Production cuts

[dmlfarmer]

I have not seen much about the impact of the Notley government mandatory 8.5% mandatory production cut so I checked prices today. WCS price on Friday Nov 31 was $16.93. Price on Monday Dec 3rd was $27.95. So a producer selling 100,000 barrels of WCS on Friday would have received $1,693,000. After the cut, he would only be allowed to sell 91,500 barrels instead of the 100,000 he would have liked to sell, but he would have received $2,557,425. or $864,425. more for less oil sold plus he still has 8,500 barrels to sell some day in the future. So was the government right in mandating the cuts?

On the other side of the coin, farmers continue to pay more to produce more grains in a saturated market in hopes that additional bushels will offset the additional costs but all they seem to see are lower prices and higher costs, which may or may not be offset by the higher volumes.

Something wrong with this picture?

[ajl]

Well that is the benefit of supply management. The problem with supply management is who determines that producer A gets the right to sell oil in the market place while potential producer B can go and beg for a living on the street corner because his potential access to the market is cut off. That is what is morally reprehensible about the dairy and chicken cartels here in canuckistan.

[bucket]

Yup ... capitalists asking government to control their own self destruction....

Farmers.....not so much....grow more make less ....smell the paint....

[grassfarmer]

Well that is the benefit of supply management. The problem with supply management is who determines that producer A gets the right to sell oil in the market place while potential producer B can go and beg for a living on the street corner because his potential access to the market is cut off. That is what is morally reprehensible about the dairy and chicken cartels here in canuckistan.

I guess you're free to call this "supply management" but don't in any way equate it to the supply management systems for dairy, poultry and eggs that most on here love to hate. This is only supply limiting existing producers it has no component of price setting based on production cost which is the system we have in the supply managed dairy, poultry and egg markets.
This type of production control is what the milk quota system in Europe was although many here falsely claim they had a supply management system like Canada's in Europe.
I don't see anybody has much to complain about here - across the board cut in production isn't picking winners and losers it's treating them all the same. Doesn't look like it's costing the taxpayer a cent and it appears to work like magic given the sudden price increase it precipitated as the production cuts don't come into play until January 1st.
Maybe the grain (or beef) guys should try the same and see if it brings the same result? Threaten to drop production 10% and see if your prices jump 64% overnight. If it wouldn't work for grain or beef how does it work for oil?