With lengthy delays and so much uncertainty when it comes to getting pipelines built in Canada, it seems Canadian producers have found another way to get their oil to market.
According to Statistics Canada, there was a total of 16,193 railway carloads transporting petroleum and fuel oil in June of 2018. That’s about eight times the amount seen a decade ago and a fresh record high.
Furthermore, because of limited pipeline capacity the biggest increase in weight moved by rail for the second consecutive month was for crude petroleum and fuel oils – up by 45.8% (464,000 tonnes) year-over-year.
Crude-by-rail exports also rose by 31.4% since January 1st while in June of 2018 they rose by a whopping 86.8% when compared with the same time frames the year before. This is largely due to the modest recovery oil prices have made in recent months, as producers scramble to take advantage of the potential boost in revenues.
So what does this all mean for Canada?
What Does More Oil-by-Rail Mean for Canada?
A shortage of rail cars is leaving both grain and oil shipments stranded in the prairie provinces. The squeeze is being felt by farmers where getting paid means delivering to a grain elevator that isn’t full. A backed-up grain elevator can mean not getting paid – sometimes for months on end.
Crude supplies are also piling up in Alberta. With no way to get the oil to our only market (the USA), our oil is being sold at a massive discount. There’s simply too much supply and no way to get more demand. We simply don’t have the pipeline capacity we desperately need to sell our oil to the rest of the world.
Other than investments into the railway network, pipelines are an obvious alternative to freeing up space for other commodities which are very important for local communities, and for this entire country.
Canada Needs Pipelines!
Limited railway capacity is one of many reasons why we need major energy infrastructure projects such as the Trans Mountain expansion, Enbridge Line 3 and Keystone XL pipelines to get built!
A typical truck can carry about 200 barrels of oil, while one train car can carry about 500 barrels. The expanded Trans Mountain pipeline could operate with an increased capacity of nearly 600,000 barrels a day. That’s 3,000 trucks and 1,000 rail cars every day!!
With the bottleneck of not only pipelines but railways also, think about how many railway cars we could fill with important commodities that also need access to international markets for trade. According to the Canadian Canola Growers Association (CCGA), the annual value of Canada’s grain exports is about $20 billion.
To support the growth of our agriculture industry, we must have adequate railway services – pipelines are just one element that can free up train units for other Canadian industries which are critical to our national economy!
As one of the world’s top five exporters of wheat, the largest producer of high-protein milling wheat and exporting leader for malting barley, we owe it to our farmers and our economy. Enough with giving our prosperity away Canada… we need adequate railway capacity AND pipelines!
Scotiabank estimates the discount on Canadian oil will cost our country $15.6 billion this year alone. That’s a lot of opportunity for job creation and social services we are simply giving away every day these pipelines do not get built.
What Can YOU Do?
As Canadians, we owe it to ourselves and our nations future economic prosperity to spread a positive message about our natural resource industries. Here’s three things you can do to help balance the conversation and be part of the movement:
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