CALGARY — Canadian oil and gas stocks climbed Monday on the news of Prime Minister Justin Trudeau's resignation, but analysts say the country's energy sector will still be challenged by uncertainty in the months to come.
As news of the Prime Minister's decision became public, some energy investors and traders took to social media to cheer the news. Canadian oil and gas stocks jumped to lead all other sectors in terms of gains Monday, with the S&P/TSX capped energy index climbing as much as two per cent in mid-day trading before settling to close up 0.79 per cent.
Several oil and gas industry groups declined to comment in the immediate wake of Trudeau's announcement, but Heather Exner-Pirot — a special advisor on energy to the Business Council of Canada — said she believes the overriding feeling in the oilpatch Monday was one of "relief."
Canada's oil and gas sector has had a rocky relationship with Trudeau's government over the past decade, Exner-Pirot said, and many of the policies brought in under his leadership have been viewed as being outright hostile to oil and gas development.
"The Liberal government (under Prime Minister Trudeau) has made Canada's oil and gas sector uncompetitive," she said.
"So there is some optimism now that Canada will finally be a place that's open for business."
The federal government under his leadership made a major investment in the oil and gas sector through its purchase of the Trans Mountain pipeline in 2018. As owner of the project, the federal government also completed a multi-billion-dollar expansion of the pipeline which has allowed Canadian oil production and exports to climb to new heights.
But the Liberal government's commitment to its climate goals also saw it introduce a host of policies that were hugely unpopular within the industry. These included the federal Impact Assessment Act (dubbed the "No More Pipelines Act" by its detractors), the federal moratorium on oil tanker traffic off B.C.'s northern coast and the recent anti-greenwashing legislation, which led a number of oil and gas companies to scrub their websites of content related to the environment.
The Trudeau government's proposed oil and gas emissions cap, which has not yet been finalized, faces staunch opposition from both the industry as well as the oil-producing provinces of Alberta and Saskatchewan.
The Business Council of Alberta, which represents many of the country's largest oil and gas producers, has called the proposed cap a "discriminatory and divisive" policy that could result in the province losing tens of thousands of jobs.
Scott Crockatt, vice-president of communications with the Business Council of Alberta, said Monday the Prime Minister's resignation announcement means it is unlikely the "economically damaging policy" will come to fruition anytime soon.
"I think this means that something like the oil and gas emissions cap is going to see no further development for at least (the first quarter) of this year, and — under what appears to be the most likely scenario — maybe not until after the next election," he said in an interview.
But Crockatt said Trudeau's departure leaves significant uncertainty at a time when Canada cannot afford to be "rudderless." He said concerns remain about president-elect Trump's threatened tariffs against Canadian products, and businesses need to know the federal government is ready and able to negotiate on their behalf.
"There are many businesses — especially in the energy sector — who are doing deals today that will take effect after the Trump presidency begins," he said.
"And so it is ... concerning that it's unclear what the next few months are going to look like, in terms of the Canada-U.S. relationship."
It's also unclear what the future holds for some of the decarbonization projects that were proposed by the Canadian energy sector under a Trudeau government, Exner-Pirot said, including the high-profile Pathways Alliance carbon capture and storage project which would reduce emissions from oilsands production if built.
A spokeswoman for the Pathways Alliance group of oilsands companies, which have not yet made a final commitment to build the proposed $16.5-billion project, declined to comment Monday.
But Exner-Pirot said under Trudeau's leadership, the federal Liberals rolled out a suite of incentives for carbon capture and storage. It's unclear whether the federal Conservatives under the leadership of Pierre Poilievre would provide the same level of support if they form the next government, she added.
"They (the Conservatives) don't seem to be very keen on it. It doesn't sound like they would support what is needed to get that project over the hump in the time frame we're looking for," Exner-Pirot said.
"So yes, I would say this is a threat to the Pathways Alliance."
In an emailed statement, the Canadian Association of Petroleum Producers said Canada's energy sector is looking for federal leadership that "send(s) the signal that Canada is ready to invite investment into our resource sector and grow our role as a secure supplier of energy to the world.”
"The impending leadership transition creates uncertainty for businesses as they put their 2025 plans into action, but it also offers the opportunity for a new federal government to shift to a focus on growth," said CAPP president Lisa Baiton in the statement.
This report by The Canadian Press was first published Jan. 6, 2025.
Amanda Stephenson, The Canadian Press
