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Alberta plans to buy 7,000 railcars to ease ‘crisis’ in oil price differentials

TORONTO, O.N. – Alberta needs to buy as many as 7,000 railcars if it wants to be able to meet its goal of shipping an additional 120,000 barrels of oil a day, says Premier Rachel Notley.

In a speech to the Toronto Board of Trade, Notley says her province is prepared to buy roughly 80 locomotives, with each train pulling 100 to 120 cars.

This extra capacity will allow the province to transport 30 percent more crude-by-rail than current levels and would help narrow the price gap by $4 a barrel and generate an additional $1 million a day for Ottawa.

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She says the plunging price of oil has reached a “crisis” point for her province and her government is prepared to make the purchase on its own, with or without the federal government’s help.

This is the first time she has specified how many railcars will need to be purchased. She did not give estimates on the cost of the cars but industry experts suggest that one rail car can cost between $120,000 and $150,000 to buy or about $1,200 per month to rent, putting Alberta’s plan at upwards of $1.05 billion.

The price of Alberta crude is currently sitting around $10 a barrel, which Notley says is $40 less compared to the price of oil from other world producers.

A year ago, Notley said Alberta was losing about $40 million a day because of that difference. Today, that differential has grown to $80 million a day.

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