Much more recently there have been calls from other provinces for Saskatchewan and Alberta to “weaponize” the energy sector and use the threat of oil supplies against our American neighbours. At a high level, one would look at this and think that this could possibly make a modicum of sense as Canada has a significant amount of trade with the United States in terms of energy, specifically oil, and much of that trade is domiciled in the Midwest United States as well as in the Gulf Coast. More importantly, while the Gulf Coast has supply access from pipeline and water, allowing for global competition, the Midwest is more isolated and as such Canada has become its primary and preferred supplier. As such, one could quickly come to the conclusion that we could either a) reduce their supply or b) implement some sort of export tax and inflict some pain on America and force them back to the table.

However, there is one key consideration that people need to consider before walking down this path, and it requires that you take a look at the crude oil infrastructure map for Canada. In short, ALL of the crude oil that Alberta and Saskatchewan produce is either consumed in Alberta, Saskatchewan and British Columbia or it is EXPORTED primarily to the United States or to offshore markets.

As a result, were Canada to pursue a policy of weaponizing oil, as an example, the repercussions of such actions could be catastrophic in response. Should the United States choose to respond in a tit for tat nature, namely weaponize oil, they could either respond in kind to Ontario for all of its oil with a similar absolute dollar based tariff or threaten to cut off oil supplies to the province as a whole. Need I remind people that Line 5 is a critical supply point for Sarnia to access its crude oil supplies, and this has been a pipeline that has been fraught with challenges as the State of Michigan has previously threatened to shut it down.

What this latest disagreement does highlight is the need for Canada to accelerate the development of critical infrastructure so that Canada can pursue the diversification of its trade partners and reduce some of the dependency that we have on the United States. While the United States will always be the key trade partner for Canada, it behoves us to make sure that we diversify our trade portfolio and mitigate some of the sole source risk we currently face.

Having covered this space many years back, I thought it would be useful to revisit the economics of this project, especially in light of the recent announcement as it pertains to Churchill Falls. The Horgan dam is expected to cost almost $15mm/MW of generating capacity, in line with other "new" large scale hydro facilities in Canada.Using similar math as these projects, namely $15mm/MW (things are not getting cheaper), for the two projects (up to 2,500 MW increase in capacity additions at Churchill Falls and Gull Island hydro project with plans for an additional ~2,700 MW), would project out to $72 bn which is directionally in line with the figure discussed today at $70bn.

What was more curious to me was the pricing arrangement that Quebec gets. Newfoundland Hydro says Hydro-Quebec will pay 1.8 cents per kilowatt hour next year — up from the current 0.2 cents — and that price will go up 14 per cent per year, reaching 11.5 cents in 2041. Said another way, Hydro-Quebec will start paying $18/MWh and that price will escalate to $115/MWh by 2041.

Three words - SIGN ME UP

To put this into context, assuming that the Horgan Dam is financed 100% with 100 year non amortizing debt at 4% interest, has a cash cost (operating, maintenance etc.) of $10/MWh (typical ranges quoted at $10-$20/MWh), it has a useful life of 100 years and the Class 1 depreciation for hydro dams is 4%, the power price needed to recover the capital cost is almost $135/MWh. Churchill Falls has a much higher capacity factor of 73% (actual output vs. nameplate capacity) than the Horgan Dam of 53%, which would drive that number down. As a result, on a cash basis, the cost recovery point is closer to $100/MWh.

Perhaps there are carbon credits etc. which will skew the math lower, but from a pure math perspective, it sure looks like Quebec is getting one heck of a deal and someone is going to be left paying for some of this. If I am missing something, which I have been known to do, I look forward to being enlightened.

As we are all well aware, the Strait of Hormuz has become a place that we all have become acutely aware of as a result of the ongoing military actions that are taking place in the region, and the resultant shutdown of this passageway. Moreover, though many were aware of its importance in terms of the passage of oil and gas, many were not as aware of the passage of other critical items such as helium, fertilizers etc. As with most things, it is that last marginal sale which sets the price for all, and when you create a limit on that supply, prices rise, sometimes parabolically.

One beneficiary of this has been the energy sector, as the price of crude oil has seen upwards pressure, albeit perhaps not as high as one might expect considering the geopolitical realities that continue to unfold. LNG has also seen significant increases in pricing, both as a result of the impact of infrastructure being attacked as well as from the fact that many LNG contracts are priced off of oil based on S-curve contracting.

So, what has that meant in terms of Canadian oil and gas producers? We have seen a significant jump in terms of what is being paid out in terms of cash taxes and royalties. For the first 6 months of 2026 these top 4 producers have paid out $15.5 bn ($6.4 bn in taxes, $9.4 bn in royalties) versus $9.2 bn ($3.4 bn in taxes, $5.8 bn in royalties) over the same timeframe in 2025.

What is possibly more striking is when you compare H1 2026 to all of 2025. In 2025 these 4 companies paid out a total of $19 bn ($5.8 bn in taxes, $13.2 bn in royalties). Said another way, these four companies have already paid 10% more taxes in 2026 than they did in all of 2025, and have paid almost 70% of the royalties than they did all of last year.

All this to say, the Governments are sitting on a windfall in terms of revenue from the sector at a time when Canada is facing its share of economic challenges. It is good to see the Government of Canada adopt a more positive and constructive stance when it comes to the development of the oil and gas sector and the importance it represents not only to the Canadian economy but also to the global one as well. Now we just need to continue this momentum and get things done.

Total Energy Consumption

I will cut to the chase. Overall energy consumption continues to grow on a year over year basis, and this past year saw energy consumption grow by 1.4% or 8.1 EJ. The largest contributor to that growth in consumption came from the Asia Pacific region (+3.2 EJ), while the lowest growth came from the CIS (+0.2 EJ).

Perhaps just as interesting is the mix of that energy consumption, and this is something that I have been discussing for some time now. As mentioned previously, overall energy consumption grew by 1.4% or 8.1 EJ. The largest contributor to that growth came from renewables, which saw overall consumption grow by 3.2 EJ or 9.9%. However just as interesting was that ALL forms of energy consumption grew in 2025, and when you group all 3 hydrocarbon sources together (oil + natural gas + coal), they grew by 4.6 EJ and accounted for 56% of total growth.

Total CO2 Emissions

The other focal point is CO2 emissions. In 2025, we saw emissions continuing to grow, increasing by almost 331 million tonnes. All regions saw emissions increase. The notable increase in emissions came from the United States (+147 million tonnes, far outweighing any other country) with the largest decrease coming from Japan (-25 million tonnes).

Population

The last part of the discussion, for me, comes down to population. In 2025 we saw the globe continue to grow, increasing by almost 70 million people. The largest growth in population came from India (+14.0 million) while China saw a decrease in its population (-3.2 million) When you look at population growth and energy consumption, the trend is undeniable.

Similarly, when you look at overall emissions, the correlation with population is clear.

Below, I have included more detailed consumption information by fuel source for your review. In short, the energy question is a complicated one. For now, the one thing is clear. The world is seeking more of all sources of energy.

Oil

Another year, another record in terms of oil consumption. During the past year it is estimated that overall energy consumption from oil increased by 1.0% or 1.9 EJ (+1.3 million barrels per day) versus 2024. The biggest increase in consumption was driven by the Asia Pacific region (up 666,000 barrels per day) while Europe saw a very modest decline (-1,000 barrels per day)

Natural Gas

Similar to crude oil, natural gas consumption also was on the uptrend, increasing by 1.3% or 2.0 EJ (+6.4 Bcf/day) versus the prior year. The largest growth in natural gas consumption, and it may come as a surprise to some, was in Europe (+1.9 bcf/day) while in South and Central America consumption actually went slightly lower (-0.2 bcf/day).

Coal

Big bad coal. This is always an interesting datapoint to look at, simply because of all the negative headlines associated with the product. For 2025 overall consumption continued to inch higher, increasing by 0.4% or 0.7 EJ. The biggest increase was seen in the North America (the United States in particular), where consumption increased by 8.7% (+0.7 EJ) while the largest decrease was seen in Europe (-0.3 EJ)

Nuclear

As we keep hearing, we are in a nuclear renaissance, albeit any real changes that we see in terms of generation are likely a decade plus away for most parts of the world. That said, overall consumption did continue to trend higher, increasing by 0.3 EJ versus last year. The largest growth was seen in the Asia Pacific region (+0.3 EJ) while Europe saw a slight decline (-0.1 EJ).

Hydro

Not surprising (to me at least) was that hydro was relatively unchanged versus the prior year. Why am I not surprised? Most sources that are viable to have a dam, do. As such, overall hydro consumption inched higher by 0.1% or 0.02 EJ. The biggest increase was seen in the Asia Pacific region (+0.3 EJ) while Europe saw a similar decline in consumption (-0.3 EJ).

Renewables

Last, but definitely not least, is the renewables sector. It is here where you see the largest growth in terms of percentages, albeit you are starting from a lower base. Overall, the space saw consumption grow by 9.9% or 3.2 EJ. The largest growth was seen in the Asia Pacific (+2.2 EJ) while the CIS saw no real change versus the year prior.

As we all know, there has been a prolonged engagement between the United States, Israel and Iran, driven primarily by the belief that Iran should not be in possession of a nuclear weapon. For years we have been told that Iran had been secretly pursuing the enrichment of uranium and recently had been close to achieving the point where they could have enough material to create a bomb. As a result, it was decided that it was time to take action and a combat mission commenced.

Globally, one of the biggest impacts to come from this was the closure of the Strait of Hormuz. Through this little body of water that connects the Persian Gulf to the Gulf of Oman and ultimately leads to the Indian Ocean, the world awoke to the importance of this tiny little pinch point and what it means to us all. On a global basis (thanks AI…this would have taken me hours) traffic in the Strait has historically represents:

• ~20% to 25% of the world’s total maritime crude oil trade.

• ~20% of global liquefied natural gas (LNG) supplies, which largely originate from Qatar.

• ~33% of the world’s seaborne fertilizer trade.

• ~33% of global helium shipments.

• ~50% of the world’s seaborne sulfur shipments.

Flash forward to today. I can say without hesitation that this has been the oddest of outcomes for this commodity. At no other time would you have seen this degree of complacency despite the closure of 20-25% of the global oil supply. I am not a conspiracy theory guy but something doesn’t add up. Though crude prices have definitely increased, and we have seen higher regional spikes in supply constrained parts of the world, my personal opinion of how the global commodity traders have reacted to the magnitude of this recent interruption is somewhat of a nothingburger. For context, the Strait has effectively been closed since February 28th, and if we make some very generous assumptions related to redirection of supplies through pipelines and clandestine shipments through the Strait by turning off transponders, you still get to a point where in excess of 1 billion barrels of oil has been taken off the market. Does the chart below give you that impression?

Closer to home, the Strategic Petroleum Reserve in the United States has recently been in drawdown mode for the past 10 weeks, pulling out roughly 66 million barrels for sale. Over the past 5 weeks, the pace of withdrawals has picked up, and has averaged over 8 million barrels per week, and at the current pace would see the lowest level hit since 1982 by mid August of this year. I am not saying we need to get back to 600 mmb (this is likely too high), but the combination of re-injection and people coming back on the demand side should cause longer term pricing support for oil.

There are some people that say that demand has corrected for the shortfall in supply (and the correction in prices) but I don’t believe that 10+ mmbpd has just evaporated when the average demand for oil during COVID, when the globe shut down, was on average 91 mmbpd, or roughly a 10 mmbpd drop. People are not locked down and the world has not closed for business. Moreover, though prices have “spiked” I would also say that when you zoom out, I would hardly call current prices extraordinary, and when taken in context with inflation, they are normal / cheap.

Oil, however, remains the easy scapegoat for broader problems as it is something that people touch each day and are highly aware of near-term price changes as a result. I continue to believe that crude oil prices are not reflecting what is going on today, and that the longer-term implications for pricing are more supportive going forward as a result of depleted inventories, restocking requirements and the fact that oil remains a cornerstone requirement for daily living, despite what energy transition proponents may wish you to believe.

As everyone has heard by now, the Prime Minister of Canada, Mark Carney, and the Premier of Alberta, Danielle Smith, have signed what they have described as a “pivotal energy agreement” wherein Alberta has agreed to:

• Increase their base carbon price to $140 per tonne by 2040 (an improvement over the prior requirements of $170 per tonne by 2030). Included within this is tighter TIER (Technology Innovation and Emissions Reduction Regulation - Alberta’s industrial carbon pricing and emissions trading system) benchmark rates and enforcement of a minimum carbon price for credits in 2030.

• In order to have a pipeline to the west coast, the Pathways CCUS (carbon capture, utilization, and storage) pipeline must be built and in operation, with a target date of no later than 2035.

• Any pipeline to the west coast will have significant indigenous co-ownership and economic benefits, and will have financing provided by the AIOC (Alberta Indigenous Opportunities Corporation).

• Alberta will focus on other “nation building” projects that include methane reduction (75% below 2014 levels by 2035), have a plan by January 1, 2027 for competitive nuclear energy in the province by 2050, and the construction of significant electricity transmission interties with British Columbia and Saskatchewan to support clean power markets.

If anyone doesn’t read this “grand bargain”, as it is being presented to the Canadian public, as somewhat one-sided, then I pray for you that you are not in charge of negotiations for whomever you work for. In my opinion, this has just further codified what has already been a significant overreach from the Federal Government in terms of what was a constitutionally protected right, namely the exploration, development, conservation and management of non-renewable resources. By first imposing a national carbon policy, the government was able to insert itself into the conversations regarding such things as the expansion of oil sands programs. It was no longer just a conversation within the province of how the development was to be handled, but now had to include the component of “how does this factor into the Canadian carbon outlook.” As such, the final say in a program switched from the province and now has a federal partner at the table.

Fast forward to today. For months now we have been hearing how we need to diversify our trade patterns, moving away from the United States and towards more “friendly” jurisdictions. When it comes to energy, and oil specifically, this has been the number one source of our trade imbalance with the United States, and is something I explored in a prior post titled Looking at the Canada - US Trade Flow Picture. Remove oil from the picture and Canada suddenly becomes a small net importer from the United States. However, as we also know from nature, liquids flow in the path of least resistance. Enter Bridger Pipeline, a proposed pipeline from Alberta to Wyoming with an initial capacity of 550,000 barrels per day, and it will lean extensively on the Keystone XL right of way, thus leading to it being referred to as “Keystone Light.” The Alberta portion of this pipeline would be handled by South Bow (spun out of TC Energy) and the United States portion would be handled by Bridger Pipeline. This has already received a Presidential permit for the pipeline, though additional environmental and regulatory approvals are required to proceed, not to mention the completion of an open season with producers to commit potential volumes to the system. So it seems that, far from diversifying our trade, the sole source for the massive trade imbalances that seem to be a burr in the saddle of a particular United States President, we are potentially doubling down on this bet. Now I for one am not against trade with the United States. They have been a good partner and they have adjusted their energy infrastructure (refining) to take the Canadian heavy oil, something that they are now dependent on going forward (although the “democratization” of Venezuela may have some longer term impacts on these trade balances, depending on how that situation “stabilizes”.)

As I review the Grand Bargain as it is posited (or the Grand Ransom as it is also being referred to by some) I wonder where this all goes. First, let’s clarify something when it comes to “decarbonized oil.” Decarbonizing a barrel has to be one of the dumbest phrases I have heard, especially when it doesn’t actually have anything to do with the barrel itself. We are the ONLY nation in the top 10 oil producers who has a self imposed carbon tax. Moreover, producers will pay to “decarbonize” their production stream (really this is just “decarbonizing” the production method, not the barrel itself), and to the extent that they do that versus a benchmark, they generate a “carbon credit”, which has a value that is to be enforced by government. They then will take that CO2 and inject it into a pipeline, on which they will pay tolls, and inject that CO2 into a reservoir underground. And somehow this is meant to cost a de minimis amount to producers? When you deploy tens of billions of capital, the cost isn’t going to be small, but the math behind it may make it appear as such. One way or another people will be paying for this, while the rest of the world rides on unfettered.

British Columbia continues to partake in own goals as a result of the implementation of DRIPA and the obvious implications for oil infrastructure being built in that province, and Canada puts up its own set of hurdles under the guise of increasing transparency, all the while the world starves for affordable oil from stable jurisdictions. There is a generational opportunity in front of us and yet we seem to find a way to get in our own way. Nowhere in the world is anyone clamoring for “decarbonized” oil, rather they are trying to find cheaper, reliable and predictable supply to provide to their citizens. Canada has to have a real conversation about what it wants to be when it grows up and how it wants to pay for it. All we have right now is political cosplay where various pundits advocate on behalf of various aspirational narratives while ignoring the fact that the economic stage is on fire and in desperate need of a plan.

Oil Sands Alliance - Fact Sheets

One of the pickles, amongst many, that the market faces in terms of proceeding with the pipeline is the mismatch between where carbon trades in the market ($30’s) and where industrial carbon prices are (Alberta - $95/tonne cap, Canada $115/tonne in 2026), creating a disincentive to act. Moreover, you have underlying systems which govern large emitters like TIER in Alberta (Technology Innovation and Emissions Reduction Regulation) where you compare a facility’s emissions against a benchmark, and have a net adjustment.

Herein lies the rub. For a pipeline of that scale (CAD$20 bn...currently) and capacity (10-12 million tonnes per year), the toll for an economic model gets you to need something that approximates the current envisions carbon price in 2030 - namely CAD$170/tonne, for all volumes shipped. Depending on what source you look at, capture of CO2 ranges between CAD$100-200/tonne, and you layer on the cost of shipment, and you can see how this can become a very expensive project in short order. Yes, there are some tax benefits that could be included such as accelerated depreciation, but those are limited. Further, part of this grand bargain is tied to increasing market access in the future, which is far from certain.

Using an average CO2 emission of 57 kg/bbl for an oil sands barrel, a cost of capture of $150/tonne (midpoint), and a regulatory cap of $170/tonne, I can see a world where the gross cost (before any offsets) of CAD$18/bbl, which is material. It is also why the producers want certainty in terms of carbon pricing (for the capture models) as the current market shows huge risks. Layer on top of this the ongoing issues related to indigenous consent (including Beaver Lake Cree Nation and Frog Lake Cree Nation), capital risks (see TMX) and questions regarding the efficacy of a yet unproven “Major Projects Office" and I suspect this is why we are finding that the Pathways (OSA) negotiations are challenging.

Next, I wanted to look at unemployment rates to see where things were tracking. Though overall rates are tracking reasonably “flat” (somewhat upwards trend), what is of concern to me is the level of unemployment in the group that is 24 and younger. This is an important group to keep an eye on as they are the cadre that is looking for work experience / first career job. Though the contribution to the economic pie may be small, the importance to the future cannot be overstated.

Finally, context. When I zoomed out and looked at data from a longer term perspective, namely since 2000, I wanted to see how the data looked on a running 12 month basis. Specifically, I wanted to look at employment levels and how they changed on a running 12 month basis. This is where I get more concerned. If you look at Canada’s job creation data in this context, this is the worst 12 months of job creation outside of the global financial crisis, the oil collapse / economic slowdown, and COVID. The direction that the country is headed is a problematic one and is something that the Government of Canada needs to figure out quickly.

When people discuss the energy mix of the globe, and energy transition specifically, they note how renewables have grown their share of the market from ~1% in 2000 to 6% in 2024.

However, what is missing from that chart is the true perspective of the overall global energy mix. If you look at it in terms of absolute energy consumption, it is notable that ALL sources of energy have been growing whether that be the most recent year reported (2024) or since 2000.

We need reasonable and balanced discussions, not rhetoric, from both sides of the aisle. There is no way that you will see 513 EJ (out of a total of 592 EJ) replaced by other sorts of energy, never mind the persistent growth in consumption, in any reasonable timeline. And don’t forget the concept of energy density, which is why hydrocarbons enjoy the position that they have.

As a Canadian I have been quite vocal about the opportunity that we are sitting on, and is the envy of the rest of the world. At times like this it truly highlights the opportunity that is before us as the world is forced to reassess the security of supplies that it relies upon. Will this be the time that Canada finally gets in line, together, to advance businesses that are in all of our best interests, or will we continue to cut off our collectives noses to spite our faces.

Obviously the Government had a sense that something bad was on the horizon and decided to get in front of it. For the past few months, food inflation data had been on an upward trend (November 4.2%, December 6.2%) from what was already an elevated baseline over the prior six months of 3.3%. Sure enough, when Statistics Canada rolled out its January inflation data on February 17th, the statisticians said “if you thought the past two months were bad, hold my beer.” For January 2026, the annualized food inflation number reached 7.3%.

Now this is a whole lot of numbers without a lot of context. That’s what I hope to provide to you as I believe understanding data is key to understanding the issue at hand. In the chart below I have outlined the monthly annualized food inflation data for Canada since 2010. I felt this was a reasonable timeline (16 years) that would capture various economic cycles as well as the COVID pandemic.

As you can see, the most recent data is a troubling datapoint. Outside of COVID (and the short period thereafter, where inflation rates trended lower, thereby “benefiting” from the lower inflation versus that which was experienced during peak COVID), this latest datapoint is anomalous, to be kind. What is the cure to that which ails us? Honestly, I am at a bit of a loss to answer that. But I do know that the layers upon layers of institutional bureaucracy, and the fees and taxes that are layered upon the various touch points in our food supply system are such that they can only add to the costs of feeding our citizens.

*** A reader flagged to me that part of the “bump” was a result of the depressed numbers that were a result of the GST holiday the Government put in place in late 2024/early 2025. As a result, the data would be “inflated” versus normal. That said, the trend has been higher for longer, and the tone of the economy continues to remain muted. I will continue to watch this space with interest ***

If we don’t get a handle on this soon, we likely are heading into what could be a very complicated issue. Handing out GST rebates is not a cure, it is a symptom of the problem at hand.

According to the interweb, Generative AI is “artificial intelligence designed to produce output, especially text or images, normally requiring human intelligence, typically by applying machine learning techniques to large collections of data.” Where does generative AI really come to bear? In my opinion, it is on anything that has a rules-based architecture. As such, accounting, legal, engineering all seem to be areas that will be focal points in the early stages of its roll out. Many say that this technology is enabling, bringing greater productivity out of people, freeing them up from the mundane tasks and allowing them to pursue more valuable parts of their jobs. But for me, reading between the lines, that is all about one word - efficiency. When you hear that, the first thing I think of is layoffs, not job growth. When I have mentioned such things with people I know, I often hear the retort “we heard the same thing about buggy whip manufacturers during the advent of the automobile”, but to that I reply that automobiles were expansionary in terms of technology and employed more people as a result, while the primary focus of Generative AI seems to be driven by efficiency, and the ability to replace people with more efficient algorithms.

Before people start to exclaim that I am a luddite, let me say that I love technology. I use it every day, and I see where the applications can help in everyday life. Whether it is crafting the framework of a letter to my local politician or looking up data to support a piece I am writing, I have no doubt of the power and efficiency of such technologies, and I am merely scrapping the surface in terms of its applications. However, when I look at the youth of today, many of the starting careers that they wish to pursue are the exact target applications that Generative AI will be going after. Of course, many others will also say that the future will be in plumbing, electricians and carpenters, but there are two things I would say to that. First, someone has to have a good job to be able to employ said trades (they cannot just engage in the Nvidia /Open AI circular economy that we all have been witness to), and second, have you used YouTube lately? As a small example, I recently had a plumbing issue with my toilet, and was frustrated at the prospect of having to pay $500 to fix it. So I jumped on to YouTube, searched a few items and found how to do it myself. After a short car trip, a $50 part, and 30 minutes of work I was done. Not only did I fix it myself, I felt really good about it and walked about the house acting like I had somehow found the cure to cancer. All this to say, manual trades will also be impacted. We are in the early innings, and where there is perceived opportunity, there will be new entrants. Moreover, look at how automotive manufacturing has evolved; now apply this to construction. It is already happening.

So, why the mentioning of the French Revolution and Marie Antoinette’s famous quote? If we as a society do not get this right, there is a very real risk both societal and economically. The French Revolution was a confluence of factors, but key amongst them were the views of societal inequity (the gap between the haves and the have nots), economic crisis (ballooning debts) and growing unemployment. Most importantly, in my opinion, is that those who had little hope and opportunity recognized that there were more of them than those who held all the cards. Now I am not forecasting a period of great social unrest and uprising, but I am saying that the pace of application in terms of Generative AI and the matching with job opportunities of our youth is something that we must keep a close eye on, not only for today but also for the future. The implications in terms of economics, demographics and a whole host of other issues is something that people with far bigger brains that I will need to get a grasp on, at the risk of having more serious longer term societal issues if we get it wrong.

According to Elections Canada, “The election or campaign period must be at least 37 days and no more than 51 days, and election day must fall on a Monday, with certain limited exceptions.” As such, counting back from July 1st as the magic date, the latest this would imply the an election period could run would be between May 11th and May 25th (my birthday, yeah!)…but if called, it will be earlier.

With what I believe are 3 upcoming by-elections that Prime Minister Carney has to call (Scarborough Southwest, University-Rosedale and Edmonton Riverbend), a majority government within grasp (1 seat, depending on how these byelections go), and polling that is just too encouraging, the temptation may be just too great. Yes, I know that Mr. Carney said he won’t call one, but politicians never fib, now do they?

Perhaps we will hear a phrase such as this in the coming months. “We didn’t want to call an election but the Conservatives forced us to. Their lack of willingness to cooperate on key files as we head into the CUSMA negotiations, and our need to come into these meetings strong and united as a nation, drove us to this decision. We hope that Canada will send us the majority mandate that we need to send a strong message to the world that Canada is back.”

With rhetoric like this, the waters are being chummed and the electorate is thus being primed. Time will tell and hopefully I am wrong.

These likely are words that are going to elicit views that I am unhinged, or perhaps delusional, and that the current actions that we see going on in the United States are but a mere anomaly, and in the words of the ancient proverb “this too shall pass.” Maybe? But I sure wouldn’t take that bet.

The fact of the matter is this. Donald Trump is doing what he views as best for his economy, the rest of the world be damned. Some of this I will actually give kudos for, like his forcing the hands of NATO countries (ahem…particularly Canada) to appropriately fund their commitments to a level that approaches reasonableness. Others, I shake my head at, such as the reshoring of manufacturing and the prioritization of a national critical minerals strategy (as we all know in business, there are reasons why one will outsource parts of the business to others, driven in large part by efficiency and cost drivers). Regardless, these actions are ongoing, and over the next three years are unlikely to reverse course. As a result of this, we have seen numerous companies announce their refocusing of operations towards the United States, we have seen unprecedented direct investment in corporations by the United States government, and we have seen many national leaders come to Washington to kiss the ring of Donald Trump as they acquiesce.

So, why do I say that this “new world order” is here to stay? Easy. Let’s do a thought exercise for a moment. Let’s assume that the Democrats actually find a way to get their house in order and find a way to win the next election. I for one remain quite dubious about this. Despite all the things we see in the news, this goes under the baseline assumption that the majority of Americans are unhappy with where the state of things are at right now. One can point to current polling, where Trump is definitely seeing a decline in popularity, but this is also a truly American phenomena as we head into the mid-term electiosn and a resetting of the balance of power often occurs (this why so many focus on what a President does in their first 100 days in office as it is the time when they truly have the “freedoms” to pursue a mandate).

So, assuming that in roughly three years we have a change in government in the United States, do you really think that they are going to repeal some of the major policies that Donald Trump has put into place? Do you believe that they are going to tell Americans that it is fine for companies to shutter their good paying manufacturing jobs that have recently restarted. Is America going to take its eye off the ball when it comes to onshoring chip manufacturing and critical mining strategies? I personally think that would be a brutally difficult sale to the people of America, and frankly is a battle that I don’t think the Democrats are going to be willing to fight.

So, for Canada, this is that moment where we actually need to figure out what we want to be when we grow up. We need to focus on those areas where we truly enjoy a natural competitive advantage, not a manufactured (subsidized) one, and build on that. We need to have a national conversation that moves beyond politics and focuses on the facts, because in a world like today, things move quickly and thus we need to have commitment and resolve to achieve the things we need to, or we will continue to slide backwards. As I have said before, though I may not have voted for Prime Minister Carney, he is my Prime Minister and I hope he is successful, as success for him begets success for Canada, and we really do need to start getting some wins.

Today was one such instance, where I happened to come across a posting by Jeremy Patzer, the Member of Parliament for Swift Current - Grasslands - Kindersley. In this post, Mr. Patzer highlighted some takeaways from the Stellantis committee meeting, in which the representative from Stellantis was a no show due to a convenient “technology issue.” The purpose of the meeting is a result of the company deciding to move the production of the Jeep Compass to the United States, after having gotten subsidies from governments this side of the border. For those who don’t remember, the Government of Canada and the Province of Ontario agreed to provide “up to $15 billion in performance-based incentives for a new battery plant in Windsor, Ont., to be operated by the Stellantis-LG joint venture, NextStar Energy.” Now, though I could dig into the whole corporate welfare rabbit hole and the need to provide $15 billion in a combination of cash support (roughly $500mm subsidized by the Strategic Innovation Fund on facility construction) and billions in future tax credits, all for 2,500 jobs ($6mm pp) and the prospect of being a bold new economy; I will leave that for others to unpeel.

What I will draw your attention to is around 1:10 into the post by Mr. Patzer which I have included below.

Stellantis - Committee Highlights

To summarize, the takeaway was that the legal team for a $15 billion contract did not review the document in its entirety, just certain clauses that were deviating from what standard clauses would normally contain. Now I am not a lawyer, but I do know that when you change wording in one clause, it can have a cascading effect in terms of the interpretation of other clauses, and can therefore impact the intentions of the contract as a whole. Did that happen? I don’t know. But I do know that if you don’t review the contract in its entirety, you open yourself to risk.

As someone who has had to deal with business contracts in the past, I knew that when dealing with any contract of significance that I should get a quick review done to make sure that nothing was out of the ordinary, and this was able to be done in a quick an efficient manner. Why did I do this? First, in the most basic of terms, to cover my ass. Second, to ensure that I was not exposing our shareholders or employees to any unforeseen risks. Frankly, it is just good business practice and, when given appropriate guidance, can be quite cost effective.

The parallel I will draw you to is this. Canadian Natural Resources, Canada’s largest oil and gas producer, has a total capital budget of just over $6 billion. Now I know for a fact that Murray Edwards is someone who sweats the details. He sits in on project proposals (and follows very closely on the execution of the project, and holds people accountable), he looks into operational results, and he fusses over every dollar that the company spends, because he a) is a material shareholder of the company, b) he is the head of the Board of Directors as Executive Chairman, and c) is driven to achieve excellence. As a result, he has taken a company that was a mere blip on the landscape a mere few decades ago, to being the dominant company in the WCSB today. How? By never taking his eyes off the target. And, by the way, this is not the only company that he is involved with.

Meanwhile in Ottawa it feels like companies show up to their version of Oprah, where they sit in the audience in eager anticipation of getting their handout.

This latest revelation follows on another gaff when the CRA made an automatic $4.99 million refund as it was under the $5 million threshold for review. It seems that nobody that governs this country seems to want to actually take responsibility for anything these days. It likely comes down to the fact that there is no real accountability as there as it isn’t really their money to begin with.

I would really love to see the media hold ALL politicians responsible for their actions, rather than just normalizing this sort of behaviour. It is shocking to me that we have migrated from a point where a $15 glass of orange juice in London (which, by the way, was not a particularly high bar to cross for those that have actually been in London) was a political scandal, to a point where tens of millions of taxpayers dollar can go missing and it elicits a mere shrug. If I did a fraction of the mismanagement that I see coming from the hallowed halls of Ottawa while I worked in the private sector I a) would have been fired, b) likely been charged, criminally and c) probably would have been sued. It's time that Canadians demanded better, and remember that it is the people who ultimately hold the power, not the politicians.

Changes are afoot—reportedly, carve-outs and tweaks to federal regulations that would help attract investment in a new oil pipeline from Alberta. But any private proponent to come out of this deal will presumably be handpicked to advance through the narrow Bill C-5 window, aided by one-off fixes and exemptions.

That approach can only move us so far. It doesn’t address the underlying problem.

Anyone in the investment world will tell you a patchwork of adjustments is nowhere near enough to unlock the large-scale energy investment this country needs. And from that investor’s perspective, the horizon stretches far beyond a single political cycle. Even if this government promises clarity today in the much-anticipated memorandum of understanding (MOU), who knows whether it will be around by the time any major proposal actually moves forward.

With all of the talk of “nation-building” projects, I have often been asked what my thoughts are about what we must see from the federal government.

The energy sector is the file the feds have to get right. It is by far the largest component of Canadian exports, with oil accounting for $147 billion in 2024 (20 percent of all exports), and energy as a whole accounting for $227 billion of exports (30 percent of all exports).

Furthermore, we are home to some of the largest resource reserves in the world, including oil (third-largest in proven reserves) and natural gas (ninth-largest). Canada needs to wholeheartedly embrace that. Natural resource exceptionalism is exactly what Canada is, and we should be proud of it.

One of the most important factors that drives investment is commodity prices. But that is set by market forces.

Beyond that, I have always said that the two most important things one considers before looking at a project are the rule of law and regulatory certainty.

The Liberal government has been obtuse when it comes to whether it will continue the West Coast tanker ban (Bill C-48) or lift it to make way for a pipeline. But nobody will propose a pipeline without the regulatory and legal certainty that they will not be seriously hindered should they propose to build one.

Meanwhile, the proposed emissions cap is something that sets an incredibly negative tone, a sentiment that is the most influential factor in ensuring funds flow. Finally, the Impact Assessment Act, often referred to as the “no more pipelines bill” (Bill C-69), has started to blur the lines between provincial and federal authority.

All three are supposedly on the table for tweaks or carve-outs. But that may not be enough.

It is interesting that Norway—a country that built its wealth on oil and natural gas—has adopted the mantra that as long as oil is a part of the global economy, it will be the last producer standing. It does so while marrying conventional energy with lower-carbon standards. We should be more like Norway.

Rather than constantly speaking down to the sector, the Canadian government should embrace the wealth that this represents and adopt a similar narrative.

The sector isn’t looking for handouts. Rather, it is looking for certainty, and a government proud of the work that they do and is willing to say so to Canada and the rest of the world. Foreign direct investment outflows have been a huge issue for Canada, and one of the bigger drags on our economy.

Almost all of the major project announcements Prime Minister Mark Carney has made to date have been about existing projects, often decades in the making, which are not really “additive” to the economy and are reflective of the regulatory overburden that industry faces en masse.

I have always said governments are about setting the rules of the game, while it is up to businesses to decide whether they wish to participate or to pick up the ball and look elsewhere.

Capital is mobile and will pursue the best risk-adjusted returns it can find. But the flow of capital from our country proves that Canada is viewed as just too risky for investors.

The government’s job is not to try to pick winners and losers. History has shown that governments are horrible at that. Rather, it should create a risk-appropriate environment with stable and capital-attractive rules in place, and then get out of the way and see where the chips fall.

Link to The Hub article: Large-scale energy investments remain a pipe dream

Iqaluit hydroelectric project proponent makes pitch for ‘modern Arctic capital’

So, a 15 MW hydroelectric facility in Iqaluit for $500mm (on a 2017 estimate - this makes Site C look like a bargain) constitutes big, bold thinking? Currently the region uses diesel for its power generation needs, and they consume roughly 15 million litres of diesel per year doing so. Now to be clear, burning diesel up north is a) expensive as all of that has to be imported from far away and b) it is quite polluting as the burning of diesel is not the cleanest of methods.

In terms of economics, as my wife would say “of course you have a spreadsheet for this!” Yup, I do. Assuming no cost inflation since 2017, and using a 90/10 debt equity split and a 100 year amortizing debt model (i.e. perpetually financed) you would need to sell the power at in excess of $300/MWh and would generate a paltry equity return of 3-4%. Now, if that is something that investors want to throw their money behind, have at it! Me? Considering that this project has been on the books since the early 2000’s, doesn’t have an updated capital budget since 2017, and is located in the most remote part of Canada where a can of Coke is almost $3, I will take a pass on this opportunity. However for the Government of Canada, perhaps this is just too good to pass up.

Anything but conventional energy appears to be the thinking out of the PMO these days. That despite the fact that conventional energy is the number one export from Canada by a country mile. Don’t believe me and my pesky charts? How about one straight from the Government of Canada based on 2024 data.

Let’s face it - Mr. Carney does not want to take on provincial politics (BC) and indigenous protests. As a leader, I expect more from him. This job isn’t meant to be an easy layup. As for the Iqaluit project, this should be in the everyday “just get it f@cking done” pile, not the “major, nation building projects” pile. The fact that this project is still where it is at reflects all of the massive amounts of bureaucracy and red tape that exists to make sure things don’t get done efficiently in this country. As I keep saying, capital is mobile and will pursue the best risk adjusted returns it can find. Frankly, Canada is just viewed as being too risky for many investors as evidenced by the flight of capital from Canada in the FDI numbers.

Think bigger, Canada. Based on the fact that our number one expense outside of elderly benefits payments, and surpassing the Canada Health Transfer, is interest on our debt, causing a reframing of the debt challenges we face from tackling the balance outstanding to measuring it as a % of our (lackluster) GDP results, in the parlance of NASA, in a “Uh, Ottawa, we’ve got a problem” moment coming.

As usual, there is a ton of word salad phrases that are sprinkled throughout the document, of which people will try to use their decoder rings to interpret what exactly the government is saying. One such example of this is the oil and gas emissions cap. I have seen many saying the death of this is near, while I read it and said, in the spirit of Monty Python “I’m not dead yet!” There seems to be a lot of “potential” in that statement and not a lot of absolutes.

However, this one chart says it all for me. If you look at what the budgetary planning process has looked like, the truth is it has been horrific. Add up the 6 years outlined and the current deficits are now forecast at $358 billion, up from $203 billion previously. You will have to excuse me if I don’t immediately trust the new numbers.

Using a 3.5% debt cost, the expansion of the deficit (let alone the absolute increase in the debt) adds an additional $5.4 billion in debt service costs per year by 2029-2030. Moreover, if you look at the total projected debt charges, per their budget, we hit $76.1 billion per year in 2029-2030.

At the current population of Canada that is $1,843 for every man, woman and child in this country. Remember, as I have highlighted before, roughly 2/3 of taxpayers in Canada pay ~10% of the tax bill, and that averages ~$1,000 per tax payer. Now to those who say “But Will, individuals only account for ~55% of total federal revenues” I say, sure, and roughly 80% of Canadians file a tax return, so if I calculated the amount of interest owing by tax paying individual, pro-rated, I would get $76.1 bn * 0.55 / 33.2 mm = $1,260 per taxpayer. The math is still broken. Do you see why I get increasingly concerned?

Sooner or later someone is going to actually have to act with prudence.

I do believe that the Government of Canada has taken a good first step in terms of slowing immigration, as there must be matches between the economic output and those who both contribute to and rely upon such. However, the next step, namely growing the economy, will be a much more difficult task in this current environment and is much longer term in terms of outcomes in my opinion. Thus, my concerns about deficits rest with the fact that spending, without having a reasonable chance of getting to a sustainable spending pattern, is troubling.

We need to attract investment now, and we need to make sure that we have a path towards sustainable budgets going forward. Quick fixes like prioritizing the simplification of the tax code and reducing bureaucratic red tape should be at the top of the list. They create the environment for investment. The most important messages I would pass on to any politician is that you should be prioritizing people over politics, and please remember that it is my money that you are spending, not yours.

The Canada Revenue Agency is another such institution. Per their website, the CRA “Administers tax, benefits, and related programs for the Government of Canada and for most provinces and territories.” Said another way, as a public service, they work on collecting the taxes that are owed, and distribute funding related to several federal programs. It is a critical role within the Federal Government as it provides much of the primary funding needed to run much of what we have in this country.

So image my surprise when I saw the article in the CBC where it said “Leaked files reveal CRA refunded millions by mistake.” Immediately I clicked on the link and was appropriately horrified when I read the line “the $4.99-million transaction went through automatically, as it fell just short of a $5-million threshold for manual review in this type of tax refund.” The first question that popped into my mind was how was such a high limit established for manual review? As someone who has worked in finance for essentially all of my adult life, never have I experienced this level of discretion when it comes to capital. In the oil and gas sector, Authorizations for Expenditure or AFE’s are a way of life, where all expenses needed to go for approval from a supervisor / management over a certain threshold, and those thresholds are often very low, often well below $100,000. Why so low? The primary reason is risk management; you don’t get surprised by blowing up a capital plan. Furthermore, you can identify trends and challenges, early, and start to work on contingencies.

As I always keep saying to politicians who will listen, remember that it is our money that you are spending and not yours. The fact that the CRA had such a high threshold is just pure laziness. If they had treated that refund as coming out of their pockets and not just some administrative exercise, I guarantee the focus would be different. Considering almost all of the data that the CRA has is stored electronically, this seems like the perfect place for AI to be implemented. At a bare minimum, the screen should be in place, and then files could be flagged for review based on perceived inconsistencies. Moreover, the thresholds should be dropped, materially, to limit the potential damage from such mistakes. If we in the energy sector can operate within such tight thresholds, as we worked to preserve shareholder capital, then there is no reason that the CRA cannot do similar actions to preserve taxpayers contributions.

A key thing to remember is that the Mayor represents only one vote, so they must try to find a way to build consensus or run the risk of being a lame duck leader. 

So, what does the landscape look like now? 

• 10 new councilors, 4 incumbents elected

8 councilors are independent (no party affiliation), 3 are with Communities First, and 3 are with the Calgary Party.

So, I suspect you are going to see a number of things that are similar to where they were before, namely split. We will see, but that is my early prediction, versus my hope going in that perhaps we would see a bit more resolve on the part of Calgarians to fix what many feel is broken. But, when only ~50% turn out to vote, I guess that is to be expected.

The other thing that really should be looked at is how many candidates run. As predicted by me (and many others), Jeff Davison once again just proved up his role as vote splitter. Time and again his conservative policies, while thoughtful, were obviously not widely embraced. Similarly, Brian Thieissen, who organized with the former “Team Nenshi” apparatus, also registered a swing and a miss. Yes, having people stand up for leadership is something we should embrace and applaud. Whenever I am asked why I don’t put my name forward I give an easy answer - I love my wife and I love my children. Until politics stops being a blood sport, I shall remain an observer. However, having too many with too similar a message truly dilutes the message and can lead to less than desirable outcomes. 

The race really was a two horse race between Jeromy Farkas and Sonya Sharp. The incumbent, Jyoti Gondek, clearly had touched many a nerve in her four years as leader, continually drifting from her political lane and demonstrating that she led what ended up being a toothless Board overseeing the City of Calgary finances. No was a word that was never to be uttered, unless it was to fight against restraint. To lose to not one, but two campaigns, really is an achievement, especially with all the inherent advantages an incumbent has. 

Back in Jeromy’s first campaign I was a vocal supporter, and even did a bit of volunteer work, though I won’t overstate my importance - it was small. But after having lost in his last campaign for Mayor, he took a walkabout and gathered his thoughts. His reintroduction to the political landscape was a surprised to nobody; it was a matter of when, not if. But his return also brought with it some skepticism. Gone was the hard edged fiscal conservative who was fighting the system. In was the more curated Jeromy, one who was softened in approach and style. So now we will see. As the self branded “pathfinder” he will have to show he is a capable leader and find that unifying message. Many in Calgary are beyond frustrated with Government, and that extends well beyond the local frame of reference. This is a city that embraces challenge and emboldens entrepreneurs. We understand risk, and we are deeply knowledgeable on volatility. But we also don’t suffer fools gladly. Jeromy has an opportunity to create real change and show the rest of Canada how it can be done. But the leash is a short one, and time is of the essence.

So, to Jeromy I wish him good luck. The election is behind us and it is now time to move forward with good leadership. To Sonya Sharp, I say thank you. I hope that you land softly and that Calgarians remember the good fight you put forward. Without someone willing to stand up and be counted, there is no good race.