Related Articles
Forward article link
Share PDF with colleagues

Election result shifts Canada to the left

Justin Trudeau led his Liberal Party to a surprisingly strong victory in Canada’s national election on 19 October, ending the Conservative Party’s decade in power

The election heralds a political shift to the left in Canada and will shake up the country’s oil, pipeline and climate change politics.

The oil industry had a stalwart friend in Stephen Harper. As prime minister, he pushed hard for friendly fiscal terms for oil producers and new pipelines to get Alberta’s oil sands into the US and to new markets beyond North America; and he resisted measures to cut carbon emissions at home and abroad.

Now the political tide has turned – a process that started in May when the left-leaning New Democratic Party’s (NDP) swept to victory in Alberta, Canada’s oil heartland.

It may not be all bad for the oil industry. The strong support it enjoyed from Harper over the past decade did not translate into success in pushing through the industry’s major initiatives. These include Keystone XL and a raft of other pipelines aimed at getting Canadian oil and gas to international markets.

“Canada needs new infrastructure, including pipelines, to move our energy resources to domestic and global markets"

The opposition accused Harper of running roughshod over environmental and indigenous community objections to the new pipelines, sparking fierce opposition to nearly all new energy infrastructure developments. And in the case of Keystone XL, the Obama administration resented the heavy-handed lobbying campaign Harper waged on behalf of the industry. This even tainted diplomatic relations between the countries and probably damaged the chances of the pipeline being approved.

The Liberal Party will bring tougher environmental regulations to the industry and could raise taxes and royalties. Trudeau’s government could also tip economic policy towards the country’s manufacturing sector, which suffers from the strong Canadian dollar when the oil industry is thriving. He will also bring Canada to the forefront of international efforts to rein in carbon emissions.

But Trudeau has offered qualified support for all of the major proposed pipelines except Enbridge’s Northern Gateway pipeline to bring Albertan oil to the Pacific, which he opposes. “Canada needs new infrastructure, including pipelines, to move our energy resources to domestic and global markets. However these projects must earn the trust of local communities, respect Indigenous rights, and cannot put our lands and waters at risk,” he said during the campaign.

Trudeau’s softer touch approach could in the end improve the chances of some of these projects going ahead. It may be too late for Keystone XL to be approved under the Obama administration, but Trudeau’s pledges of tighter environmental regulations in the oil sands and limits to carbon emissions could help ease Obama’s environmental concerns over the pipeline. He will also bring a badly needed fresh approach to getting other controversial domestic pipelines built after a series of bruising political fights has most of them stuck in the mire.

Ultimately, though, the industry’s biggest problem isn’t politics but prices. The low crude price has hit Canada’s oil sands producers particularly hard. And their position near the top of the global cost curve means the period of multi-year low prices poses an existential threat to the industry.

Also in this section
Saudi Arabia's Vision 2030 looks blurry in Khashoggi aftermath
18 October 2018
International reaction to the disappearance of prominent Saudi journalist Jamal Khashoggi will lead, at very least, to delays to the kingdom’s ambitious reform programme
South Africa urgently seeking gas as energy transition stalls
18 October 2018
South Africa’s power sector plans envisage a big role for gas, but first the country needs to find the feedstock
Senegal and Guinea-Bissau deal faces domestic pressures
17 October 2018
Guinea-Bissau is eager to kick start exploration in acreage shared with oil-rich Senegal, but it’s slow going