The President of one of Canada’s biggest oil and gas producers warned the oil sands industry that they must cut costs or face a “death spiral”. The drop in oil prices is an “opportunity” for every part of the industry to cut costs and eliminate inefficiencies that crept into the system during years of high prices. – The Globe and Mail

Steve Laut, Persident of Canadian Natural Resources Ltd. (CNRL) told members of the Fort McMurray Chamber of Commerce that US tight oil has become the biggest competitor to the Canadian oil sands. New technology development for hydrofracking and other advanced drilling techniques continue to drive costs down in shale operations, and the oil sands industry must work hard to compete and drive their own costs down as well.

Mr. Laut said that oil sands producers were three times as profitable in 2004 when oil was close to $40 per barrel than they were in 2013 with oil at $100 per barrel. Mr. Laut blamed municipal taxes and rising costs from suppliers, not world oil prices, as the reason that CNRL and other oil sands producers were no longer generating the profits they used to.

Critics were quick to point out that Mr. Laut earned $9.25 million in 2013, and perhaps executive compensation should be cut along with expenses for suppliers and labor.