Oil price crash a 'disaster' for economy, Canadian stocks: Taylor
The steep discount on Canadian crude has not only been causing pain for Alberta, but also for Canadian stocks and the overall economy, a portfolio manager with Purpose Investments warns.
“It’s really been almost a disaster for the Canadian economy, this oil price differential,” Greg Taylor said in an interview with BNN Bloomberg Tuesday.
“This is a story that every Canadian should be up in arms about right now, because these pipeline delays and the lack of an outtake for a lot of the Western Canadian product has really hit the entire Canadian economy and is affecting our [S&P/TSX Composite Index] also.”
Taylor said the oil slump – which has seen the discount on Western Canadian Select crude versus the North American benchmark Western Texas Intermediate hit highs of more than US$52 per barrel in October – has been hurting Canadian bank stocks and causing the Canadian index to underperform global markets.
Taylor added that oil sands producer Athabasca Oil Corp.’s decision to sell assets to Enbridge Inc. for $265 million, as well as its announcement that it will cut head office jobs and reduce salaries by 10 per cent, shows “the magnitude of this crisis” in the province.
“Alberta is in panic mode right now,” Taylor said. “We’re hearing things about Alberta separatism coming back as an issue, which I think is a longshot, but things are just not good in Alberta right now and that has really been the fuel for this economy for a while.”