Potential Canadian Rail Strike and Its Effects on the Oil Industry

  • Trans Mountain Expansion project may help minimize the impact of a potential Canadian rail strike on U.S. oil imports
  • Rail strikes could start if an agreement with the union representing engineers, conductors and yard workers is not reached
  • Increased pipeline capacity has been offset by increased Canadian crude production
  • A lengthy strike may eventually impact heavy crude exports
  • Diluent must be added to move raw bitumen through pipelines, causing potential congestion if rail strikes continue

The opening of the Trans Mountain Expansion project may help minimize the initial impact of a potential Canadian rail strike on U.S. oil imports, according to an analysis by East Daley Analytics. The possibility of a disruption in rail service comes as Canada’s two main railway companies say they could start locking out workers if they don’t reach an agreement with the union representing engineers, conductors, and yard workers after the union delivered a strike notice over the weekend. The Trans Mountain Expansion has the capacity to transport 590,000 b/d of heavy sour crude from Hardisty, Alberta, to the Westridge Marine Export Terminal in Vancouver, British Columbia. However, increased flows on the pipeline haven’t significantly impacted Canadian exports to U.S. refineries in the Midwest due to increased Canadian crude production making up for the increased pipeline flows and allowing for continued use by U.S. refineries as well as re-export of Canadian crude from ports on the U.S. Gulf Coast. A lengthy strike extending more than a month could eventually impact heavy crude exports, and diluent must be added to move raw bitumen through pipelines, causing potential congestion if rail strikes continue.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about the potential impact of a Canadian rail strike on oil supplies and the Trans Mountain Expansion project. It cites an analysis by East Daley Analytics and includes relevant details about crude imports, pipeline capacity, and possible alternatives in case of a lengthy strike. The article also clarifies that it was created by Oil Price Information Service, which is operated by Dow Jones & Co., indicating its credibility.
Noise Level: 4
Noise Justification: The article provides relevant information about the potential impact of a Canadian rail strike on oil supplies and offers insights into how the Trans Mountain Expansion project could mitigate some of the effects. It also discusses possible consequences of a lengthy strike, such as congestion caused by replacing rail movements with trucking. However, it lacks in-depth analysis or exploration of long-term trends or possibilities.
Private Companies: East Daly Analytics,Oil Price Information Service
Key People: Steve Cronin (Reporter), Michael Kelly (Editor)

Financial Relevance: Yes
Financial Markets Impacted: Canadian oil industry, U.S. refineries, and rail companies
Financial Rating Justification: The article discusses the potential impact of a Canadian rail strike on the oil industry and its effect on financial markets such as the Canadian oil industry, U.S. refineries, and rail companies. It also mentions the Trans Mountain Expansion project’s role in minimizing the initial impact but warns about possible consequences if the labor dispute lasts longer.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the article.
Move Size: No market move size mentioned.
Sector: Energy
Direction: Down
Magnitude: Small
Affected Instruments: Stocks, Commodities

Reported publicly: www.marketwatch.com