The volume of crude oil transported by rail in Canada dropped to near zero on November 20, the day after workers at the country’s largest railway operator declared a strike. As a result, inventories are swelling and local supply gluts are worsening.
The strike broke out at an unfortunate time for Canadian producers, which have been gearing up to load more oil onto tank cars in light of the Alberta provincial administration’s decision to loosen restrictions on operators that transport their production by rail. It is sure to intensify competition for rail space, as CN has instructed its remaining staff to prioritize shipments of grain and other perishable goods.
Alexandre Boule, a spokesman for CN, said on November 20 that his company was negotiating with the Teamsters Union to address concerns about working conditions and employee benefits. In the meantime, though, the work stoppage has upset the balance of goods transported by rail in Canada.
“The issue becomes prominent very quickly in terms of oil backing up into storage,” said Mike Walls, an analyst at Genscape Inc. “Western Canada is so sensitive to any takeaway disruptions.”