Oil prices have plummeted, crashing to historic lows on Monday. The crash has seen Canadian oil prices trading in the negative and US crude to close the day in negative territory for the first time ever.
The price of a barrel of West Texas Intermediate crude oil for May delivery, opened Monday near $20 per barrel before dropping to negative $37.63 dollars by the end of the day on Wall Street. The June contract crashed more than 11% to $18.14 a barrel.
Western Canada Select, Alberta’s main oil export, hit a low of $3.96. A chart from oilprice.com highlighting the change in oil prices over the course of a week
Restrictions around COVID-19 have led to a massive reduction in travel thus causing a worldwide drop in the demand for oil.
It’s bad news for Alberta’s economy which is so closely tied to the energy industry, but Premier Jason Kenney said it will be a blow to all of Canada.
“The implications for the Canadian banking sector, the financial services industry, the manufacturing industry, the manufacturing industry, for pension funds for people’s retirements, right across the country government revenues that pay for healthcare and critical public services could all be jeopardized.”
Kenney calls the plummeting oil prices an issue of profound concern.
While the Federal government has provided some assistance, he said the industry needs more help from Ottawa.
“We need to understand that hundreds of thousands of Canadian jobs are on the line, some 500,000 jobs are connected directly or indirectly to this,” said Kenney.
“This is not an Alberta issue, this is not an industry-specific issue, this strikes right at the heart of the entire Canadain economy.”
On Friday the federal government announced a $2.45-billion aid package for the country’s energy sector. That includes $1.7 billion to help clean up abandoned oil and gas wells and $750 million towards an emissions-reduction fund, initiatives that will help maintain an estimated 10,000 jobs across the country.
Canada’s business development bank also said it will make commercial loans between $15 million and $60 million available to oil and gas companies to fund operational cash flow needs for 12 months.