Canada ushered in a new era on October 19, as voters handed the Liberal Party a majority government. But what will the new government mean for Canada’s oil and gas sector?
Incoming Prime Minister Justin Trudeau has staked out several positions on major pipeline projects in Canada. First and foremost, he has supported the Keystone XL pipeline. However, there is growing speculation that U.S. President Barack Obama may reject the pipeline, perhaps as soon as this week.
That would provide political cover for Trudeau, who may support the pipeline, but hasn’t made the project a high priority. Related: Oil Glut Appears To Be Getting Worse, Not Better
With Keystone XL dead, what else does the industry in Canada have to look forward to with a Trudeau government? Another controversial oil sands pipeline awaits a fight. Enbridge’s Northern Gateway pipeline would stretch from Alberta to the Pacific Coast, carrying oil for export on the coast of British Columbia. The Prime Minister-designate has stated his opposition to the project and has promised to block it once in power. There is a question over whether or not Trudeau actually has the authority to do so, but the election cannot be seen as a positive for Enbridge’s proposal.
Also, Justin Trudeau has put forward a stronger stance on climate change compared to now-former Prime Minister Stephen Harper, who received international opprobrium for his reluctance to take climate change seriously. Although Trudeau has been vague on what he plans to do about climate change, it is safe to say stronger action to reduce greenhouse gas emissions won’t be beneficial to oil sands producers in Alberta. Trudeau has promised to issue a climate policy within 90 days, just in time for the international negotiations in Paris set to take place in December. Related: Day Of Reckoning For U.S. Shale Will Have To Wait
On the flip side, the fact that the Liberal Party won a majority mandate, rather than a minority stake that would have forced it to form a coalition government, means there could be a degree of political stability in Ottawa that will be welcomed by the oil and gas industry. In fact, the industry group Canadian Association of Petroleum Producers (CAPP) sees a silver lining in the election result. “It allows us to get down to work on what our priorities are, which really haven’t changed regardless of the election,” CAPP President Tim McMillan said, according to the Financial Post, referring to the group’s top political objectives: more pipelines and fiscal competitiveness. Related: The End Of The European Refining Boom Or Just A Pause?
On top of the majority result, the energy industry breathed a sigh of relief that the New Democratic Party (NDP) disappointed in the election. The NDP would have been much more hostile to the energy industry, and its candidate Thomas Mulcair had been leading in the polls at one point in recent weeks.
Overall, there is some trepidation in Canada’s energy industry towards the new Prime Minister. Still, any damage to oil producers that results from new policies will pale in comparison to the ongoing slump in oil prices.
By Charles Kennedy of Oilprice.com
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