A major Canadian crude oil benchmark fell sharply on March 19. Western Canadian Select lost half of its already severely depressed price to close at $5.43 per barrel. That massive drop made it, at the time, by far the lowest of the major global oil price benchmarks. Even before the drop, Western Canada's oil industry, located in Alberta, was on "life support" according to Jason Kenney, Premier of the province.
The Canadian federal government has acted quickly, with word of a CA $15 billion (about $10 billion US) package to keep the country's oil industry afloat in unprecedented times.
Fighting for survival as global heavyweights go to war
Canada's oil sands is proving one of the hardest-hit of all the global sources of crude oil as a Saudi Arabia-led group of OPEC producers wage war against higher-cost oil producers in a battle for market share. The fight for dominance is being waged primarily between OPEC partners and Russia, following the latter country walking away from negotiations to cut output, but North American producers on both side of the U.S. and Canada border are getting pummeled by oil prices they simply cannot survive.
Oil markets respond to government relief efforts
Western Canadian Select trading responded very positively to the news that Canada's federal and Alberta's provincial governments intend to quickly provide relief to an industry that employs some 100,000 people in the region.
At this point, officials have been light on details, but Kenney and industry executives have suggested a program similar to the Troubled Asset Relief Program -- or TARP -- that was implemented in the U.S. during the Global Financial Crisis.
In response to the news, shares of Suncor Energy (SU -0.91%), one of the largest integrated oil companies in Alberta, jumped more than 9%. However, shares are still down more than two-thirds since oil prices started falling.