Canadian oil now costs as much as a cup of coffee - what will happen to jobs?
As oil prices hit a 20-year low due to the economic downturn, Canada is looking for new industries to create jobs.
The price of American West Texas Intermediate oil fell by $6 USD per barrel on Monday, reaching $11.66 USD. This is the lowest level since 1999. This oil price is expected for May contracts.
The cost of oil delivery in June is currently estimated at about $22 USD per barrel, which is also 11% lower compared to the previous day's level.
Quarantine measures, travel bans, and the general economic downturn associated with the COVID-19 pandemic have reduced oil demand by about 25 million barrels per day.
As oil demand is very low and the world is running out of places to store the surplus, the price is falling. Oil storage tanks in Cushing, Oklahoma, currently hold 55 million barrels of oil, the highest level since 2018.
Canadian oil companies are also facing the risk of stopping production if these prices persist. Western Canadian Select oil, which is extracted from Canadian oil sands, typically trades $10-15 USD less than American oil because it's harder to transport and refine.
Alberta Premier Jason Kenney tweeted on Monday that the price of Canadian oil had effectively become negative overnight — meaning Canadian oil companies are forced to pay to get rid of their product.
With a barrel of Canadian oil now worth about the same as a cup of coffee, some renewable energy experts say it's time to take a different approach to building Canada's energy sector.
They say that the massive job losses and economic turmoil hitting the oil industry could be at least partially offset by a more aggressive transition to renewable energy, upgrading energy efficiency systems, and other sustainable infrastructure.
