The future of Canada’s energy sector is in jeopardy after the price of Canadian oil went negative over the weekend.
On Sunday, Alberta Premier Jason Kenney tweeted that Western Canada Select was trading at -$0.01.
Over the weekend, global oil prices hit an 18-year low as demand has been drying up and producers around the world are struggling to find storage space. Last week global prices dropped by 20%.
Oil prices took another dive on Monday, with West Texas Intermediate dropping to -$37.00 at one point – a record low.
Firms such as Husky Energy, Cenovus Energy and ConocoPhillips have all drastically cut production over the past few weeks. One forecaster told Reuters that as much as one-third of Canada’s oil output might get cut in the near future.
More than simply stopping production, much of Canada’s output comes from steam-driven oil facilities which are extremely costly to shut down and restart.
It is unclear how long companies can survive if prices remain negative and global shortage remains at near-capacity.
On Friday, Prime Minister Justin Trudeau announced $2.5 billion in long-awaited aid to the energy sector.
Finance Minister Bill Morneau had originally told companies on March 25 that help was “hours, potentially days” away.
Of the $2.5 billion, $1.7 billion will go towards cleaning up and closing unneeded oil wells, with the rest going towards an emission-reduction plan.
Kenney took to Twitter to criticize Trudeau’s approach to the energy sector, noting that Central Canada’s auto sector received significant aid during the 2008 Financial Crisis.