Canadian oil and gas stocks rise, but analysts warn of challenges following Trudeau's resignation
Canadian oil and gas stocks rose on Monday following Prime Minister Justin Trudeau’s resignation announcement, though analysts warned of potential challenges ahead.
According to BNN Bloomberg, the S&P/TSX capped energy index gained as much as 2 percent in mid-day trading before closing 0.79 percent higher, leading all other sectors.
The announcement sparked mixed reactions across the energy sector. Many investors and traders celebrated the news on social media.
Heather Exner-Pirot, special advisor on energy to the Business Council of Canada, described the mood in the oilpatch as one of “relief.”
She noted that Canada’s oil and gas industry has had a strained relationship with Trudeau’s government over the last decade.
Exner-Pirot stated, “The Liberal government (under Prime Minister Trudeau) has made Canada's oil and gas sector uncompetitive. So there is some optimism now that Canada will finally be a place that's open for business.”
Several oil and gas industry groups declined to comment immediately after the announcement.
Trudeau’s government invested significantly in the energy sector, most notably through its $4.5bn purchase of the Trans Mountain pipeline in 2018.
The project’s expansion, completed under federal ownership, has enabled Canadian oil production and exports to reach new heights. However, the government also introduced policies widely unpopular within the industry.
These measures included the Impact Assessment Act—dubbed the ‘No More Pipelines Act’ by critics—a moratorium on oil tanker traffic off British Columbia’s northern coast, and anti-greenwashing legislation.
The latter prompted many oil and gas companies to remove environmental content from their websites.
The proposed oil and gas emissions cap, which remains unfinished, faced strong opposition from oil-producing provinces such as Alberta and Saskatchewan.
The Business Council of Alberta, representing major producers, criticized the cap as a “discriminatory and divisive” policy that could threaten tens of thousands of jobs.
Scott Crockatt, vice-president of communications at the Business Council of Alberta, said Trudeau’s resignation likely halts progress on the emissions cap in the near term.
“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,” Crockatt stated.
Despite the temporary pause, he warned that Trudeau’s departure creates uncertainty during a critical period.
Crockatt noted concerns about how Canada will manage trade tensions with the US, particularly regarding president-elect Trump’s threatened tariffs. He emphasized the importance of federal leadership during negotiations.
“There are many businesses — especially in the energy sector — who are doing deals today that will take effect after the Trump presidency begins,” Crockatt 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-US relationship.”
The resignation also raises concerns about the future of decarbonization projects championed during Trudeau’s tenure.
These include the $16.5bn Pathways Alliance carbon capture and storage (CCS) project, which aims to reduce emissions from oilsands production. The Pathways Alliance group has yet to commit fully to building the project. A spokesperson for the group declined to comment on Monday.
Exner-Pirot highlighted that Trudeau’s government introduced financial incentives for CCS, but she expressed doubts about whether Pierre Poilievre’s Conservatives would provide similar support if they win the next election.
“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,” she said. “So yes, I would say this is a threat to the Pathways Alliance.”
The Canadian Association of Petroleum Producers (CAPP) emphasized the need for federal leadership that prioritizes growth and investment in the resource sector.
In a statement, CAPP president Lisa Baiton said, “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.”
