Canada’s tar sands/oil sands industry faces a “death spiral” unless producers can get a break on the “made in Fort McMurray cost” of doing business, Canadian Natural Resources President Steve Laut is warning the local chamber of commerce.
According to Laut, “producers were making three times the profit in 2004 when a barrel of oil cost about US$40 than it did when the price hit close to $100 in 2013,” the Globe and Mail reports. “He said rising costs from suppliers, and not world oil prices, were the reason that CNRL and others could no longer produce the profits it once did.”
If world oil prices eventually stabilize at $60 to $75 per barrel, he said, “oil sands can only avoid collapse if the people in the room—contractors and service industry representatives—begin cutting costs,” Scowen writes. Laut pointed to municipal taxes as CNRL’s fastest-rising cost.