New Highs From Geopolitical Lows: Canada’s Two-Year Energy Outlook—April 2022

The Conference Board of Canada, 14 pages, April 12, 2022
Issue Briefing
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This quarterly economic forecast presents the medium-term outlook for the Canadian economy. This release focuses on energy. For an overview of all major components of the economy, go to the Canadian Outlook main page.

Document Highlights

  • Following Russia’s invasion of Ukraine and the imposition of Western sanctions, the West Texas Intermediate (WTI) is expected to remain elevated this year, above the $90 a barrel mark.
  • The price discount between the WTI and Western Canadian Select (WCS) will remain favourable this year and next, thanks to the completed Enbridge’s Line 3 and the wrapping up of the Trans Mountain Pipeline expansions in 2023.
  • Canadian oil and natural gas exports will continue to enjoy strong demand from the United States. Cut-off imports from Venezuela and declining oil imports from Mexico will increase the U.S. reliance on Canadian crude.
  • While employment in the oil and gas sector has rebounded strongly since the onset of the pandemic, a tight labour market and the industry’s difficulties in attracting workers risk limiting growth over the medium term.
  • Producers have said they intend to keep focusing on their balance sheets this year. But higher-than-expected prices are likely to ramp up profits and investment (to some extent at least) over the next two years.
  • Canada’s oil and gas industry will continue to face growing pressure to drastically cut emissions from its operations. Investment in carbon capture and storage technologies are forecast to grow over the forecast period.

Table of Contents

Key Findings
Energy Snapshot
Prices Soaring Amid War in Ukraine
Strong U.S. Demand Will Boost Output
Tight Labour Market May Constrain Job Growth
Exports Benefiting From New Pipelines and High Prices
Investment Finally Returning

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