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What Happens If U.S. Shale Goes Bust – OilPrice.com

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What Happens If U.S. Shale Goes Bust? | OilPrice.com

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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    This month has seen a spectacular oil price crash the likes of which we haven’t seen in decades. The last time we had since a single day oil price drop as drastic as Monday, March 9 was way back in 1991, when the U.S. launched airstrikes directed at the Iraqi military in response to the invasion of Kuwait. The price drop earlier this month was similarly staggering, with Brent benchmark global oil prices down by 22 percent and United States prices down by 20 percent.  This cataclysmic crash was caused by a perfect storm of market-spooking factors: the accelerating global spread of the COVID-19 coronavirus pandemic and the continuing oil price war being waged by Saudi Arabia after the OPEC+ alliance, which formed in 2016 to include Russia, imploded at the beginning of this month. The implosion itself was caused by coronavirus, as the plummeting oil demand caused by the industry- and economy-stalling pandemic led Russia and Saudi Arabia to initiate talks to address the issue, which subsequently led to bitter disagreement and an ultimate disbanding of the alliance and then an all-out price war. 

    The oil price war and subsequent crash have had devastating effects on U.S. shale, which was already struggling with diminishing profit margins. “Few U.S. shale firms can withstand prolonged oil price war,” Reuters proclaimed last week. “For the last five years, U.S. shale oil producers have been battling suppliers for lower costs and running equipment and crews hard to drive drilling costs down by about $20 a barrel,” the article reports. “The oil market rout last week, however, has left most shale firms facing prices below their costs of production.”

    Subsequent news out of the Permian Basin has been grim, with World Oil reporting this week that “Shale plays, oil patch see tens of thousands of layoffs across the industry.” According to analysis by Texas Railroad Commissioner Ryan Sitton, tens of thousands of oil industry workers are being laid off across Texas, and World Oil writes that “while workers in just about every industry are threatened by the economic slowdown, few are more at risk than those in the oil patch.”

    Related: Barclays Slashes Oil Price Forecast On Demand Shock

    This news is what is leading a lot of us to ask, what would happen if the U.S. shale industry goes bankrupt? This is exactly the question that Robert Rapier sets about answering in an opinion column for Forbes this week. “The real consequences of letting the U.S. shale industry fail is to hand global control of oil production back to Saudi Arabia. Millions of Americans will lose jobs, domestic oil production will fall, and our oil imports will soar. Saudi Arabia will then be free to once again withhold production to drive up the price.” While some shale companies in the U.S. will inevitably go bankrupt in the coming months, if too much of the industry fails it could have a lasting negative impact on the United States’ national security. Ultimately, he argues, letting U.S. oil collapse is far too risky in the short term, even if moving away from fossil fuels is, ultimately, a net good.

    “Look, you may think the U.S. oil industry deserves to go bankrupt. You may believe we should all be driving around in wind-powered electric vehicles or riding bicycles. But that’s not the world we live in today,” he writes. “Should we use less oil? Yes. And we will over time. But right now the U.S. still uses a lot of oil, and we will continue to do so for several years, even as we transition to electric vehicles.”

    On the other hand, as oil is proving to be an increasingly volatile sector, and even Saudi Aramco is talking about peak oil by mid-century, isn’t it high time to let go? As climate action increases, the Financial Times warning that this oil crash is “only a foretaste of what awaits energy industry,” maybe it’s time to read the writing on the wall and more seriously divest from oil in favor of creating jobs and infrastructure in more progressive and forward-leaning energy sectors.

    By Haley Zaremba for Oilprice.com

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      Quick Compare: 2020 Tesla Model 3 Vs Model Y After $3,000 Price Cut – Forbes

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      Here’s a very short, very basic comparison of the Model Y and Model 3 for newbie electric car buyers just getting their feet wet:

      *Pricier Model 3 configs offer up to 322 miles of range

      **The Model 3 with rear seats folded has “almost comparable cargo capacity [to the Model y], not as bad as those numbers from the owner’s manuals suggest,” according to Motor Trend.

      Type:

      —Model Y: CUV (crossover utility vehicle)

      —Model 3: sedan

      Production start date:

      —Model Y: January 2020

      —Model 3: mid-2017

      Price:

      2020 Tesla Model Y Dual Motor All-Wheel Drive Long Range: base price: $49,990* (cheapest version currently available / price as shown on Tesla’s website)

      2020 Tesla Model 3 Standard Range Plus base price: $37,990 (cheapest model)

      Cheaper Model Y version:

      The cheapest Model Y now available isn’t cheap. A cheaper version of the Model Y will eventually be offered, according to Tesla.

      American made:

      Both the Model 3 and Model Y are made in America in Fremont, Calif.

      How similar?

      The Model Y is based on the Model 3 and shares 75% of the parts, according to Tesla. And to the untrained eye, they can be hard to distinguish.

      How different?

      But there are some big differences like cargo space and ground clearance — the Model Y has more of both. And you sit higher in the Model Y because the Y’s seats are on risers, which makes it easier to get in and get out of the car compared to the Model 3.

      The Model Y also uses a more efficient heat pump versus the resistive heating system in the Model 3.

      And the Model Y is taller, wider, and longer than the Model 3. It’s only a matter of inches (e.g., the Y is about 7 inches taller) but it can make a difference for things like headroom.

      How popular?

      The Model 3 was the best-selling car in California — the hottest electric car market in the U.S. — in the first quarter of 2020, beating both the Honda Civic and Toyota Camry, according to the California New Car Dealers Association. Since the Model Y is just beginning to ramp up production, the jury is still out but CEO Elon Musk has said that he expects it to outsell the Model 3.

      Seating capacity:

      5 passengers for both the Model 3 and Model Y, though the Y has an option for seven passengers (see “options” below).

      Ground clearance (think: light off-roading):

      —Model Y: 6.6 inches

      —Model 3: 5.5 inches

      Basic warranty:

      4 years / 50,000 miles for both the Model 3 and Model Y.

      Major options:

      —Model Y will offer a third row of seats, allowing it to seat seven passengers ($3,000 option)

      —The Model 3 Performance offers 0-60 in 3.2 seconds for thousands of dollars less than the Model Y Performance (which is a plodding 3.5 seconds by comparison).

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      300 more sailings, BC Ferries loosens restrictions – Times Colonist

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      B.C. Ferries is loosening some restrictions and increasing capacity as summer travel within the province grows.

      Passenger numbers have risen to about 70 per cent of what they were at this time last year, said Tessa Humphries, communications manager for B.C. Ferries. In the early days of the pandemic, they were about 20 per cent of normal.

      article continues below

      Passenger capacity had been capped at 50 per cent, but that restriction is being phased out to increase service, Humphries said.

      That level was set by Transport Canada, which gave operators a choice between limiting capacity and implementing enhanced cleaning and physical- distancing measures.

      Humphries said B.C. Ferries implemented both measures at first but has now decided to phase out the capacity limit. B.C. Ferries consulted with Transport Canada on the change, she said.

      Enhanced physical-distancing and cleaning protocols, including clear plastic barriers and face- coverings, remain in place. Passengers are asked whether they’re experiencing COVID-19 symptoms prior to travel, and those in vehicles are allowed to remain inside their cars.

      More than 300 sailings per month have been added on major routes between the Island and the Lower Mainland since the start of June. The company is aiming to keep capacity about 20 per cent above demand, Humphries said.

      “We will have fewer sailings than in summer schedules of the past, but significantly more than what was available as a result of the service cuts in April,” she said.

      The company has also added an additional vessel on the route between Departure Bay and Horseshoe Bay on Fridays and Sundays, and a second vessel on the route that services the southern Gulf Islands on Thursdays through Mondays.

      “We did also hear from the communities that there was a struggle for capacity there,” Humphries said, adding that it wasn’t uncommon for sailings on Gulf Islands route to be completely booked.

      Passengers travelling by car are encouraged to book in advance or choose less busy times to travel.

      Humphries said B.C. Ferries expects it will take a couple of years before passenger numbers return to pre-pandemic levels.

      Onboard food services have resumed on some minor routes, including between Swartz Bay and the Gulf Islands, and the Passages gift shop reopened Friday on sailings between Swartz Bay and Tsawwassen. Packaged food and limited hot food resumed on three major routes between the Island and the Lower Mainland in June.

      The Lands End Café in the Swartz Bay terminal also recently reopened. Markets in the Departure Bay and Tsawwassen terminals reopened in late June.

      The drop in ferry traffic has cost B.C. Ferries millions of dollars in lost revenue.

      Humphries said the company is evaluating the financial situation daily and reopening onboard amenities will provide another revenue stream.

      “But we’re all doing all of that carefully and gradually, as well as safely reintroducing these services,” she said.

      regan-elliott@timescolonist.com

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      Canada halts Ukraine puppy imports; New rules against vaping ads: CBC's Marketplace Cheat Sheet – CBC.ca

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      Miss something this week? Don’t panic. CBC’s Marketplace rounds up the consumer and health news you need.

      Want this in your inbox? Get the Marketplace newsletter every Friday.

      Canada puts temporary halt on puppies from Ukraine

      Canadian officials are temporarily halting the importation of puppies from Ukraine after more than 500 dogs were found crammed on a plane last month, and dozens died. But animal welfare advocates say the change isn’t expected to put an end to the international puppy trade targeting Canadians.

      Marketplace‘s David Common reports. 

      Canadian officials are temporarily halting the importation of puppies from Ukraine after hundreds of dogs were found crammed on a plane last month and dozens died. But the change isn’t expected to put an end to the international puppy trade targeting Canadians. 1:47

      Health Canada ban on vaping ads to take effect in August

      In the wake of mounting research suggesting that vaping use is on the rise among teenagers, Health Canada is prohibiting advertisements for vapes in areas where youth may be exposed to them. The ban applies to all retail locations and online stores that sell e-cigarettes, except for adult-only establishments. Read more about the changes.

      E-cigarette advertising hangs above candy at a convenience store in Toronto in August 2019. (Craig Chivers/CBC)

      Fashion retailers scrambling during the pandemic. Here’s what they’re doing to survive

      It’s no secret that malls and department stores have been struggling over the last few months, but some businesses may be more poised to weather the storm than others. Larry Rosen, the CEO of Harry Rosen, says his company is surviving by taking advantage of federal support programs and shoring up its liquidity, but that competitors who came into the crisis with a lot of debt are already at risk. Read more about how companies are trying to fight back.

      Total retail apparel sales will decrease 28 to 32 per cent in 2020, while luxury apparel sales should drop 16.8 per cent, says Trendex, a marketing intelligence company specializing in the Canadian and Mexican apparel markets. (Nathan Denette/Canadian Press)

      The pandemic isn’t over. But for Maple Leaf Foods workers, the extra pay is

      Maple Leaf Foods is no longer paying employees an extra $2 an hour for working during COVID-19.

      That’s drawing criticism from employees at the company’s plant in Hamilton who say if the risk of working hasn’t subsided, neither should the pay.

      “At the start, they gave us T-shirts that said ‘Not all heroes wear capes’ and we really loved those shirts. When we got them we felt, ‘OK, they really appreciate us,'” says Chris Bernard, the chief union steward at the plant. 

      “Now it just doesn’t feel like we’re heroes anymore. They’re saying we’re not worth [an extra] $2 an hour.” Read more about the Maple Leaf Foods workers speaking out.

      Maple Leaf Foods ended its pandemic pay bonus this month. (CBC)

      What else is going on?

      Uber is getting into the grocery delivery business in Canada
      The program will be piloted in Toronto and Montreal.

      DavidsTea to ‘significantly reduce’ number of stores and shift to online selling
      The company is restructuring under the Companies’ Creditors Arrangement Act, which covers insolvent companies.

      Riveted Mesh Floor Lamp recalled due to risk of fire hazard
      Certain models of this lamp, sold at Restoration Hardware may overheat, posing a fire risk.

      Daiya brand Classic Vanilla Creme Non-Dairy Frozen Dessert recalled due to undeclared milk
      People with an allergy or aversion to milk should not consume the product.

      Marketplace needs your help 

      Many of us are looking to get our driveways freshly paved this summer, but not all contractors are created equal. Have you ever had a negative experience with a paving contractor? Or have they taken your money without finishing the job? Email us at marketplace@cbc.ca

      Has your computer conked out? Is your phone on the fritz? We want to hear from you! Technology is keeping us connected like never before, but what happens when these devices break? What did you do? Tell us about your broken tablets, computers and phones by emailing caitlin.taylor@cbc.ca

      Catch up on past episodes of Marketplace any time on CBC Gem.

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