Biden is taking the heat for higher gasoline prices during the summer driving season
Wounded after U.S. President Joe Biden cancelled the Keystone XL pipeline that would have shipped Alberta crude to the United States, the province snapped at the White House’s call on the Organization of Petroleum Exporting Countries Wednesday to raise production faster than planned.
“The Biden administration pleading with OPEC to increase oil production to rescue the United States from high fuel prices months after cancelling the Keystone XL pipeline smacks of hypocrisy,” Alberta Energy Minister Sonya Savage said in a statement Wednesday. “Keystone XL would have provided Americans with a stable source of energy from a trusted ally and friend.”
Alberta Premier Jason Kenney was also critical of the Biden Administration.
“The same US administration that retroactively cancelled Canada’s Keystone XL Pipeline is now pleading with OPEC & Russia to produce & ship more crude oil,” the premier tweeted. “This comes just as Vladimir Putin’s Russia has become the 2nd largest exporter of oil to the US.”
The pipeline project, challenged by environmentalists for more than a decade, was expected to pump 830,000 barrels a day of Alberta crude to Nebraska, connecting to pipelines feeding refineries in Texas. It was abandoned by owner TC Energy Corp. in June after the Biden administration revoked a presidential permit on assuming office in January. President Barack Obama had blocked the project and President Donald Trump had revived it.
Jake Sullivan, Biden’s national security adviser, criticized global oil producers Wednesday, saying, “At a critical moment in the global recovery, this is simply not enough.” Sullivan also said in the statement: “Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery.”
Canada is the U.S.’s largest source of oil imports, shipping just over 4 million barrels per day of oil on average in May. Russia recently emerged as the second largest source of oil imports, shipping 844,000 bpd to the U.S. in May, eclipsing Mexico.
As the pandemic depressed oil demand last year, the benchmark West Texas Intermediate crude briefly traded at negative US$36.98 a barrel in April 2020, compelling the 13-member OPEC and 11 other major oil producers such as Russia, to cut supply by about 10 million bpd, or around 10 per cent of global demand. In July, the group agreed to increase production by 400,000 bpd starting this month. The reduction now stands at about 5.8 million bpd, and OPEC has agreed to erase that by year’s end.
But with the U.S. economy reopening rapidly, demand is surging but production hasn’t kept up. WTI has been trading above US$60 a barrel since February, according to the U.S. Energy Information Administration, while average U.S. retail gasoline prices have jumped to US$3.17 a gallon in August from US$1.94 a gallon in April 2020. U.S. crude dipped 0.03 per cent to US$69.23 a barrel Thursday, while Brent crude was flat at US$71.43 per barrel.
Biden is taking the heat for higher gasoline prices during the summer driving season, with Republicans on social media attempting to link prices at the pump with his Keystone XL decision, efforts to disincentivize domestic oil production and plans for higher taxes in a US$3.5 trillion budget blueprint approved Wednesday.
“Our producers can easily produce that oil if your Administration will just stay out of the way,” tweeted George Abbott, the Republican governor of Texas. “Allow American workers—not OPEC—(to) produce the oil that can reduce the price of gasoline. Don’t make us dependent on foreign sources of energy.”
Other Republicans also took the opportunity to criticize the government that has been aggressively pushing out green energy policies to reduce the country’s carbon footprint.
“It’s pretty simple: if the President is suddenly worried about rising gas prices, he needs to stop killing our own energy production here on American soil,” Republican Senator John Cornyn of Texas said in a statement. “Begging the Saudis to increase production while the White House ties one hand behind the backs of American energy companies is pathetic and embarrassing.”
However, OPEC may not immediately pay heed to the White House’s call as the Delta variant is crimping global oil demand.
On Thursday, the International Energy Agency cut its forecast for global oil demand “sharply” for the rest of this year as the resurgent pandemic hits major consumers, and predicted a new surplus in 2022.
It’s a marked reversal for the Paris-based agency, which just a month ago was urging the OPEC+ alliance to open the taps or risk a damaging spike in prices. The oil cartel had responded to calls to hike supply, which is now arriving just as consumption slackens.
“The immediate boost from OPEC+ is colliding with slower demand growth and higher output from outside the alliance, stamping out lingering suggestions of a near-term supply crunch or super cycle,” the IEA said in its monthly report.
U.S. oil production hit a record high of 12.3 million bpd in 2019 before dropping to about 11.3 million bpd during the pandemic, according to the EIA.
Helima Croft, head of global commodity strategy at RBC Capital Markets, says the administration’s “real anxiety appears to be about retail gasoline prices that have risen by over 40 per cent since the start of the year.” Biden doesn’t want to jeopardize his climate change-fighting policy target of the U.S. achieving net zero carbon production by 2050, she says.
“Encouraging greater U.S. oil production appears to be an absolute non-starter,” Croft says in an Aug. 11 report. “Hence calling on OPEC may be one of the only levers they can pull to try to keep U.S. gasoline prices in check while at the same time preserving their climate credentials.”
Part of the gasoline price surge lies with refining capacity hurt by “less than robust economics as well as the structural issue of refinery closures in recent years,” Croft says.
“Gasoline inventories have put in a new five-year seasonal low, an 8.6 million barrel deficit, recording the largest deficit since the winter storm freezeover knocked out U.S. refining capacity back in March. Moreover, U.S. crude production remains 1.8 million barrels a day below pre-pandemic levels, which has left crude inventories deeply in deficit territory since the start of May.”
Biden’s call on OPEC “serves as a more politically palpable way to deal with spiking pump prices” as opposed to how Trump urged producers to “drill baby drill” in domestic oil fields, Croft says.
For Minister Savage, “the Biden administration’s plea for more oil confirms there will continue to be demand for Canadian and Alberta energy, and highlights the need for affordable and reliable energy as the world seeks to lower emissions.”
“The bottom line is the world needs Alberta’s energy.”
Financial Post
With files from Thomson Reuters
MONTREAL – Politics, public opinion and salary hikes south of the border helped push Air Canada toward a deal that secures major pay gains for pilots, experts say.
Hammered out over the weekend, the would-be agreement includes a cumulative wage hike of nearly 42 per cent over four years — an enormous bump by historical standards — according to one source who was not authorized to speak publicly on the matter. The previous 10-year contract granted increases of just two per cent annually.
The federal government’s stated unwillingness to step in paved the way for a deal, noted John Gradek, after Prime Minister Justin Trudeau made it plain the two sides should hash one out themselves.
“Public opinion basically pressed the federal cabinet, including the prime minister, to keep their hands clear of negotiations and looking at imposing a settlement,” said Gradek, who teaches aviation management at McGill University.
After late-night talks at a hotel near Toronto’s Pearson airport, the country’s biggest airline and the union representing 5,200-plus aviators announced early Sunday morning they had reached a tentative agreement, averting a strike that would have grounded flights and affected some 110,000 passengers daily.
The relative precariousness of the Liberal minority government as well as a push to appear more pro-labour underlay the prime minister’s hands-off approach to the negotiations.
Trudeau said Friday the government would not step in to fix the impasse — unlike during a massive railway work stoppage last month and a strike by WestJet mechanics over the Canada Day long weekend that workers claimed road roughshod over their constitutional right to collective bargaining. Trudeau said the government respects the right to strike and would only intervene if it became apparent no negotiated deal was possible.
“They felt that they really didn’t want to try for a third attempt at intervention and basically said, ‘Let’s let the airline decide how they want to deal with this one,'” said Gradek.
“Air Canada ran out of support as the week wore on, and by the time they got to Friday night, Saturday morning, there was nothing left for them to do but to basically try to get a deal set up and accepted by ALPA (Air Line Pilots Association).”
Trudeau’s government was also unlikely to consider back-to-work legislation after the NDP tore up its agreement to support the Liberal minority in Parliament, Gradek said. Conservative Leader Pierre Poilievre, whose party has traditionally toed a more pro-business line, also said last week that Tories “stand with the pilots” and swore off “pre-empting” the negotiations.
Air Canada CEO Michael Rousseau had asked Ottawa on Thursday to impose binding arbitration pre-emptively — “before any travel disruption starts” — if talks failed. Backed by business leaders, he’d hoped for an effective repeat of the Conservatives’ move to head off a strike in 2012 by legislating Air Canada pilots and ground crew to stick to their posts before any work stoppage could start.
The request may have fallen flat, however. Gradek said he believes there was less anxiety over the fallout from an airline strike than from the countrywide railway shutdown.
He also speculated that public frustration over thousands of cancelled flights would have flowed toward Air Canada rather than Ottawa, prompting the carrier to concede to a deal yielding “unheard of” gains for employees.
“It really was a total collapse of the Air Canada bargaining position,” he said.
Pilots are slated to vote in the coming weeks on the four-year contract.
Last year, pilots at Delta Air Lines, United Airlines and American Airlines secured agreements that included four-year pay boosts ranging from 34 per cent to 40 per cent, ramping up pressure on other carriers to raise wages.
After more than a year of bargaining, Air Canada put forward an offer in August centred around a 30 per cent wage hike over four years.
But the final deal, should union members approve it, grants a 26 per cent increase in the first year alone, retroactive to September 2023, according to the source. Three wage bumps of four per cent would follow in 2024 through 2026.
Passengers may wind up shouldering some of that financial load, one expert noted.
“At the end of the day, it’s all us consumers who are paying,” said Barry Prentice, who heads the University of Manitoba’s transport institute.
Higher fares may be mitigated by the persistence of budget carrier Flair Airlines and the rapid expansion of Porter Airlines — a growing Air Canada rival — as well as waning demand for leisure trips. Corporate travel also remains below pre-COVID-19 levels.
Air Canada said Sunday the tentative contract “recognizes the contributions and professionalism of Air Canada’s pilot group, while providing a framework for the future growth of the airline.”
The union issued a statement saying that, if ratified, the agreement will generate about $1.9 billion of additional value for Air Canada pilots over the course of the deal.
Meanwhile, labour tension with cabin crew looms on the horizon. Air Canada is poised to kick off negotiations with the union representing more than 10,000 flight attendants this year before the contract expires on March 31.
This report by The Canadian Press was first published Sept. 16, 2024.
Companies in this story: (TSX:AC)
HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
The Canadian Press. All rights reserved.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
Companies in this story: (TSX:ROOT)
The Canadian Press. All rights reserved.
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