Worry and frustration mount in Alberta as oil prices languish

The street outside Calgary's downtownHyatthotel was teemingwith pro-oil demonstrators Thursday, forcing police to close traffic along a busy avenueas thegrowing crowd spilled over the sidewalks.

While a business audience streamed inside the hotelto listen tothe prime ministerspeak, the large crowdchanted, "Build that pipe!" and "Trudeau must go!"

But amidst the rally's clamour, there emerged an unexpectedrefrain: "O, Canada."

The anthem had the feel of anacoustic flare an SOS signal to the country and its leaders about theprovince'splight.

While the miserable price of crude has manyAlbertansworried, there's frustrationthe issue isn't being met with enough urgency, even aseconomists warnof a broader impact.

"People don't realize how much the energy sector contributes to the economy...it supports families and it supports Canadians," Minh Nguyen, 39, who works in the sector, said at Thursday's rally.

"It's not just an Alberta problem. It is a Canadian problem."

Nguyen's concerns have beenechoed acrosstheoilpatchand Alberta's legislature: The situation is serious.

The fundamental issue, asScotiabankEconomics explains, is there aren't enough pipelines to transport the crude from where it's produced in Western Canada to where it's consumed predominantly U.S. refineries.

This has widened the discount received for Canadian crude relative to U.S. varietiesas Canadian barrels need to be marked down for the higher cost oftransportation, theScotiabank report said.

The discount is around $13 USa barrel in normal times, it said, climbing over $20 US to account for the cost of pricier transportation like rail.

"But when production rises beyond the capacity of pipelines and rail combined, as Canada'soilpatchis experiencing today, producers are forced to utilize even higher-cost transportation methods or to wait out the storm in provincial storage tanks already filled to the brim," reads the report.

"The value of these stranded barrels plummets, dragging the regional benchmark down with them."

The result of the oil glut has been hard on many producers, withdiscountstracking around $40 US a barrel in recent weeks, climbing as high as $50 US.

Analysts expect the situation to improve in the months ahead, but meanwhile the industry is losing tens of millions of dollars a day.

While initiallythediscountswere an issue largely for oilsandscrude, it's not stopping there.

"This price deterioration has now spread to all the other different grades of oil that we produce," economistPeter Tertzakian, executive director of ARC Energy Research Institute, told CBCNews last week.

If the oil glut isn'taddressed in the next few weeks, it could affect spending and jobs across the West, Tertzakian said.

The situation threatens to punch a big hole in Alberta's finances, butthere are also warnings ofa broaderimpact.

Premier RachelNotley, for one, estimates it is costing the Canadian economy $80 million daily.

Making matters worse, the benchmark price for U.S. oil, West Texas Intermediate, has also been falling, dropping on Friday to itslowest level since September 2017.

An analysis fromBMO Capital Markets on Friday said the longer the extreme lows persist for Canadian oil prices, the greater the economic damage for Alberta, and the national economy.

"The way it can affect the entire country is through overall government revenues," Doug Porter,chief economist at BMO Capital Markets, said in an interview.

"Generally speaking, the federal government doesn't get much directly from the energy industry, but indirectly they certainly do.

"This will hit government revenues and it can also weigh on the Canadian dollaras well."

The price gap has led some oil producers to do something extraordinary: call on the provincial government to mandate production cuts to help clear the glut.

But the request has proven divisive, with large integrated companies Suncor, Husky Energy and Imperial Oil rejecting the idea, saying it could create both economic and trade risks.

Alberta's premier appointed a team of envoys to seek solutions with industry, though a quick andeasy solution appears elusive. In the meantime, Notleycontinues calling on Ottawa to help fund a strategy to move more oil by rail.

"If Ottawa won't come to the table, well, then we'll get it done ourselves," Notleytold drillers Thursday.

The premier's words may speak to a deeper frustration.

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Calgary-based pollster Janet Brown said with the economic downturn,difficult recoveryand ongoing troubles with getting pipelines built, there may be more deep-rooted concerns.

"You're really dealing with a heavily emotional situation for a lot of Calgarians," Brown said.

"This is not a question of just pure economics. It's really about people's lives and livelihood and their family, and it's just as emotional for Calgarians as it is a practical concern."

She said some people also feel there's ameasure of satisfaction outsideAlberta to see the province struggle.

But University of Toronto political scientist Nelson Wisemandoesn't believe that's actually the case. Albertans' concerns are being heard, he said.

"Once you get outside of the environmental groups, the attitude is the industry is vital, not just for Alberta, for Canadian revenues," Wiseman said. "People here don't think, 'gee, you know if Alberta loses somehow we're better off.' I don't think people see it that way at all."

On Thursday, Prime Minister Justin Trudeau acknowledged Alberta is in a "crisis" over low oil prices, but people who'd hoped he'dcome to Calgary with news of help would probably have been disappointed.

Oilpatch leaders, who met privately with Trudeau, said the prime minister appeared to listento the sector's concerns over oil prices, pipeline constructionand Bill C-69, which would overhaul the approval process for energy projects.

"He made it very clear he understands the concerns of the industry," said CenovusCEO Alex Pourbaixtold reporters immediately following the meeting.

But as time winds on and oil prices languishconcern and frustration build.

"It tells you how desperate times are," Canadian Natural Resources executive vice chairman Steve Lautsaid when asked Thursday about the large crowd of demonstrators outside the Hyatt.

"You don't normally see that kind of thing happen."