Oil prices dramatically dropped as markets opened in Asia on Monday, down more than 25 per cent after a 10 per cent drop on Friday.
West Texas Intermediate crude fell $9 US to $32 and international benchmark Brent fell $11 to $34.
It was the largest single-day drop since the beginning of the Gulf War in 1991.
Prices are falling as Saudi Arabia, Russia and other oil-producing countries argue about how much to cut production in order to prop up prices.
Demand for energy is falling as people cut back on travel around the world. The worry is that the coronavirus outbreak will slow economies sharply, meaning even less demand.
OPEC and key ally Russia failed to agree Friday on a cut to oil production that would have contained the plunge, and on Saturday, Saudi Arabia’s state oil giant Aramco slashed export prices.
“We’re seeing the outcome of a one-two punch in terms of a demand shock from the coronavirus … and on top of that this weekend’s news of a price war started after the breakdown of OPEC plus Russia arrangements,” said Blake Shaffer, an assistant professor of economics and public policy at University of Calgary.
Shaffer said the demand-side drop was expected but the more recent development of a price war is a supply-side issue that’s hammering the market.
A ‘nuclear-sized event’
The oil market has seen arguments like this before. In 2014, OPEC held off production cuts in order to hold onto market share in the face of a resurgent U.S. oil industry. That led oil to tumble from over $100 US a barrel to below $40 by 2015.
But experts say this drop is much more dramatic.
“This is a really big move. I was an energy trader for 15 years. I don’t have all the daily moves in my head, but this would definitely be one of the biggest ones I’ve seen,” Shaffer said.
Martin Pelletier, a portfolio manager with Trivest Wealth Council in Calgary, said this is a “nuclear-sized event” for an already-hurting Alberta, and if not contained, the economic malaise could spread to the rest of the country.
“This could be the knock-out punch for Alberta, unfortunately,” Pelletier said, adding that some companies might not survive the hit.
“We’re going to really need to see some leadership coming out of Ottawa, and I mean both the Bank of Canada and [Prime Minister Justin] Trudeau and the government … This is a crisis; this is a very serious event.”
Pelletier said he’d like to see both a large fiscal spending program tailored to impacted provinces and an emergency rate cut.
The Alberta government’s recent spring budget forecasts WTI will average $58 US a barrel in the coming year, and Shaffer said this is bad news both for the economy as a whole and for the province’s royalty revenues.
“Roughly every dollar [per barrel] is about $350 million to the government … We’re talking about a $7 billion decline in revenue expectations,” he said.
Some experts are predicting even lower numbers could be on the way.
Ali Khedery, a former Exxon adviser and now CEO of strategy firm Dragoman Ventures, tweeted “$20 oil in 2020 is coming” after news broke of Saudi Arabia’s plans to hike production.
Shaffer said seeing such a wide difference in price forecasts after the province’s budget dropped just weeks ago makes a strong case for the government to change how royalty revenues are budgeted and push for further economic diversification.
“If this is prolonged, you’ll see continued job layoffs and effects on families. One of the really important things I’ll stress is having an economy that isn’t dependent on the outcome of a price war between the Saudis and the Russians … I hope it’s yet another wake-up call in terms of the efforts to diversify our economy,” he said.
EDMONTON – RCMP say a second suspect has been arrested in the killing of an Alberta county worker.
Mounties say 28-year-old Elijah Strawberry was taken into custody Friday at a house on O’Chiese First Nation.
Colin Hough, a worker with Rocky View County, was shot and killed while on the job on a rural road east of Calgary on Aug. 6.
Another man who worked for Fortis Alberta was shot and wounded, and RCMP said the suspects fled in a Rocky View County work truck.
Police later arrested Arthur Wayne Penner, 35, and charged him with first-degree murder and attempted murder, and a warrant was issued for Strawberry’s arrest.
RCMP also said there was a $10,000 reward for information leading to the arrest of Strawberry, describing him as armed and dangerous.
Chief Supt. Roberta McKale, told a news conference in Edmonton that officers had received tips and information over the last few weeks.
“I don’t know of many members that when were stopped, fuelling up our vehicles, we weren’t keeping an eye out, looking for him,” she said.
But officers had been investigating other cases when they found Strawberry.
“Our investigators were in O’Chiese First Nation at a residence on another matter and the major crimes unit was there working another file and ended up locating him hiding in the residence,” McKale said.
While an investigation is still underway, RCMP say they’re confident both suspects in the case are in police custody.
This report by The Canadian Press was first published Sept. 13, 2024.
RICHMOND, B.C. – The Integrated Homicide Investigation Team says the 26-year-old son of a man found dead on British Columbia’s Sunshine Coast has been charged with his murder.
Police say 58-year-old Henry Doyle was found badly injured on a forest service road in Egmont last September and died of his injuries.
The homicide team took over when the BC Coroners Service said the man’s death was suspicious.
It says in a statement that the BC Prosecution Service has approved one count of first-degree murder against the man’s son, Jackson Doyle.
Police say the accused will remain in custody until at least his next court appearance.
The homicide team says investigators remained committed to solving the case with the help of the community of Egmont, the RCMP on the Sunshine Coast and in Richmond, and the Vancouver Police Department.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, have broken off without an agreement following 15 hours of talks.
Joe McCann, president of Amalgamated Transit Union Local 1724, says they stayed at the bargaining table with help from a mediator until 2 a.m. Friday and made “some progress.”
However, he says the union negotiators didn’t get an offer that they could recommend to the membership.
McCann says that in some ways they are close to an agreement, but in other areas they are “miles apart.”
About 600 employees of the door-to-door transit service for people who can’t navigate the conventional transit system have been on strike since last week, pausing service for all but essential medical trips.
McCann asks HandyDART users to be “patient,” since they are trying to get not only a fair contract for workers but also a better service for customers.
He says it’s unclear when the talks will resume, but he hopes next week at the latest.
The employer, Transdev, didn’t reply to an interview request before publication.
This report by The Canadian Press was first published Sept. 13, 2024.
