Alberta is preparing a $15 billion bailout that potentially includes more access to credit for small and mid-sized producers. Expected next week, the multi-billion dollar bailout still has many unknowns. At this time the Federal Government is keeping the details quiet, citing the sensitivity of the options under discussion.
The $15 billion would provide relief to the industries harmed by the COVID-19 as well as the price war between Russia and Saudi Arabia. A war that has created havoc on oil and energy prices. The major portions of the funding would be used to create jobs for laid-off workers.
TARP
As negotiations continue, 65 Alberta CEOs released a letter to Prime Minister Justin Trudeau asking for the creation of a TARP. This measure would be used to buy distressed assets, suspend the federal carbon tax and income tax at every level, and urge banks to provide zero interest loans as well as loan guarantees.
Ottowa has planed financial assistance to create jobs in reclaiming orphaned wells. While not yet confirmed it appears Ottowa is also discussing cutting payroll taxes in the industry.
Oil Trade Wars
After Saudi Arabia started the price war with Russia, oil prices descended into a tailspin. Wednesday saw the lowest prices in almost twenty years. Alberta crude closed near $14 USD while WTI closed roughly $20 USD.
“…as long as oil costs less than a bucket of chicken, we’re in trouble…”
– Alex Lindsay Civil Engineer
POTUS Donald J. Trump announced Thursday that he will get involved in the oil price war. He will encourage Saudi Arabia and Russia to cut productions and stabilize prices. In response to this news, oil prices rose. While still down 60% overall , US Futures settled up 24%.
“It’s very devastating to Russia, because the whole economy is based on that, and they have the lowest prices in decades,” “I would say it’s very bad for Saudi Arabia. But they’re in a fight, they’re in a fight on price, they’re in a fight on output. At the appropriate time I’ll get involved.”
– Donald J. Trump POTUS.