Canadian Prime Minister Justin Trudeau won reelection on October 21, but he lost his majority in parliament, which forces him to make a coalition with another party.
Canada’s oil industry was keen to weaken Trudeau, but even as the Prime Minister lost seats, the election result could make an even bigger challenge for an industry struggling with pipeline bottlenecks, investor doubt and growing scrutiny over climate change.
For the oil industry, if there has been one overarching problem dominating the talk in both Alberta and Ottawa, it has been the incapability to build a long-distance pipeline. Several proposed schemes were killed off in recent years – such as the Northern Gateway and Energy East pipelines – and several more have been in legal limbo for even longer. In the case of Keystone XL, the plan has been on the drawing board for a lot of years and counting.
The bottleneck forced Alberta to say mandatory production cuts in order to save the industry from problems. Prices for Western Canada Select fell below $20 per barrel a year ago as increasing production ran into a wall of unavailable pipeline capacity.
Some in the oil industry hold the federal government responsible for its woes, with particular ire focused at the federal carbon tax. But Prime Minister Justin Trudeau, even as he has talked eloquently on the urgency of climate change, effectively nationalized the Trans Mountain Expansion in 2018, a pipeline project that would have otherwise died after Kinder Morgan signaled its wishes to discard it. The Canadian government became a direct owner in the project and is looking to force it through despite opposition from First Nations, environmental groups, and the provincial government in British Columbia.