Producers tout competitiveness at US$70 oil while warning that levies and bottlenecks pile up
Canadian business confidence is rising just as war‑driven energy shocks, pipeline uncertainty and carbon‑pricing fights collide with trade tensions and tariffs – a mix that hits inflation, growth and long‑term return assumptions.
Canadian business sentiment had started to improve before the Iran war, according to Reuters, which cited a Bank of Canada quarterly survey. The war began on February 28, prompting a follow‑up March survey of 20 firms the bank saw as directly affected.
In that smaller sample, “most businesses had revised up their expectations for input prices, mentioning specifically fuel, freight, fertilizers and exchange rates,” the Bank of Canada said.
Firms with fuel‑intensive operations such as agriculture, oil and gas, manufacturing and transportation already reported higher input costs, while others expected increases in coming months as suppliers passed on costs.
Bank of Canada Governor Tiff Macklem said last week that he was not concerned about the near‑term spike in inflation expectations due to the war.
The business outlook indicator, a metric of prospects under current economic conditions, rose to -0.36, the highest level since the fourth quarter of 2022, Reuters reported.
Money markets are betting on one 25‑basis‑point rate hike later this year.
The same survey cited by the same outlet showed that trade tensions between Canada and the US, previously fanned by tariffs, now weigh less heavily, and that future sales outlooks have returned to their historical average.
More firms than in recent quarters are focusing investments on productivity and capacity, while fewer are prioritizing routine maintenance, and nearly half anticipate hiring more staff over the next year.
On the household side, a separate consumer survey found that expectations for five‑year inflation fell to 3.02 percent from 3.09 percent in the fourth quarter.
In energy, executives and investors report stronger operating expectations but less faith in a quick federal green light for new capacity.
A recent ATB Cormark Capital Markets business sentiment survey cited by Global News showed confidence waning in a new oil pipeline being chosen for a speedy federal review within the next year.
The firm canvassed executives at 24 energy services companies, 22 exploration and production firms and 17 institutional investors between March 18 and April 1.
The survey found that 46 percent of respondents saw it as highly probable or probable that a new pipeline would be added to the list of projects deemed in the national interest under federal legislation passed last year, down from 52 percent in a survey conducted between August 28 and September 11 of last year.
That earlier poll came more than two months before Alberta and Ottawa announced a sweeping energy accord setting conditions for a new West Coast oil pipeline.
According to Global News, one executive at a publicly traded exploration and production company used a write‑in comment to say that “people are losing faith that the Liberal government will actually fix any of the structural problems they created in the last 10 years.”
Another executive at a small private energy services company called for “less talk and more action,” saying, “Not one project (in oil and gas) has come to fruition.”
Even so, 48 percent of respondents in the spring 2026 survey said they believed the Liberal government led by Prime Minister Mark Carney would actively work toward expanding the energy sector, up from 37 percent in the fall 2025 poll.
Global News reported that the survey period coincided with extreme volatility in commodity prices as conflict in the Middle East disrupted tanker traffic through the Strait of Hormuz, leaving flows “all but frozen.”
Crude prices climbed to around 70 percent above pre‑war levels before pulling back.
Eighty‑six percent of exploration and production respondents reported an improving business outlook over the next six months, 67 percent of energy services respondents expected activity to pick up, and 82 percent of buy‑side investor respondents said they had become more bullish toward energy over the past six months.
“A lot of these businesses have business models that work very, very well at crude prices in the US$70 to US$75 (per barrel) range,” Patrick O’Rourke of ATB Cormark said, according to Global News.
At the same time, industry leaders warn that the industrial carbon levy risks eroding competitiveness just as global demand for reliable supply strengthens.
Lisa Baiton, head of the Canadian Association of Petroleum Producers, said Canada is “still talking about an industrial carbon tax when no other producing and exporting nation does that to their producers,” speaking at the 2026 BMO CAPP Energy Symposium in Toronto, according to The Canadian Press.
She argued that war in the Middle East has “put an exclamation point” on CAPP’s view since Russia’s 2022 invasion that a country with some of the world’s largest oil and gas reserves has a responsibility to develop them and bolster global energy security.
Under a federal‑provincial memorandum of understanding, Alberta’s industrial carbon price is to eventually rise to $130 per tonne from $95, with the higher price tied to the economics of the large Pathways carbon capture project and a proposed West Coast pipeline.
Agreements on the carbon price details and Pathways remain unresolved two weeks past an April 1 deadline, and Premier Danielle Smith said talks on how quickly the price will rise are still underway.
Clean Prosperity analysis suggested oilsands producers should be able to recoup added carbon costs because their product would sell for more if a new pipeline enabled more exports to Asia, finding net profits at four facilities would rise by more than $3bn in the 15 years after a pipeline opening.
The Canadian Press reported that the Canadian Climate Institute estimated the higher carbon price would add roughly 50 cents a barrel, “about the cost of a Timbit.”
Cenovus Energy Inc. CEO Jon McKenzie called it a “fallacy” that a carbon levy will drive decarbonization, saying it “represents nothing more than an incremental cost that makes us less competitive with the rest of the world.”
Birchcliff Energy Ltd. CEO Chris Carlsen said his relatively new plants have already tackled the “low‑hanging fruit” on emissions and that carbon capture and storage is not feasible at the company’s scale, adding, “(The higher carbon price) just stacks on top of everything else.”
The Canadian Press reported that a McDaniel & Associates study for the Alberta government showed the province holds 177bn barrels of proven oil reserves, the world’s fourth‑largest total.
Mike Verney of McDaniel said Canada has a “largely undeveloped resource that’s highly commercial at prices north of US$70 WTI.”
Randy Ollenberger of BMO Capital Markets said Canada’s oil is “the most competitive in the world” at existing sites, but argued it loses that edge if approvals take five to 10 years or if tanker bans and missing pipelines prevent exports.
