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He and others have made the argument that stronger environmental and safety regulations in Canada will drive investors towards energy projects here.
Phil Skolnick, managing director of equity research for Eight Capital, who covers the Canadian energy markets, said prices are rising amid a complicated backdrop.
In the U.S., President-elect Joe Biden is set to take office later this month, and his administration is expected to usher in a new era of regulations and incentives to boost renewable energy and electric vehicles. But that could also hurt U.S. supply of oil, which is already expected to shrink.
Meanwhile, he said political turmoil in Venezuela has hurt that country’s heavy oil production, which competes for market share with the Canadian oilsands.
We are finding that a lot of things we thought were essential travel, aren’t essential anymore
Phil Skolnick, managing director of equity research, Eight Capital
While Skolnick is recommending Canadian oil companies as an investment opportunity as vaccines help reinvigorate demand, he acknowledged that the pandemic has also raised questions about demand.
“We are finding that a lot of things we thought were essential travel, aren’t essential anymore,” said Skolnick. “We’re finding out a lot can be done on Zoom.”
The environment has given rise to new restraint and caution among Canadian energy companies. In the past, rising oil prices would have been a cue to increase upstream investment and look for growth, Skolnick said. Instead, most companies are focused on returning capital to investors through share buybacks or dividends.
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