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Canada’s Railway Strike To Cause Billions In Damage, Create Fuel Shortages

Crude Railway

Crude-by-rail shipments from Canada’s oil-rich province Alberta have nearly halted, while other provinces face critical shortages of propane, as the strike at Canadian National Railway drags on for a fourth day on Friday, threatening to dent Canada’s economy by billions of dollars.

More than 3,000 railway conductors, train persons, and yard workers at the largest Canadian railway went on strike at midnight on Tuesday, demanding longer rests and medicine benefits.

CN said on Thursday that negotiations continue with the help of the federally appointed mediators. The company regrets “the impact that the strike is having on our customers, supply chain partners, the Canadian economy, trade in general, and the public,” President and CEO JJ Ruest said.

The strike at the railway operator comes at a challenging time for the Canadian oil industry, which has suffered from lack of sufficient pipeline capacity to carry oil to refining centers.

The price of Canada’s heavy oil benchmark, Western Canadian Select (WCS), slid on Wednesday, a day after the strike began, to the lowest in a week, as crude by rail shipments were almost halted because CN prioritizes grain shipments.  

The strike has nearly halted crude oil shipments at some terminals in Alberta. Ernie Barsamian, CEO at terminal storage clearinghouse The Tank Tiger, told Bloomberg that the firm had been asked whether it could store some 30 rail tank cars in the U.S. Pacific Northwest for a month after the strike prevented the crude from being delivered to its destination terminal. 

The strike is also heavily hitting propane supply in Quebec. The province will run out of propane within four days, Premier François Legault told reporters on Thursday. The situation is an emergency, Legault said, adding that a rationing scheme was already in place and will prioritize hospitals.

According to Toronto-Dominion Bank, the strike could cost Canada’s economy US$1.66 billion (C$2.2 billion) if it lasts until November 30, and US$2.33 billion (C$3.1 billion) if it extends to December 5.   

By Tsvetana Paraskova for Oilprice.com

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