Wed, April 24, 2024 at 9:35 AM EDT
Business
Feds torn between moving toward cleaner energy or bailing out oil and gas sector – Global News
Canada’s oil producers could only sit and watch as the price of their product plummeted last month to less than what it costs to buy a litre of soda, hit by the double whammy of a COVID-19-induced drop in global demand and a production war between Russia and Saudi Arabia that flooded the market with more oil it didn’t need.
Prime Minister Justin Trudeau said Friday his government is looking for a way to help. But it is also clear any aid package is being influenced by the push-pull the Liberals have long felt between one of Canada’s most influential economic sectors and an environment movement which sees this as Canada’s opportunity to move away from fossil fuels once and for all.
Trudeau’s promise came nine days after Finance Minister Bill Morneau said an aid package for the oil sector was “hours, potentially days” away. Morneau’s office would not say Friday how many hours Morneau actually meant.
Keith Stewart, an energy strategist with Greenpeace Canada, said a delay in the package is a good thing, because it would be a lot easier and faster to pump out a bailout of loans and aid to companies than it would be to find innovative ways to fund workers through a transition to greener pastures.
Greenpeace is among a number of national environment organizations demanding no cash be spent to help oil companies.
“Doing it right is more complicated than doing it fast,” he said.
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He is hopeful any direct aid to companies will be tied to their willingness to show business plans in line with Canada’s climate targets. Anything else should help workers who need to know they can pay their mortgages and put food on the table while they retrain for new jobs in clean energy or environmental remediation.
An investment to clean up Alberta’s orphan wells was promised by Morneau on March 18, and was expected in the federal budget which has now been delayed indefinitely due to the COVID-19 crisis.
Tim McMillan, president of the Canadian Association of Petroleum Producers, said it is “frustrating” that Ottawa reached out to talk as soon as the demand drop and the Russia-Saudi Arabia spat began to hurt. But right now it’s all still just talk.
“I think it is unparalleled in history to see demand drop like this,” he said.
“The urgency is apparent. We’re seeing the damage being done to our economy.”
McMillan said regardless of global markets, there is no doubt oil and gas is an essential service, producing petroleum-based chemicals used in plastics for health care equipment and natural gas that is keeping the heat on and keeping electricity plants pumping out power.
Global oil demand fell by one-third in March, as worldwide air travel all but stopped, manufacturing plants went on hiatus and workers around the globe heeded requests — and often orders — to stay at home. At the same time Russia and Saudi Arabia could not agree on cuts to oil production, flooding markets with oil and further depressing prices.
In Western Canada, prices fell below US$4 a barrel at one point last week.
The International Energy Agency predicted Friday the oil market collapse could cost 50 million jobs internationally. In Canada, companies are already laying off workers and cutting production because there is no profit to be made pumping out a barrel of oil that costs less than an expensive coffee.
Prices jumped a bit Friday, with news that an online meeting of oil producing countries is set for Monday in a bid to overcome the production war. It does not appear that Canada will be part of that meeting. Trudeau was asked directly Friday if Canada would be participating and dodged the question.
Conservative energy critic Shannon Stubbs said she too wants to see the investments focus on people, but in a way that bridges them and their companies to get back to producing oil. Stubbs said every day constituents in her Alberta riding are calling terrified for their future. Jobs are disappearing and the spinoff impact across her riding’s economy is profound.
She is worried that the delay is caused by a disagreement similar to the one around the Liberal cabinet table earlier this year about whether to approve a massive new oilsands mine in Alberta. The Frontier mine was ultimately shelved by the company before a decision was made, but there were open disagreements among Liberals about whether to approve it.
Trudeau would not tip his hand on any timing or content of the aid package in the works, though he said it was part of the conversation he had with premiers Thursday during a first ministers’ teleconference call. Trudeau said some of the already announced COVID-19 aid is open to oil companies and workers too.
© 2020 The Canadian Press
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Business
Oil Firms Doubtful Trans Mountain Pipeline Will Start Full Service by May 1st
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Oil companies planning to ship crude on the expanded Trans Mountain pipeline in Canada are concerned that the project may not begin full service on May 1 but they would be nevertheless obligated to pay tolls from that date.
In a letter to the Canada Energy Regulator (CER), Suncor Energy and other shippers including BP and Marathon Petroleum have expressed doubts that Trans Mountain will start full service on May 1, as previously communicated, Reuters reports.
Trans Mountain Corporation, the government-owned entity that completed the pipeline construction, told Reuters in an email that line fill on the expanded pipeline would be completed in early May.
After a series of delays, cost overruns, and legal challenges, the expanded Trans Mountain oil pipeline will open for business on May 1, the company said early this month.
“The Commencement Date for commercial operation of the expanded system will be May 1, 2024. Trans Mountain anticipates providing service for all contracted volumes in the month of May,” Trans Mountain Corporation said in early April.
The expanded pipeline will triple the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.
The Federal Government of Canada bought the Trans Mountain Pipeline Expansion (TMX) from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.3 billion (C$4.5 billion) at the time. Since then, the costs for the expansion of the pipeline have quadrupled to nearly $23 billion (C$30.9 billion).
The expansion project has faced continuous delays over the years. In one of the latest roadblocks in December, the Canadian regulator denied a variance request from the project developer to move a small section of the pipeline due to challenging drilling conditions.
The company asked the regulator to reconsider its decision, and received on January 12 a conditional approval, avoiding what could have been another two-year delay to start-up.
Business
Tesla profits cut in half as demand falls
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Tesla profits slump by more than a half
Tesla has announced its profits fell sharply in the first three months of the year to $1.13bn (£910m), compared with $2.51bn in 2023.
It caps a difficult period for the electric vehicle (EV) maker, which – faced with falling sales – has announced thousands of job cuts.
Boss Elon Musk remains bullish about its prospects, telling investors the launch of new models would be brought forward.
Its share price has risen but analysts say it continues to face significant challenges, including from lower-cost rivals.
The company has suffered from falling demand and competition from cheaper Chinese imports which has led its stock price to collapse by 43% over 2024.
Figures for the first quarter of 2024 revealed revenues of $21.3bn, down on analysts’ predictions of just over $22bn.
But the decision by Tesla to bring forward the launch of new models from the second half of 2025 boosted its shares by nearly 12.5% in after-hours trading.
It did not reveal pricing details for the new vehicles.
However Mr Musk made clear he also grander ambitions, touting Tesla’s AI credentials and plans for self-driving vehicles – even going as far as to say considering it to be just a car company was the “wrong framework.”
“If somebody doesn’t believe Tesla is going to solve autonomy I think they should not be an investor,” he said.
Such sentiments have been questioned by analysts though, with Deutsche Bank saying driverless cars face “technological, regulatory and operational challenges.”
Some investors have called for the company to instead focus on releasing a lower price, mass-market EV.
However, Tesla has already been on a charm offensive, trying to win over new customers by dropping its prices in a series of markets in the face of falling sales.
It also said its situation was not unique.
“Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs,” it said.
Despite plans to bring forward new models originally planned for next year the firm is cutting its workforce.
Tesla said it would lose 3,332 jobs in California and 2,688 positions in Texas, starting mid-June.
The cuts in Texas represent 12% of Tesla’s total workforce of almost 23,000 in the area where its gigafactory and headquarters are located.
However, Mr Musk sought to downplay the move.
“Tesla has now created over 30,000 manufacturing jobs in California!” he said in a post on his social media platform X, formerly Twitter, on Tuesday.
Another 285 jobs will be lost in New York.
Tesla’s total workforce stood at more than 140,000 late last year, up from around 100,000 at the end of 2021, according to the company’s filings with US regulators.
Musk’s salary
The car firm is also facing other issues, with a struggle over Mr Musk’s compensation still raging on.
On Wednesday, Tesla asked shareholders to vote for a proposal to accept Mr Musk’s compensation package – once valued at $56bn – which had been rejected by a Delaware judge.
The judge found Tesla’s directors had breached their fiduciary duty to the firm by awarding Mr Musk the pay-out.
Due to the fall in Tesla’s stock value, the compensation package is now estimated to be around $10bn less – but still greater than the GDP of many countries.
In addition, Tesla wants its shareholders to agree to the firm being moved from Delaware to Texas – which Mr Musk called for after the judge rejected his payday.
Business
Stock market today: Nasdaq futures pop, Tesla surges after earnings with more heavyweights on deck
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Tech stocks rose on Wednesday, outstripping the broader market as investors welcomed Tesla’s (TSLA) cheaper car pledge and waited for the next rush of corporate earnings.
The Nasdaq Composite (^IXIC) rose roughly 0.6%, coming off a sharp closing gain. The S&P 500 (^GSPC) was up 0.2%, continuing a rebound from its longest losing streak of 2024, while the Dow Jones Industrial Average (^DJI) fell 0.1%.
Tesla shares jumped nearly 12% after the EV maker’s vow to speed up the launch of more affordable models eclipsed its quarterly earnings and revenue miss. That cheered up investors worried about growth amid a strategy shift to robotaxis and the planned cancellation of a cheaper model.
The results from the first “Magnificent Seven” to report have intensified the already high hopes for Big Tech earnings, that the megacaps can revive the rally in stocks they powered. The spotlight is now on Meta’s (META) report due after the market close, as the Facebook owner’s shares rose after the Senate voted for a potential ban on rival TikTok. Microsoft (MSFT) and Alphabet (GOOG) next up on Thursday.
Meanwhile, Boeing (BA) reported better than expected first quarter results before the opening bell with a loss per share of $1.13, narrower than the $1.72 estimated by Wall Street. Shares rose about 2% in morning trade.
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