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The two sources said Ottawa had reservations about Alberta’s proposal as the federal government felt the situation would ease.

“We are prepared to help but we want to focus on something that could have an effect now and not in 18 months time,” said one of the sources.

One of the reasons for the glut is closed U.S refineries, which are due to start up again by the end of the year. The sources also noted that Enbridge Inc’s Line 3 pipeline expansion, linking Alberta to U.S. refineries, is scheduled to start operation late next year.

“If you started getting these cars in October (2019), you would sort of be fixing a problem that’s already almost solved,” said the second source, adding that Ottawa would spend a few weeks studying the province’s ideas.

Alberta made the proposal as the price for its benchmark Western Canadian Select crude for December delivery has dropped to US$13.65 per barrel, after factoring a discount of US$40.75 to the North American benchmark West Texas Intermediate futures price.

The railways are adding locomotives and workers to their fleets, but the supply of tank cars is tight, with some older models being phased out.

If you started getting these cars in October (2019), you would sort of be fixing a problem that's already almost solved,

“(Customers) start banging on the door at 7 in the morning and we turn out the lights at midnight,” said John Zahary, chief executive of Altex Energy, which operates rail terminals.

“They’re desperate — the guys buying the oil want this cheap stuff and the railways seem to have capacity. It’s finding rail cars that is the issue,” he said in an interview.

Low prices have led several major Canadian producers, including Canadian Natural Resources Ltd and Cenovus Energy Inc to curtail production this quarter, and called for Alberta to mandate output cuts.

Western Canada’s crude oil bottlenecks and low prices are costing the country’s economy some $80 million per day, Alberta Notley said this week.

© Thomson Reuters 2018