The price of a barrel of Western Texas Intermediate crude oil, a global benchmark for oil prices, cost less than zero dollars on Monday.
Stay-at-home orders and travel restrictions designed to limit the spread of the novel coronavirus have reduced travel, which in turn caused worldwide demand for oil to drop. On Monday afternoon, the plummeting price crossed a new threshold and became negative, with a barrel valued at -$38.76 USD.
Western Canada Select, Alberta’s main oil export, hit a low of $3.96 — making it just one cent more expensive than a Big Mac on Uber Eats.
“These kinds of scenarios only happen when you’re in a depression,” said Greg Poelzer, a University of Saskatchewan political scientist.
“The impact of this will carry on for a number of months — months, not weeks.”
The price of oil began dropping in March when global restrictions were implemented. The situation was exacerbated by a price war between OPEC, the Organization of Petroleum Exporting Countries, which is led by Saudi Arabia, and Russia.
An agreement last week between the parties and the G20 brought the price war to an end. A few days later, the Saskatchewan government announced administrative restrictions were being lifted, and on Friday, the federal government announced a $2.4-billion support package for the oil industry.
On Sunday night, Alberta premier Jason Kenney tweeted that the federal government must do more to help the industry and “hundreds of thousands” of jobs are at stake.
[ Sign up for our Health IQ newsletter for the latest coronavirus updates ]
The following day, Saskatchewan energy minister Bronwyn Eyre said the same.
“The plunge of oil prices today into actual negative territory was not immediately anticipated, and further underlines the urgent need for an immediate and substantial support package for Canada’s energy industry from the federal government,” she said in a statement.
Poelzer said the government can’t do anything because any supports a government could offer can’t change the market.