Canada prepares multi-billion dollar bailout for its oil industry
The federal government of Canada is preparing a multibillion dollar financial aid package for the oil and gas industry and could announce it as soon as next week, the Globe and Mail reports, citing unnamed sources.
Among the measures discussed were access to more credit, especially for smaller businesses, and job creation for the workers who will likely be laid off amid the price crisis.
One source told the Globe and Mail that Ottawa has prepared US$10.43 billion (C$15 billion) in financial aid for the industry, which, already struggling with low local crude prices, a pipeline shortage and a hostile investment environment has now been brought to its knees by the combination of weak demand created by the Covid-19 outbreak and the oil price war started by Saudi Arabia earlier this month.
The local benchmark, Western Canadian Select, yesterday dived to $5.430 a barrel, losing more than 50 percent of its value in a day. Also yesterday, Premier Jason Kenney warned that t Alberta’s oil and gas industry was “on life support”.
“We must begin to prepare ourselves for a time of adversity unlike any we have seen since the 1930s in this province,” Kenney told media, after earlier this month he announced plans for government support for oil and gas companies focusing on low-interest credits until the worst of the crisis passes.
The provincial government has been discussing the credit aid package with Ottawa, too. The industry is taking part as well. The Globe and Mail reports a letter signed by 65 industry executives asking Prime Minister Justin Trudeau to set up an equivalent to the U.S. Troubled Asset Relief Program and use it to buy distressed assets. In addition, the industry is asking for a suspension of the carbon tax and all income taxes.
“Our companies collectively represent over 100,000 working Canadians,” the executive wrote. They called for “all levels of government to work together toward one goal: no Canadian, household, business or organization is left worse off than where they were when this crisis began.”