What the U.S. ban on Russian oil imports means for Alberta
![Jason Kenney Alberta Premier Jason Kenney gives a COVID-19 update in Calgary, Alta., Tuesday, Feb. 8, 2022. THE CANADIAN PRESS/Jeff McIntosh](/content/dam/ctvnews/en/images/2022/3/7/jason-kenney-1-5809041-1646675895441.jpg)
As oil and gas prices soar and the United States bans imports of all Russian oil products, energy analysts fear it will be a challenge for Alberta's resource sector to respond quickly.
U.S. President Joe Biden announced the ban on Tuesday, calling it "another powerful blow to (Russian President Vladimir) Putin's war machine" while "Americans have rallied support the Ukrainian people."
Meanwhile, speaking at the CERAWeek conference in Texas on Tuesday, Premier Jason Kenney said Alberta is the natural answer for the current energy crisis.
“With the third largest proven and probable oil reserves on earth, 180-billion barrels-plus and one of the largest reserves of proven and probable natural gas reserves, that we (Alberta) are a natural answer to the challenge of global energy security," said Kenney.
Kenney also continued to call for the American government to revive the Keystone XL Pipeline project to bring Alberta oil to U.S. refineries.
Yet on Tuesday, TC Energy Corporation rejected that.
"The Keystone XL Pipeline Project was terminated and will not proceed," said Reid Feist, media relations specialist.
The Russian invasion of Ukraine last month has shifted global energy security and analysts suggest Alberta can be a "pillar" or stable supplier, but lacks time.
"You could argue (Alberta's energy resources) would contribute to greater global stability in the course, that's not where we're at today. In terms of this crisis, there is a lot of pressure for short-term responses and short-term solutions from the upstream sector, but there it will take a little bit longer for them to really respond to it," said Kevin Birn, a Calgary-based crude oil market analyst with S&P Global Commodity Insights.
Birn says the current high-price environment where the North American benchmark teeters to US$130 per barrel is not sustainable for the long-term, but shows strong demand for crude oil.
"We're seeing the world remains very much hydrocarbon-powered, and oil and gas is a fundamental pillar for quality of life in the medium term," said Birn.
Birn says Alberta produces a heavy sour crude that is refined in the American Midwest and Gulf Coast, and although production upstream within Canada could be ramped up -- there are major challenges for Alberta to meet the market gap by the exclusion of Russian oil.
He adds that transportation remains an issue, as pipeline and rail capacity from Alberta to the U.S. is limited.
In addition, Birn says the energy sector in North America has recently shifted to an energy transition, as producers are "looking at a long-term demand scenario where they do see renewables taking a greater share and potential for erosion of the demand (for oil) over the long term."
CLIMBING COST OF LIVING
The price at the pump has shocked Canadian drivers as a direct result of the Russian invasion of Ukraine and a Calgary-based energy retail analyst says it will continue to climb over the next few months.
Gasoline fuel prices have soared across the country to a national average of $1.80 per litre.
Gas prices are already 15-30 cents higher per litre since late February, and are expected to increase another eight to 10 cents in April with the start of the North American driving season, said Vijay Muralidharan, a consultant with Kalibrate, a company that collects gasoline price and consumption data.
"Technically, what you're seeing today in gasoline is what has happened in February ... So you're not going to see any abatement of gasoline prices for at least a month and a half, in my opinion," said Muralidharan.
WHERE ELSE COULD IT COME FROM?
Speculating that energy companies would look to the Middle East to purchase oil, Kenney encourage them to instead look to Albertan oil because, "a flight to Calgary is cheaper than a flight to Riyadh (the capital of Saudi Arabia)."
Kenney also promoted Alberta's energy resources as coming from a politically stable region compared to other oil producing regions.
Russia produces an estimated 10 per cent of crude and products used around the world.
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