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Canada’s oil industry partners put billions of dollars into unproven technology that the US treasury says is like an oil under a rock
Canadians to get biggest drop in gasoline prices since 2009 over COVID variant fears
Consumers in Canada are likely to see the biggest drop in gasoline prices since 2009, a Citigroup research team has predicted, after private energy companies decided to scrap their CVID (continuous ethanol gasoline) project, which would have used US ethanol-refining capacity in a demonstration experiment.
They put about $1.3bn into the venture, which failed to gain the necessary regulatory and industry buy-in.
Fears of a US pullout from the Paris climate agreement have contributed to an overall sell-off in the prices of major commodities, including oil, which plummeted below $50 on Monday, the first time it has traded below that level since 2016.
Citi analysts say the price drop is likely to happen before the summer, which will be a boon for gasoline price consumers in Quebec, Ontario and British Columbia, where it is currently expensive.
Gasoline on street in Ottawa is currently 41c a litre, which is about the same as a premium petrol in Britain.
The analysts predict a drop to 20-25c a litre before the end of June.
“Our view is that the effect of this change will be better-than-expected and only partially offset by inflation,” the analysts said.
The US last week did however, approve the Keystone XL oil pipeline in Nebraska, which could be completed by the end of the year. That is another boost for US consumers, Citi said.
Back in 2010, companies in the Netherlands, France, Italy, the UK and Germany together invested $70bn in upgrading their refineries to use what is known as “next generation biofuels”.
The venture was supposed to help replace some of the output of 14 “petroleum plants” of nine European countries that were forced to close in a move to reduce their dependence on fossil fuels.
The agreement was first adopted in 2009 as a follow-up to a 2002 Kyoto Protocol protocol that aimed to slash greenhouse gas emissions.
But big German automobile companies were upset that they had been left out of the plan, and oil producers and the EU tried to remove the pact from the official agenda in 2009.
Governments then added provisions to the agreement that gave producers access to a market for the fuels.
Instead of going green, the companies that are now undertaking the projects are simply switching the flow of the oil they produce.