anniversary for the tanker-bedraggled British Columbia coast. One year ago in Hecate Strait, the American ATB “pusher tug” Jake Shearer broke apart from its fully loaded 10,000 deadweight-ton capacity petroleum barge and came within a stone’s throw of destroying the most magnificent, wild and precious region of the Pacific Ocean.

The Jake Shearer is a new-generation tugboat which is set up to lock into, and push its petroleum barge rather that towing it by cable in the conventional manner. The bow of the tug is fitted with two giant hydraulic locking pins, while its tanker barge is fitted with a large notch cut out of its transom. Once mated together, these two vessels then become an “articulated tug/barge unit” or “ATB.” The tug pushes into the transom notch and the locking pins extend out sideways from the bow and engage into large racks fitted within the transom of the barge. Then, mated together “doggy style” as it were, the tug/barge combo goes about its business.

A fully loaded American “ATB” tanker travelling up the BC Inside Passage. Photo: Ian McAllister

In this case, the business of the Jake Shearer was to deliver domestic petroleum products to Southeast -AKA “Panhandle” Alaska, which it did on a regular, once every 2-3 week schedule, travelling back and forth through the BC Inside Passage. Alaska’s 5 oil refineries supply about 80% of its domestic fuels needs, but the remaining 20% is delivered to the “Panhandle” via the BC coast by ATB, -with each trip carrying on average, a load of about 10,000 deadweight tons. To illustrate, that is about 1/4 of the spill volume released into the Gulf of Alaska by the Exxon Valdes.

…click on the above link to read the rest of the article…

GM To Close 100-Year-Old Oshawa Plant, Affecting Thousands Of Jobs

November 26, 2018

GM To Close 100-Year-Old Oshawa Plant, Affecting Thousands Of Jobs

With car sales in the US and China locked in a precipitous slowdown that is only expected to worsen, GM on Monday is expected to announce the closure of one of its Canadian plants as the company hopes to move more production to Mexico and (hopefully) bolster its lagging shares, Reuters reported. The company’s plant in Oshawa, Ontario – the plant in question – produces slow-selling Chevrolet Impala and Cadillac XTS sedans, while also completing final assembly of the better-selling Chevy Silverado and Sierra pickup trucks, which are shipped from Indiana.

The outcry from the union and local officials is already causing political pressure on GM to mount after the carmaker accepted billions of dollars in subsidies from the Canadian and US governments after filing for bankruptcy nearly a decade ago. But the company must weigh these considerations against the demands of Wall Street analysts, who believe that GM has too many plants in North America. Signaling the start of the carmaker’s latest cost-cutting initiative, the company said on Oct. 31 that about 18,000 of its 50,000 salaried employees in North America would soon be eligible for buyouts.

Two sources told Bloomberg that the announcement of the plant’s closure is expected on Monday.

The closure is not unexpected. In a message to employees last month, GM CEO Mary Barra cited the stagnant share price as a reason for tougher restructuring measures.

Unifor, the Canadian autoworkers union that represents the plant’s employees, told Bloomberg that it has been told there is no car production planned at the factory beyond next year, raising the prospect of talks to preserve jobs. Unifor National President Jerry Dias said back in April that the Oshawa complex had been slated for closure in June of this year. But he added that one top GM Canada executive had vowed that it wouldn’t close on his watch.

…click on the above link to read the rest of the article…

Central Banks Looking at Creating Their Own Cryptocurrencies

November 26, 2018

Central Banks Looking at Creating Their Own Cryptocurrencies

The IMF has recommended that all Central banks should issue their own cryptocurrencies. Indeed, they are looking at using Block Chain to keep track of taxes and to enforce negative interest rates with
cryptocurrencies which would allow them to impose negative interest rates whenever necessary. With adopting cryptocurrencies that governments would control, we will come one step closer to losing all our freedom. Central banks could enforce negative interest rates with cryptocurrencies and thus people would find their accounts just garnished. This technology is also causing those in hunt of tax revenues to lick their lips.

The issuance of digital currencies would allow central banks to remain in control of the money supply far more so than they are today. Sweden is moving forward and there we see that the use of cash is rapidly disappearing.
Cryptocurrency technology would allow also the taxman to just cometh and take whatever he desires in the midst of the economic crisis we face. The Central Banks would be able to maintain greater control over the creation of money through the process of leverage (bank lending).

While policymakers in Canada have already researched the idea. The IMF head Christine Lagarde called on central banks to focus on issuing digital currencies. All of this attention is being applied as the fear of rising interest rates in the marketplace is really beyond the control of central banks. It is true that central banks can control the short-term rates, but long-term rates are established by the free market. This is why the Federal Reserves was buying in 30-years bonds hopefully to impact the long-term rates which the Fed cannot directly control.

TAR SANDS OPERATIONS GO FROM BAD TO WORSE: Now Losing Billions A Month

November 17, 2018

TAR SANDS OPERATIONS GO FROM BAD TO WORSE: Now Losing Billions A Month

The situation at Canada’s Alberta Tar Sands Operations has gone from bad to worse as the super-low oil price is now costing the industry billions of dollars each month. Unbelievably, the price for the Western Canadian Select heavy oil fell to a gut-wrenching $14.65 yesterday down from a high of $58 in May. Tar sands oil is now selling at an amazing $40 discount to U.S. West Texas Oil which is trading at $56.

The main reasons for the falling price of Alberta tar sands are due to Canadian pipelines full to capacity as well as midwest U.S. refineries shut down for seasonal maintenance. Furthermore, the announcement by a U.S. Federal Judge to block the construction of the Keystone XL Pipeline on November 9th, didn’t help.

According to data from the Natural Resources Canada, the Alberta Tar Sands Operations were producing 2.7 million barrels per day (mbd) of oil in 2017. I would imagine production this year is likely to reach close to 3 mbd. The largest tar sands producer in Alberta is Suncor. Suncor produced a record 476,000 barrels per day of tar sands in the third quarter of 2018.

Now, Suncor reported a handsome $1.4 billion profit in Q3 2018 on $8.3 billion in revenues. However, that profit was based on much higher Western Canadian Select (WCS) oil price which was trading over an average of $35 for the quarter. Unfortunately, the average price of WCS so far in the fourth quarter is $20.75. And, if the price of WCS stays at the current low price, the tar sands operators will be receiving less than $20 a barrel.

In the article, Capacity shortages costing Canadian producers $100M/day, it stated:

“Heavy-oil producers are getting 40 percent of what they normally would be paid if we had access to markets,” said Grant Fagerheim, CEO of Calgary-based Whitecap Resources, which produces about 60,000 barrels per day.

…click on the above link to read the rest of the article…

Canadian Oil Producers Divided On Output Cuts

November 16, 2018

Canadian Oil Producers Divided On Output Cuts

Crude oil producers in Alberta appear to be split on a proposed cut in production amid record-low prices, Canadian media report.

One of the large Canadian oil producers, Cenovus Energy, is calling upon the government of Alberta to mandate temporary production cuts at all drillers in a bid to ease Canadian bottlenecks that have resulted in Canada’s heavy oil prices tumbling to a record-low discount of US$50 to WTI.

The province of Alberta, the heart of Canada’s oil sands production, has the necessary legislation to have all producers agree to production cuts and it needs to use it now, Cenovus said in an emailed statement to Bloomberg yesterday.

“We’re probably producing about 200,000 or 300,000 barrels per day of oil in excess of our ability to get that oil out of the province, either by pipelines or by rail,” Cenovus’ CEO Alex Pourbaix told Global News.

However, other big players disagree that the industry needs to produce less. “Our position is that government intervention in the market would send the wrong signals to the investment community regarding doing business in Alberta and Canada. And we really do need to take a long-term view and allow the market to operate as it should,” Global News quoted a spokeswoman for Suncor as saying.

However, Suncor is in a favorable position: according to the company spokeswoman it has no exposure to the suffocating differential between Western Canadian Select and West Texas Intermediate since it processes as much as 70 percent of its crude at home.

Husky Energy is another of the large Canadian producers who oppose a government-led intervention in production rates. According to Husky, “Market intervention comes with an unacceptably high level of economic and trade risk.”

…click on the above link to read the rest of the article…

Canada’s Crude Crisis Is Accelerating

November 16, 2018

Canada’s Crude Crisis Is Accelerating

Canadian oil producers are in an increasingly tough predicament. With high and increasing oil demand around the globe over the last year, Canadian oil production has increased accordingly. All of this is simple and predictable economics, but now Canadian oil has hit a massive roadblock. Producers have the supply, and they have more than enough demand, but they don’t have the means to make the connection. Canadian export pipelines simply don’t have the capacity to keep up with either the supply or the demand.

Canadian oil producers have now maxed out their storage capacity, and the Canadian glut continues to grow while they wait for a solution to the pipeline problem to materialize. As pipeline space is at a premium and storage has hit maximum capacity, oil prices have fallen dramatically, and the differentials that had previously been hitting heavy oil hard in Canada (now at below $18 a barrel for the first time since 2016) have now spread to light oil and upgraded synthetic oil sands crude as well, leaving overall Canadian oil prices at record lows.

(Click to enlarge)

Now, adding to the problem, growth in oil demand has begun to slow in the wake of skyrocketing United States production and the weakening of U.S.-imposed sanctions on Iranian oil. Fist, the U.S. granted waivers to eight nations to continue buying Iranian oil despite strong rhetoric, and now the European Union has undermined the sanctions even further.

In an effort to correct the pricing drop, some Canadian drillers have been cutting production levels, turning to more expensive forms of transportation like railways to ship their oil, and in some cases even using trucks to move their product.

…click on the above link to read the rest of the article…

Real Canadian Mortgage Credit Growth Is Pointing To An Early 80s Style Meltdown

November 14, 2018

Real Canadian Mortgage Credit Growth Is Pointing To An Early 80s Style Meltdown

Canadian mortgage credit growth is falling, but how bad is it in real terms? People are comparing today’s low growth numbers to the mid-1990s. While there are some parallels, it more accurately resembles the early 1980s. Mortgage credit growth, when adjusted for inflation, is heading towards negative numbers. We haven’t actually experienced negative real growth in over 30 years.

Why Real Mortgage Credit Is Important

In order to more accurately observe trends, analysts will sometimes inflation adjust dollar amounts. Inflation is the decrease in power of money, caused by rising or falling prices in goods. Inflation tends to obfuscate the true trend over long periods of time. Did the currency go to s**t, or did we see a behavioral change? Was it low growth, or negative growth? To get a better picture, it’s sometimes (almost always) useful to adjust for inflation. When numbers are adjusted for inflation, they’re called real numbers.

Looking at real numbers allows us to observe the trend, without the distortion of currency value at the time. This is particularly important when looking at the early 1980s for Canada. During that period, inflation was totally out of control. Today we often think of that period as low growth, with a brief negative contraction. In actuality, it was a very large contraction in real terms.

Okay, no one thinks about the early 1980s rate of credit growth, but some of you should!

Canadian Mortgage Credit Growth Is Over 3%

Canadian mortgage credit growth is pretty weak when looking at unadjusted numbers. The annual pace of growth fell to 3.38% in September, down 38.76% from last year. This is the lowest pace since June 2001, and on target to head lower according to recent performance. It’s low growth, but at least it’s not negative is what most are thinking.

…click on the above link to read the rest of the article…

Canadian Oil Producer Calls For Production Cap Amid Record Low Prices

November 14, 2018

Canadian Oil Producer Calls For Production Cap Amid Record Low Prices

“This is an extraordinary situation brought on by extraordinary circumstances,” Cenovus says.

“The government needs to take this immediate temporary action — which is completely within the law — to protect the interests of Albertans,” the company’s email to Bloomberg reads.

Western Canadian Select (WCS)—the benchmark price of oil from Canada’s oil sands delivered at Hardisty, Alberta—has dropped to a record low discount of US$50 to WTI in recent weeks, due to rising oil production and not enough pipeline capacity to ship the crude out of Alberta.

Due to the record low heavy oil prices, Cenovus Energy is currently operating its Foster Creek and Christina Lake projects at reduced volumes, it said in its Q3 earnings release. On the earnings call, Cenovus Energy’s President and CEO Alex Pourbaix urged the whole Canadian industry to slow down production to ease bottlenecks.

“And I want to be clear on this, the industry right now has a production problem. We’re going to do our part but we are not going to carry the industry on our back. I think this is something that has to be dealt with on an industry wide basis,” Pourbaix said.

Alberta’s Energy Department spokesman Mike McKinnon told Bloomberg in an email, responding to Cenovus’s call for province-wide production cuts:

…click on the above link to read the rest of the article…

Home Affordability: Canada vs. US

November 14, 2018

Home Affordability: Canada vs. US

Homes are unaffordable in the US, but the situation is far worse in Canada.

Point2homes has an interesting set of charts on Home Affordability In Canada vs the US.

Key Findings

The average Canadian has to dish out a whopping 56% more to buy a home, or 25% more to rent one compared to ten years ago, but the median wage in Canada only went up 15%.
The average home price in the U.S. increased at a much slower rate (24%), while the median income went up by 18%.
Since 2008, the Canadian dollar lost approximately 25% of its power compared to the American dollar, going from almost perfect parity to a much lower exchange rate.
The affordability crisis worsened in Canada, where the housing market went from “seriously unaffordable” to “severely unaffordable”, but the American housing market remained in the “seriously unaffordable” category.

Real Housing Prices

Eight years into the new millennium, the U.S. marched head first into one of the worst economic crises in its history following the bursting of the housing bubble. Canada’s real estate bubble hasn’t yet popped and the country has not yet seen a major decline in home prices, but the Canadian economy experienced its own share of turbulence following the oil price crash from 2014 and the burst of China’s speculative bubble.
And now, 10 years after the housing crisis that destabilized the U.S., some analysts claim that Canada faces a similar scenario if it stays the course: household debt currently exceeds 100% of GDP, according to data released by the Bank for International Settlements, the average home price went up 56% in ten years, while the median wage per household only increased 15% during the same period, and loose lending is on the rise.

…click on the above link to read the rest of the article…

Anatomy of the Housing Downturn in Vancouver, Canada

November 12, 2018

Anatomy of the Housing Downturn in Vancouver, Canada

It’s not pretty.

In 2018, “each month has brought weaker than normal sales, rising inventory, and continued downward pressure on prices” in Vancouver, British Columbia, writes Steve Saretsky, a Vancouver Realtor and publisher of real-estate blog, Vancity Condo Guide. The market faces another headwind: “With the Bank of Canada determined to reach a neutral rate of interest of between 2.5-3.5%, borrowing power continues to erode.”

The single-family price spike unwinds.

The hardest hit segment are single-family houses (“detached houses”). Sales volume in the city of Vancouver has dropped to 27-year lows for most months of the year. In October, sales plunged 32% year-over-year to 146 houses, the third worst October on record. The plunge in sales was first triggered by the imposition of a tax in August 2016 on nonresident foreign buyers – mostly investors living in China. This chart from The Saretsky Report shows sales volume in every October going back to 1991 (click to enlarge):

Inventory for sale of all types of homes combined – single-family, townhouse, and condo – in the city of Vancouver surged 24% year-over-year, “pushing prices lower across all property segments,” he writes. Within that group, townhouse inventory jumped 34% and condo inventory soared 74%.

But inventory of single-family houses edged down by 4%, to 1,556 listings, “primarily a result of sellers taking their house off the market and trying to wait out current conditions,” Saretsky writes. Given the decline in sales, months’ supply surged 35% to 10.7 months. “This has paved the way for buyers to negotiate steep discounts”:

We have now been in a weak detached housing market for over two years and as a result, price declines are becoming more noticeable and more significant. There is strong evidence from previous housing booms that volumes tend to lead prices by about two years, and for the most part that has been the case here in Vancouver.

…click on the above link to read the rest of the article…

In Major Defeat For Trump, Judge Blocks Construction Of Keystone XL Pipeline

November 9, 2018

In Major Defeat For Trump, Judge Blocks Construction Of Keystone XL Pipeline

In a setback for the Trump administration, a federal judge in Montana temporarily halted construction of the Keystone XL oil pipeline late on Thursday on the grounds that the U.S. government did not complete a full analysis of the environmental impact of the TransCanada Corp project and failed to justify its decision granting a permit for the 1,200-mile long project designed to connect Canada’s tar sands crude oil with refineries on the Texas Gulf Coast. The ruling came in a lawsuit that several environmental groups filed against the U.S. government in 2017, soon after President Donald Trump announced a presidential permit for the project.

The judge, Brian Morris of the U.S. District Court in Montana, said President Trump’s State Department ignored crucial issues of climate change in order to further the president’s goal of letting the pipeline be built. In doing so, the administration ran afoul of the Administrative Procedure Act, which requires “reasoned” explanations for government decisions, particularly when they represent reversals of well-studied actions.

Morris wrote that a U.S. State Department environmental analysis “fell short of a ‘hard look’” at the cumulative effects of greenhouse gas emissions and the impact on Native American land resources. He also ruled the analysis failed to fully review the effects of the current oil price on the pipeline’s viability and did not fully model potential oil spills and offer mitigations measures.

However, the decision does not permanently block a pipeline permit. It requires the administration to conduct a more thorough review of potential adverse impacts related to climate change, cultural resources and endangered species. The court essentially ordered a do-over.

Morris, a former clerk to the late Chief Justice William Rehnquist, was appointed to the bench by President Obama.

…click on the above link to read the rest of the article…

The Global Economy and Political Murder: Why Trudeau Won’t Stop Arms Sales to Saudis

November 6, 2018

The Global Economy and Political Murder: Why Trudeau Won’t Stop Arms Sales to Saudis

Photo Source 2017 Canada Summer Games | CC BY 2.0

Almost 5,000 miles from the city in which his corpse was secretly buried – in one piece or in bits – by his Saudi killers, Jamal Khashoggi’s murder now rattles the scruples and the purse-strings of yet another country. For Canada, land of the free and liberal conscience – especially under Justin Trudeau – is suddenly confronted by the fruits of the bright young prime minister’s Conservative predecessors and a simple question of conscience for cash: should Trudeau tear up a 2014 military deal with Saudi Arabia worth $12bn?

When Ottawa decided to sell its spanking new light armoured vehicles (LAVs) to the Saudi kingdom, the Saudis already had a well-earned reputation for chopping off heads and supporting raving and well-armed Islamists. But Mohammed bin Salman had not yet ascended the crown princedom of this pious state. The Saudis had not yet invaded Yemen, chopped off the heads of its Shia leaders, imprisoned its own princes, kidnapped the Lebanese prime minister and dismembered Khashoggi.

So the Conservative Canadian government of Stephen Harper had no scruples about flogging off its LAVs – as these little armoured monsters are called – to Riyadh, specifically for the “transport and protection” of government officials.

Now you can hardly accuse Trudeau of being a supporter of the Saudi regime. Back in August, Mohammed bin Salman’s lads ordered the expulsion of the Canadian ambassador to Riyadh and closed down trade agreements with Canada after Trudeau’s foreign minister had complained about the arrest of women’s rights campaigners in the kingdom. The Canadians had made “false statements”, claimed the Saudis – whose own reputation for false statements would soon achieve proportions worthy of a Hollywood horror epic. Trudeau was in the Saudi doghouse as well as Washington’s because, only two months earlier, Trump had called him “dishonest and weak”.

…click on the above link to read the rest of the article…

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