Canadian Pacific Rail Closure Puts Pressure on Canada’s Oil and Gas Industry

cp rail employee
An employee boards a Canadian Pacific Railway locomotive at a yard in Calgary on Friday. A shutdown of Canadian Pacific Railway operations began early Sunday. (Jeff McIntosh/The Canadian Press)

Concerns have been expressed by Canada’s oil and natural gas producers over the possibility of a long-term suspension of Canadian Pacific rail operations, which began early Sunday.

“The energy industry has expressed concerns about the impact of interrupted rail transportation for Canadian products,” said vice-president of the Canadian Association of Petroleum Producers, Ben Brunnen. “With a persistent shortage of available pipeline capacity, rail has become an increasingly crucial mode of transportation for crude oil.”

On Sunday, a number of workers in Calgary organized a walkout in protest of their employer’s policies. Wages, benefits, and pensions are just a few of the many issues at risk in this conflict.

Teamsters Canada Rail Conference (TCRC) and Canadian Pacific Railway have blamed each other for the shutdown.

Energy shortage concerns

Oil prices have risen significantly this year, first due to a lack of supply in the market and more recently due to Russia’s invasion of Ukraine. Canada’s oil and gas sector is earning lots of money due to prices increases.

However, with the railroad’s closure, Canadian producers’ projects may be put on hold for the time being.

Some oil and gas service companies have been complaining about supply shortages in the past months, particularly when it comes to supplies necessary to increase oil and gas production.

Canadian Pacific provides access to ports and transload facilities across North America, as well as short line railroads in Alberta’s industrial side for synthetic crude and other refined goods from the province

By December 2021, Canadian crude oil shipments by rail surpassed 131,000 barrels per day.

An associate professor in supply chain management at Mount Royal University, Rajbir Bhatti, predicted big losses in the industry as the rail shutdown continues

“Certainly, shutting down operations, it’s going to have an immediate cascading domino effect on the entire economy,” said Bhatti. “So from coal to potash to fertilizer, animal feed, you name it, everything’s going to take a hit now.”

Original source material for this article taken from here

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