Predicting the Unpredictable: Energy and Geopolitics in 2026
Predicting the Unpredictable: Energy and Geopolitics in 2026
This week, Peter and Jackie kick off the year with their 2026 outlook. They begin by asking a fundamental question: How relevant are predictions in an increasingly unpredictable world?
While acknowledging the limits of forecasting, they outline key themes and directional expectations for 2026—and remind leaders that, in times like these, scenario development, continuous monitoring, and course correction are far more valuable than rigid forecasts.
The discussion focuses on four major areas shaping the outlook for Canadian energy, spanning oil and gas and clean energy technologies:
- Global geopolitics and energy markets: examining how unfolding events in Venezuela and Iran—and ongoing tensions involving the United States, China, Russia, and Ukraine—could influence global energy markets.
- Oil and gas fundamentals: assessing the direction of oil prices and North American natural gas in 2026.
- Technology and disruption: exploring whether electric vehicles will regain momentum, how rapidly solar deployment will continue to scale, and whether projections for AI-driven energy demand will keep accelerating.
- Canada’s unique circumstances: politics, policy, and infrastructure—from climate policy and the Ottawa–Alberta memorandum of understanding (MOU) on an oil pipeline, to elections (and potential elections) to watch.
While predicting the future may be difficult, one thing Jackie and Peter are confident about is that the ARC Energy Ideas podcast will be here throughout the year—helping you navigate what is shaping up to be a consequential and eventful year for energy markets and geopolitics.
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Episode 309 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian, and welcome back. Well, we have so much to talk about, so much upheaval in the world. But Jackie, let’s start out with some good news. There’s a lot of snow in the mountains.
Jackie Forrest:
Yeah, the Rocky Mountains this year are having an amazing snowfall. These might be a bit dated because there keeps being new snow every day. I think I did this late last week, but the cumulative snowfall at Sunshine is 477 centimeters. Louise is 538 centimeters. These numbers are like more snow than we had all of last season, and we’re only in the start of January. And it’s exciting. I spent a lot of the last two weeks of the holidays skiing. And every gondola I go up or chairlift, Americans are up here. They’re coming here because actually the snowfall in a lot of the rest of the US has been not good at all.
Peter Tertzakian:
Yeah, I think Blackcomb was voted the number one ski destination this year or something because…
Jackie Forrest:
Yeah. Well, and we haven’t had snowfall like this in a very long time. I think I’ve never seen places like Sunshine with this much snow. So, maybe it’s happened in history, but not when I was skiing. So, yeah, it’s finally the snow gods have arrived for 2026. So, let’s hope it keeps coming and we continue to get all the snowfall the way through the season.
Peter Tertzakian:
It’s good for the watershed, I presume, for the spring and the summer. Although, I have to say that, I mean, the snow levels in Calgary, which was only an hour to the east for those of you that are not living here, it’s pretty thin.
Jackie Forrest:
Yes, yeah, it is. Well, we’ve had all that warming weather, right? So, it’s also been mild, which is actually another great thing. We haven’t had those really cold days for skiing as well. So…
Peter Tertzakian:
Yeah. Right. All right.
Jackie Forrest:
Yeah. So, there’s the good news now onto all the rest of the news.
Peter Tertzakian:
Yeah, no, onto all the… Well, it’s that time of year. In fact, almost, while the new year seems like a distant memory and we’re only two weeks in, but so much has happened and so much there to say is yet to happen and so much is unpredictable that, well, let’s try and be predictable. For 2026, I highlight the issues of what to watch for us and maybe make a few bold predictions. And then, we’ll look at the report card, the scorecard at the end of the year and see how we did.
Jackie Forrest:
Right. And disclaimer to all our listeners, as you know, if you’ve been following, we’re generally like, I think we got 60% right last year and about that the previous year. So, hey, don’t make any investments based on these predictions because this year feels more… They always feel unpredictable. But this year certainly feels a sense of uneasiness about what the future holds.
Peter Tertzakian:
Yeah. I think unpredictability will continue to be a theme this year. I mean, it’s just unpredictability is not volatility as we discussed in podcasts last year. Volatility implies some statistical reversion to an average to a mean and that the tails are tail events that don’t happen very often. But when you think about unpredictability and all the announcements that are coming out or events that are happening around the world, unpredictability follows no statistical pattern. It’s basically unpredictable.
And so, there has to be a different mindset in the way that we approach these things. And I think that maybe my first prediction is that the notion of strategizing for businesses and other types of institutional decision making is going to have to embrace unpredictability over the notion of volatility and reversion to a means. And I mean, that’s going to be very difficult to hold me to account for at the end of the year, but I think it’s something we’re going to have to discuss more over the course of the year.
Jackie Forrest:
Right. Well, and I used to work as a consultant for IHS CERA and they really believed in the scenarios where you don’t plan for one future, you plan for a wide range of futures. And then, when events happen that take you down one path or the other, you’re more prepared for. And I think scenario planning has got to be a big part of how companies think about 2027.
Peter Tertzakian:
Yeah, absolutely. I mean, if you think about spreadsheets, and for those of you that prepare spreadsheets, usually there’s a base case scenario, which is your most probable scenario, and then there’s a high case and low case. And in the mindset is that the high and the low case are interesting, but not necessarily likely. Well, now there is no such thing as a base case, in my opinion. There’s just a whole bunch of cases that you have to think about that are going to happen with potentially equal probability.
Jackie Forrest:
Right. And be tracking key metrics. So, we were going to talk in this podcast about some of the big things to watch for, but some of the metrics we should be tracking. So, one thing you can do is look for signposts about which one of those future scenarios may you be going down. And it just helps you think a bit more strategically when it does happen what your best actions are.
Peter Tertzakian:
Well, we have a lot to cover. So, we want to bucket it into four major categories. The first category will be geopolitics in the world, particularly the events that move energy markets, particularly on the demand side, because that’s the place where, whether it’s the economy or other factors is affecting it a lot. There’s oil and gas fundamentals is number two.
We also want to explore and predict potentially some technological drivers of change, particularly substitution of our incumbent energy systems, the renewables as substitutes, what’s happening with the transition. And then, finally, Canada’s circumstance as a consequence of the three buckets above politics, policy, infrastructure building from a Canadian perspective. Wow, that’s a lot. So, let’s get going.
Jackie Forrest:
Okay. Yeah, I mean, I think we’re going to have more predictions than ever this year. I’m predicting that. So, let’s go quickly through them. So, geopolitics of the world, maybe an overarching theme is we’re starting off 2026 with a feeling like regime changes in the air could come from various different countries and maybe more in the future. But we’ll go through some of the key countries that we’ll be watching.
Peter Tertzakian:
Yeah. Venezuela, obviously, that’s almost seems like in the past. But certainly, the script there in terms of regime and regime change has not fully played out. There’s all sorts of rhetoric and directives and talk about Cuba, Columbia, Greenland, Panama.
And so, we need to be on top of this story. I don’t know if I can make a prediction on this, honestly, other than there is going to be regime changes in places. And, of course, most recently in the news now, we’re watching in real time Iran, which is hugely consequential because it too is under oil sanctions. And it too, in the event that the current government falls and say the son of the Shah, who is rumored to be the leader in waiting comes back, I mean, that could not only change the complete geopolitics of the Middle East, but also have significant consequences. I would argue more consequences to oil supply than the Venezuelan situation because Iran produces far more oil than Venezuela.
Jackie Forrest:
It does. And it could go either way. You could have a stable situation where the sanctions are come off and there’s more supply, but you could also see a situation where the country is very unstable and you see less supply. So, it’s not even clear what direction it would go.
Peter Tertzakian:
Yeah, yup.
Jackie Forrest:
Well, let’s start with the US, the dominant source of geopolitical uncertainty in 2025 and more in 2026. We’re off to a big start with the American influence in terms of geopolitics. And so, we’ll be watching this sphere of influence and we talked about it quite a bit in last week’s podcast. I did want to put something out there. Is the US the new OPEC+ in regulating world oil prices in 2026?
And I say that because these sanctions they put on countries to limit oil supply, they’ve been at times not very strict with them because price of oil was high and they didn’t want to see high oil price. We have Donald Trump even talking about stated goal of $50 oil. Well, do you think in a lower price environment, which we may have in 2026, they’re going to actually be enforcing those sanctions more and taking more supply off the market?
Peter Tertzakian:
Well, that’s a great question. And I think that what it really points to is the broader prediction that oil is going to be trading less on supply demand fundamentals and more in terms of artificial supply constraints, whether sanctions are on or off, whether the new type of state capitalism that’s emerging where governments, particularly the US government, goes into countries to try and regulate the supply.
I think that this is a really important point because oil has always been somewhat regulated by OPEC, and then OPEC+ and an argument can be made that the Chinese are regulating the price as well by buying oil for their strategic petroleum reserves and not necessarily consuming it. So, oil will continue to be unpredictable from the perspective of it’s not really a free market. In fact, I would argue it’s even less so than when it was just mere OPEC.
So, maybe the converse is true, Jackie, that whereas we used to think of oil as a free market and then overlay the OPEC construct on it. Now, actually, we have all these other forces that are intervening or distorting as a proper word, distorting the markets on oil to make it even less predictable than before.
Jackie Forrest:
Well, and the US has really ramped up their use of sanctions as a way to punish countries that they think are bad actors here. And it’d be very interesting this year if we see more enforcement, because look at what happened with Russia. They put the price cap of $60 on because they wanted the oil to flow because they didn’t want to lose that supply. This year, prices are under $60. Would they be tougher on Russia?
So, I think this is a, as you say, Peter, the last 10 years or so, the Americans have really ramped up their use of sanctions and are becoming a bigger player. Okay. Tariffs, do you think that the tariff and trade wars will settle in 2026 specifically for Canada too?
Peter Tertzakian:
Well, I think tariffs have taken a backseat already globally. I think the dust has settled. And now with Venezuela, Iran, of course, domestic issues in the United States. I think tariffs have taken a backseat. Now, the issue is for us in Canada is what will happen in terms of the negotiations that are going on in the back. And, of course, the future of the Canada US trade, the US MCA, I don’t know. I tend to think that this whole state capitalistic mercantile behavior that we’re seeing almost puts tariffs on the back burner.
Jackie Forrest:
But don’t you think tariffs are going to be the primary tool to get Canada to do what the Americans want to do? Yeah, I personally think that the Americans, specifically for Canada, we have some surprises ahead in 2026 where that whole geoeconomic force is using tariffs to get Canada to do something the Americans want to do. I think we might see some episodes like that.
Peter Tertzakian:
Well, I guess my prediction would be that we are going to increasingly think about alternatives to trade between Canada and the US necessarily as a consequence of what’s going on because the perils of having one customer and one customer that is holding a hammer over the heads of a lot of heads of state, I think necessitates that we think beyond just merely renegotiating a trade agreement.
Jackie Forrest:
Well, definitely. And, of course, getting more infrastructure to get our products outside of just the United States. I did want to have one last talk about the US on state capitalism. Of course, Trump had his meeting last Friday with the oil execs, which was actually livestream, surprisingly. A big part of it was livestreamed, wasn’t a real success. So, I think the Americans may have to work on their tools of state capitalism if they’re going to get companies in the US to invest in places like Venezuela.
Peter Tertzakian:
Well, this is a very fluid situation because it’s just such a change in the paradigm that we have multi-decade paradigm that we’ve been used to where it’s free markets, capital markets, thinking about returns to the state and national security was not really in the purview of corporations, right? But all of a sudden, for example, President Trump said quite clearly last week that the oil companies should go and invest, I think the quote was, “For the benefit of the country.” Okay. That is a very state capitalistic mindset. And I think the thing we need to watch for is how, to what extent the US government will try and get corporations on side to do things in the interests of the country that supersede profitability.
Jackie Forrest:
Right. And how much the government of the US is willing to subsidize that activity, right?
Peter Tertzakian:
Right.
Jackie Forrest:
It didn’t seem like there was very many offerings from the US at the first meeting. But hey, that’s the first meeting. I’m sure there’ll be others.
Peter Tertzakian:
And by the way, what to watch for is the knock on effect of what does that mean for investment in the capital markets, which is always assumed to be free and unencumbered by these distortions.
Jackie Forrest:
Okay. Well, let’s move on. So, lots to watch for, including US sanctions enforcement, what they’re doing with the state capitalism. The US midterm elections will be also a big event to watch for in 2026.
Let’s move on to Iran. We already talked about it briefly. Really hard to say what’s going to go on here. You talked about the leaders on Crown Prince Pahlavi. I mean, the Shah of Iran was not exactly a liked person. So, it is interesting to me that he would come in and be the new leader. So, I think there’s just a lot of uncertainty of who would lead the country in the case that we have the current regime following.
Peter Tertzakian:
Right. Yeah, and if the United States gets involved militarily, whether or not truly is going to be an independent country.
Jackie Forrest:
And I also was thinking about it. The knock-on effects of Venezuela, like now Trump is threatening that he’ll do something. How much is he emboldening the people in Iran to do these protests? So, it’s interesting how one event in one side of the world can actually create…
Peter Tertzakian:
Trigger.
Jackie Forrest:
…. different things happening around the world. And maybe we’ll see other countries, us surprise us too. So, we’ll see what happens with Iran. But certainly, could be positive or negative for oil markets depending on how it was.
Peter Tertzakian:
Yeah. I mean, my prediction is the regime in Iran is going to fall and that is going to spin off a whole bunch of consequences and a series of other unpredictable events. I mean, the regime in Iran falling would only be the beginning of a whole chain reaction of events.
Jackie Forrest:
With effects, not only for the country, but in the whole Middle East, right?
Peter Tertzakian:
Yeah. I mean, Iran is really in the axis of Russia, China, Korea, North Korea for it to fall and an American resident Shah in waiting goes over and takes over, changes the whole axis of power in the Middle East and in the world, actually.
Jackie Forrest:
Okay. Well, watch for that one. Let’s talk about China. You already mentioned that China has been influential in the oil markets in 2025 by stockpiling, depending on the estimate, somewhere between a half million to a million barrels a day of crude. That’s a lot of crude they’re storing and the outlooks are that they’re going to store the same amount for the all of 2026. And that’s what’s giving some people views that the oil market will be better than you think because of these Chinese buying.
Peter Tertzakian:
Well, it’s certainly my view. And the lower the price goes, sub 60, I would imagine they’re going to actually stockpile even more.
Jackie Forrest:
Why are they stockpiling all this crude all this a very…
Peter Tertzakian:
Well, because it’s an energy security thing. I mean, oil is, again, often mistaken for just being a fuel for combustion and engines. But oil is a vital strategic commodity for all sorts of petrochemical products, lubricants, you name it. It runs through the veins of the economy beyond just competing with electric vehicles. I mean, that’s just the part of the barrel.
Jackie Forrest:
Well, and China is very vulnerable. They consume like 16 million barrels a day and some people have speculated they’re storing all this crude because they’re getting ready to invade Taiwan or some action that would stop oil coming into the country and they want to have a lot in reserve.
So, let’s hope that’s not the future, but that’s certainly another one of these effects. There’s a lot of people saying with what the Americans have done here in Venezuela, it’s going to embolden the Chinese to invade Taiwan in their sphere of influence.
Peter Tertzakian:
Well, it certainly gives them more license. And so, that Taiwan story, I predict is one that’s going to ratchet up over the course of 2026, again, with unpredictable consequences. So, stay tuned on that. I think China’s economy is also worth watching because economy and oil consumption is inextricably linked.
And so, if the Chinese economy falters, and it’s been on shaky ground with its real estate and other factors, I don’t think it’s going to fall or have major negative consequences as some pudding its predict, but I do think that it has the potential to slow. And if it does, it will affect the demand side of the oil equation negatively with potential further softening of prices.
Jackie Forrest:
Right. I mean, they haven’t been growing very much. They’re not the engine of growth that they used to be. At least the last three years it’s been pretty flat. However, if the economy shrinks, they are a very large consumer of oil, 16% of all demand. It will affect prices when that demand lessens. Do you think China’s going to yield its tools of economic warfare in 2026? It’s already shown it can restrict access to critical minerals, restrict access to some of the technology for clean energy that they have and only they have. They’ve already shown that in 2025. Do you think we’ll see more of that in 2026?
Peter Tertzakian:
Well, they certainly have a lot of levers to pull in terms of their geoeconomic tools or levers. So, they’re prepared. And we are, as we’ve stated in podcasts last year, in the midst of an economic war globally, and it’s going to ratchet up this year. So, will they use their economic weapons? They certainly would use it defensively.
Jackie Forrest:
Yeah. So, more to watch on that because unlike many other countries when it comes to Americans and using tariffs and other types of threats, the Chinese actually do have some things that can actually really impact the west. All right. Well, let’s go on to Russia and Ukraine specifically. Zelensky has said over the New Year’s address, “He’s 90% ready with this peace deal.” But Putin still is using words like, “I’m waiting for victory.” So, what are the chances of a peace deal do you think at this point?
Peter Tertzakian:
I think they’re quite high. I think that it’s a situation that has to be resolved, notwithstanding it going into a much more serious military theater in Europe, but I tend to think that it’s going to be resolved this year. But I think that any peace deal will be very vulnerable, will be very shaky. And I don’t know if it will actually resolve the Russia-Ukraine situation permanently.
Jackie Forrest:
Well, and is Putin going to be emboldened by this whole US invasion of Venezuela? And does that make a peace deal less likely? Because if Americans can do that, then why should he settle for anything less than all those bloody months?
Peter Tertzakian:
Yeah. Well, I don’t think it can be… And I don’t know. It’s just hard to cut through all the media reports and what’s going to really piece together what’s going on in that country. But my gut feel is that Russia is in no position to be emboldened given that it’s lost several of its “Friends” lately, including Venezuela, including Syria, including Iran. I mean, it’s just… And militarily, it’s exhausted after the four years of war.
So, I tend to think that it can be emboldened in the future as a consequence of what’s going on. I think that the China-Taiwan situation is more imminent in terms of ratcheting up than Russia embarking on any expansionism as a consequence of American involvement in Venezuela and potential other Western hemisphere countries.
Jackie Forrest:
I’m thinking that a peace deal is unlikely just because of Vladimir Putin seems so consistent in his wanting to get the land in the Ukraine and his victory. But I think the most interesting, if I’m right, and there’s no peace deal, will the US and Europe really start strictly enforcing these Russian sanctions? As I said before, it was all about the $60 price cap, but let the oil flow. And I think it’s coming clear to everyone that that is just giving him more and more money to fund this war.
And so, could they become very, very strict on these sanctions? And actually, there’s a bill in Congress right now that Trump says he supports that would be more strict in terms of sanctions. And with the low oil prices this year, potentially, and much stricter sanctions that actually curtail their sales, can Russia actually handle it? That’d be quite an economic shock for them. And could they really be weakened this year? And because of the low prices, US and Europe are more able to do these things.
Peter Tertzakian:
Well, all I can say is that Russia has been weakened as a consequence of the war. And so, is more vulnerable to tighter sanctions, lower oil prices and broader economic pressure.
Jackie Forrest:
So, we’ll be watching that for sure to see if we have a weekend Russia.
Peter Tertzakian:
So, what to watch for as we wrap up the section on geopolitics of the world is certainly US sanction enforcement, the Iranian situation. Okay, the list goes on and on. I mean, I think we covered a lot of it. It’s just a lot going on in the world and a lot of it affects energy, particularly the oil side of the equation.
Jackie Forrest:
Right. So, let’s move on to our next section, which is oil and gas fundamentals. The crude oil markets, we’ll start there. The IAA is predicting something like a 4 million barrel a day oversupply this year in 2026. They do have strong demand. In 2026, they think about 0.9 million barrels a day, so almost a million barrels a day of demand. But the problem is they see too much supply out there. So, strip right now, as we speak, is around $57 a barrels. The front price actually came up over the weekend with this Iranian situation.
Peter Tertzakian:
Yes, $59 or something.
Jackie Forrest:
Yeah, we’re up to $59. What do you think is going to happen with oil price this year? Do you think this strong consensus for oversupply is going to be the reality that we live with in 2026?
Peter Tertzakian:
Well, there certainly was a view before the Venezuela situation and what’s going on in Iran and everything else that OPEC was trying to bring the price down to limit any further upside on American oil production, which is a replay, a softer replay of what happened in 2014, 2015. Now, that we’re sub 50 and with the potential of going more, I think that OPEC+ will probably come back and step in a little bit, is my personal guess. But they may not have to because as I said, the other regulators that are in place are like the Chinese SPR, a strategic petroleum reserve acquiring oil to fill the reserves. But I do tend to think that there is a point, and I think that number’s probably 55, below 55, I think OPEC+ would step in.
Jackie Forrest:
Well, and you’ve got the other potential things taking supply out, like if the Americans and Europeans are more strict on Russia, those sanctions they put on Rosneft and Lukoil, some people estimated if they were actually enforced, would take out 2 million barrels a day. If we have some situation here in Iran where their supply is curtailed, we could have geopolitical events or sanctions take out enough supply to balance the market as well.
So, I think prices will stay with a five in front of them in 2026. But not as low as they should be considering these oversupply numbers that are being put forward by the major agencies like the IEA, because geopolitics, sanctions, all these other wildcards, and like you say, OPEC could affect the balances quite a bit.
Peter Tertzakian:
Yeah, I think it’s 55 plus. I think the price stays 55 plus just because… The other thing here to think is as a counterfactual, well, what would have happened to oil prices if we did not have all this geopolitical stuff going on in the world and sanctions and what have you? Well, with a 4 million barrel a day over supply expectation, the price of oil would have been $35. So, the fact that it’s in the 50s, the high 50s tells you that there is a huge premium already being placed on oil.
Jackie Forrest:
Well, and just to remind people that 4 million barrels day oversupply, if you had that for a series of two or three months, you would fill the storage tanks to the COVID type levels when we saw prices get very low. Now, we haven’t actually seen that level of oversupply manifest itself in the onshore storage tanks yet, but just to give you a sense how big that oversupply is, it’s being projected by these agencies. Obviously, no one’s believing it or price would be quite a bit lower.
Let’s talk about North American natural gas markets though. I think there’s potential for some upside here on North American natural gas. Just as a reminder, 2025 saw a huge growth in US natural gas production. They increased 10 bcf/day just in a year. Just to put that in perspective, that’s like half of all of Canada’s production, a bit more than that.
So, the Americans are always producing more and more gas. And despite that, they still had high prices because they have so many LNG exports. Their LNG exports ramped up from about 14 bcf/day at the start of 2025 to hitting 18 bcf/day at the end. That’s incredible, 4 bcf/day, more LNG exports coming out of the US.
Peter Tertzakian:
Yeah. Well, enough goes out the back door, as I like to say, that North America is now garnering international prices to a sufficient level that it’s affecting domestic prices.
Jackie Forrest:
And it’s going to get even more so because in ’26 and into 2027, the US is adding something like six more projects. The equivalent of 40 million tons per annum, just to put that in perspective, we’re talking about all of these projects in Canada by 2030 adding about 50 million tons per annum.
So, they’re almost adding that in the next few years with the projects that are underway there already. And so, that pull in terms of more gas leaving North America. And, of course, we have LNG Canada ramp up. We’re expecting that to get to full capacity in the first half of this year and we’ll see. Do you think, by the way, we’re going to have final investment decisions on additional projects here in Canada like LNG Canada Phase 2 or the Ksi Lisims project?
Peter Tertzakian:
I do. Yeah, I do necessarily. I do. And one thing we haven’t talked about domestically is the whole AI play. And I know we’re going to talk more about that over the course of the year because the build out of natural gas fired power plants. I don’t think is going to cease. I think you’re going to see more of that. And the demand for that is going to also be a positive pull for gas prices.
Jackie Forrest:
And the strip is showing that like ACO is about 230 per gigajoule. That’s Canadian dollars per gigajoule, which still seems low compared to the Americans who are getting about 330 per MMBtu right now on the strip for all of 2026. But still 230 would be double what we got last year almost and go from $10 billion of revenue approximately that the industry’s making from gas to $20 billion plus. So, the industry is going to contribute here and…
Peter Tertzakian:
Although, the prices have softened a bit lately, right?
Jackie Forrest:
They have.
Peter Tertzakian:
Because the weather?
Jackie Forrest:
The weather has been an issue and it will continue to be a dominant variable. I actually think if you had normal weather that we actually would see much higher gas prices, both at Henry Hub and at ACO, but weather is always such a big thing. It really reduces the demand if we get a warm winter.
Peter Tertzakian:
Yeah, I don’t know what normal is anymore in terms of weather. But as more gas leaves North America, we become less dependent or the gas price here becomes less dependent on the weather patterns here and becomes more of a global dynamic.
Jackie Forrest:
That’s true. But weather still is going to create those inventories to bloat at times which will reduce the price. I will say another thing I’m watching, we didn’t talk about it in the oil section, but with the lower oil prices, are we going to finally see US oil production onshore start to decline? It actually has been very resilient in 2025. It didn’t decline even though drilling rates came off. If we start to see US oil production come down, there’s a lot of associated gas with that, and that could create a bit more tightness in the market.
So, it’s hard to be a gas bowl after the last like 10 years of just terrible gas prices in North America. But with all of these LNG exports ramping up with the AI, like you say, I think that gas prices are going to come in close to strip if not higher this year. And the only reason they’d come in close to strip is if we get that warm weather.
Peter Tertzakian:
Well, close to strip or even if it’s slightly under strip, as you said, is better than what we’ve had for the last couple years, substantially better.
Jackie Forrest:
Yup. So, we’ll be watching that. We’ll be also watching what happens to these US production volumes because they certainly surprised us over the past year in terms of how much the Americans grew their production.
Peter Tertzakian:
Yeah. Okay. Well, we’ve talked a lot about oil and gas, the incumbents. What about the drivers for change and substitution?
Jackie Forrest:
Right. Well, let’s talk about all the clean energy technologies. Overall, 2025 was a bit of a disappointment in that a lot of these technologies grew, but maybe not as much as people thought. And certainly, the policy environment supporting them weakened as well.
So, electric vehicles, we’ll start with that. EV adoption rate is slowing down. Even in China, we’re seeing reports of a slowdown because they are having less policy incentives as well. Of course, the Americans cut their policy incentives. But just to remind everyone, EV shares of new car sales are still very significant. In China, it’s about half of all new car sales are electric. In Europe, it’s about 17%. In North America, it’s about 10%.
So, you are still growing the fleet of electric vehicles each year, even if your rate of acceleration of the rate of growth isn’t as big as it used to be. So, for example, Bloomberg expects buyers to have 24 million passenger vehicles in 2026, up 12% over 2025 compared to 23% growth in the previous year. So, there’s still growth. It’s just not as much as a lot of people expected. But I think EVs, you know how I feel about EVs, Peter, they’re going to regain their mojo in 2026…
Peter Tertzakian:
I do too.
Jackie Forrest:
… especially with those Chinese EVs and a lot of people in the world have access to them. We don’t. But I think any country that has access to Chinese EVs are going to continue to see growth and…
Peter Tertzakian:
See, okay, let’s get to the prediction because I’m long-term bullish on EVs, but I’m not 2026 bullish on EVs. I think we are not going to see the mojo coming back in 2026.
Jackie Forrest:
2027 or further out?
Peter Tertzakian:
Toward the end of the decade.
Jackie Forrest:
Okay. When their cars are…
Peter Tertzakian:
Well, we’re going to see step changes yet again and battery technology, step changes yet again in terms of the ability to charge them. And potentially, in ’27, ’28, I’m still a long-term bull on oil. I actually think this low period here is an aberration that the oil supply, particularly sub 60, is going to start to contract. I think that the oil spare capacity issue will get all mopped up and we’re going to have problems structurally. And that doesn’t even include the geopolitical overlay. I mean, low oil prices, low gasoline prices are not a prescription for EV adoption, especially when there’s a negative pull on EVs now in the United States and places like that.
Jackie Forrest:
Yeah, good point. When we have oil under…
Peter Tertzakian:
The subsidies have been taken off. So, I just don’t see the conditions in 2026 to get really excited about EV adoption. I think that comes in a couple of years again and it starts to ratchet up again, but it’s a technological play. It’s not as much play on subsidies and policies and that kind of thing.
Jackie Forrest:
Right. Whenever you take subsidies away, like even in China, you have a bit of a time when people see things as expensive, but then people get used to the new pricing. I will say, don’t focus too much on North America here because I agree. EVs aren’t going anywhere. And also, the automakers aren’t even really giving us much to buy. But those Chinese EVs I think are a much better product. They’re starting to go around the world. They have an oversupply of them right now, which means they’re probably going to drop the prices in 2026. I think that the story will be non-North America EV adoption going forward into ’27.
Peter Tertzakian:
Yup, okay.
Jackie Forrest:
Let’s talk about AI and electrification. What’s your prediction in terms of the AI story? Is it going to get bigger in terms of the linkage towards what it’s going to mean for energy, load growth and demand growth? Or is there going to be a bit of a softening like, oh, those expectations in 2025 were just too high?
Peter Tertzakian:
Well, there’s a lot of people continue to talk about the AI bubble. It’s taken a little bit of backseat to all this geopolitical stuff that’s going on. But the hyperscalers and AI companies have raised so much money in 2025. The 2026 is the year that they have to put it to work.
So, even if the equity bubble bursts, the capital has to be spent. And I think that in 2026, AI becomes much more of an energy story from two perspectives. First, the pull on energy, particularly natural gas. I think actually the nuclear story will become even more interesting in 2026. I don’t know if you saw the article, but Meta is now getting into the nuclear game big time.
And I think that you are going to then, on the demand side, see further social issues because the price of electricity is going to go up even more in the places where they’re building these things and the public is going to start screaming even more.
Jackie Forrest:
Yeah, I think 2026 will be the year of backlash where that might take away a bit from the headlines of energy growth where it’s just more concerns, more barriers and potentially slower outlooks for growth for AI load demand. You had shown a chart at the end of last year from JP Morgan showing 80 gigawatts of planned data centers in the US. I think the end of 2026, they’ll show that same chart and it will be smaller because some of these projects weren’t ever going to go forward, but this backlash is going to add.
Peter Tertzakian:
Right.
Jackie Forrest:
And not only rising electricity prices, have you been checking out copper prices?
Peter Tertzakian:
Yeah, they’re through the roof.
Jackie Forrest:
They’re up like 50% and AI data centers are driving a lot of copper demand too. So, I think they’re going to start to see all these different choke points where this growth of AI is starting to have issues that people are starting to complain about.
Peter Tertzakian:
Right, right. So, the AI and all the companies in the AI orbit are going to have to figure out how people are going to pay for this. And I guess my prediction is that the use of AI to make videos or whatever it is you’re doing with it will have to be differentially priced. In other words, if you’re going to make a full-length video, you’re going to have to pay more than just doing a simple query.
Jackie Forrest:
Okay. So, you think in 2026, you’re going to start to see higher prices for somebody.
Peter Tertzakian:
Oh, I think you’re going to have to see higher prices because otherwise, how is it that the costs of inflating copper, the cost of inflating electricity, et cetera, is going to be paid for. But AI, we argued in our podcast, and I continue, I would predict that AI is the dominant driver of electrification, which is the dominant driver of things like wind, solar, and other transitionary energy technologies.
Jackie Forrest:
Yeah. And so, I think clean energy, I mean, it slowed down in terms of its rate of growth in 2025. I think it’s going to continue to grow in 2026, but maybe the pace is going to slow down. Just depending on who you look at, there’s still early estimates, but globally it’s between 500 and 700 gigawatts of new solar capacity came on in 2025. Compare that to the rate in 2022, that’s two and a half times higher.
So, will we see growth probably on that level? Probably, another repeat of 2025 for next year, but maybe not like these big rates of growth in terms of solar. But we do need a lot of electrons and load growth is growing everywhere and solar and wind are going to contribute to that. And even in the US, because of that big, beautiful bill, there is an expectation that solar installations will slow down, but mostly it’s out a few years because you still have the benefits of those policies for existing projects for a few years.
So, I think solar wind will continue to grow, batteries as well. Things like carbon capture storage or industrial decarbonization or green hydrogen, those are areas we’re going to really see a slowdown though. So, I think there’s going to be two speeds just as there was in 2025, where the mature stuff continues to go forward and grow at least at the rate of last year. And the emerging more expensive technologies, you really see a lot less investing in them.
Peter Tertzakian:
Right. So, what do you think that means for the capital market trends? In other words, the financing of what we used to call, maybe we still call it, I don’t know, energy transition, clean energy. I mean, I just think it’s going to be lumped more into electrification.
Jackie Forrest:
Yeah. And I think we talked about that in our wrap up podcast for 2025, that we actually saw an uptick in capital raises for energy transition companies. But they were always associated with electricity. So, that’s going to be the new area where money is going to go. It’s an exciting play. There’s a lot of growth and regardless of policy being there or not being there, there’s a return to be made. So, I think that’s going to be exciting for 2026.
Peter Tertzakian:
So, is the prediction that the word energy transition disappears in 2026 and we just start using electrification. I think we’re just going to be talking about electrification and it’s going to be a whole smorgasbord of technologies, some of which are going to be improvements and innovations on existing energy systems based on things like natural gas, fired turbines and other natural gas, fed fuel cells and things like that. And there’s going to be a lot more wind, solar, battery, that kind of thing as well.
Jackie Forrest:
Right.
Peter Tertzakian:
But it’s not going to be called transition. It’s just going to be under the term electrification largely to feed the whole AI mega trend.
Jackie Forrest:
Okay. So, you predicted net zero was going to weaken a lot in 2025 and by many accounts you were right on that. And now, it’s an energy transition will weaken as a term in 2026.
Peter Tertzakian:
Yes.
Jackie Forrest:
All right. We’ll come back and check that at the end of the year. Let’s talk about Canadian circumstances for politics, policy and infrastructure. This in itself could be an entire podcast, but let’s start with Canadian federal carbon policy. And for our listeners that were actually enjoying their holiday break, you may not know that Environment and Climate Change Canada released a discussion paper on Canada’s industrial carbon policy right before the holidays, as they usually do, and they want feedback by January 30th.
So, they make a couple of weeks of that time, not really useful to people because they’re on holidays, but we are going to do a podcast on this because they’re talking about setting benchmarks for the carbon market stringency and prices at the federal level as we go out into the 2030 period. And also, they are talking about things like how do we determine if a provincial system is actually meeting the benchmark, which has been an issue with places like Alberta and Saskatchewan that have gone a little rogue in terms of what they’ve been doing.
So, we will have a full podcast on that because we want you to have the information you need to give feedback by January 30th. But I want to add this area as well as getting all these methane rules out at the end of the year. So, they came out with the final regs on methane, which were a bit confusing as well because they had a 2030 date when the MOU that Alberta signed with Ottawa had a 2035 date.
Anyway, alls to say, when it comes to federal carbon policy, we’re getting mixed signals. In one hand, the federal government is saying, “We want to go forward and go faster.” And then, they’re still coming out with some of this legacy carbon policy stuff that’s implying that we don’t want you to go faster. We want to slow down or not have production growth. So…
Peter Tertzakian:
Right. Yeah. Well, the retail carbon prices was scrapped last year. And I don’t know if I want to call this a prediction, but I think the industrial carbon markets, not the carbon levies, but the carbon markets are going to… I don’t want to say disappear, but certainly something’s got to change. As I said, we said it last year, we’ve got 10 carbon markets just for the industrial carbon tax. It’s fragmented. I think it’s going to be impossible to put Humpty Dumpty back together again to make these things functional, liquid in the pursuit of decarbonization.
So, I think that realization is going to set in, especially given that there are these geopolitical events that are going to affect the country far more than this policy. So, I think it’s going to be de-emphasized at a minimum and something is going to have to change.
Jackie Forrest:
Okay. Well, we’ll see because there’s certainly… It feels like some of these things that were released at the end of the year feel like they were 10 years ago or whatever. And so…
Peter Tertzakian:
They’re retro. Yeah, it’s like, how is it we’re applying yesterday’s policies to today’s realities? This isn’t 2024. It’s not even for 2021. Why are we trying to resurrect policies from that era?
Jackie Forrest:
Yeah. They’re certainly clashing with the broader goals of increasing infrastructure and growing our production and economy in all areas of natural resources.
Peter Tertzakian:
Oh, it starts with economic prosperity and national security. I mean, these are the top issues right now. In addition to the domestic issues, I mean, the laundry list is huge, whether it’s affordability, healthcare, I mean, you name it. I mean, the number of issues that have to be dealt with are huge. So, I always like to say, well, if you have a dollar to spend, where are you going to spend it? Historically, we said we’re going to spend it on decarbonization to solve that problem. But now, the problem is no longer a problem. It’s this whole series of dilemmas and we need more than a dollar to deal with all these issues. So, how is that dollar going to be carved up?
Jackie Forrest:
And it’s important to recognize too, these policies don’t just affect the oil and gas industry. They affect the mining industry. The manufacturing industry, they’re adding costs to industries across the country, right?
Peter Tertzakian:
Still, yup.
Jackie Forrest:
Okay. Well, let’s talk about Alberta and Ottawa’s MOU, the idea of advancing an oil pipeline with Ottawa’s support. If other agreements can be made, of course, April 1st is a big date where we’re going to somehow get an agreement on this industrial carbon price, what you were talking about. The methane equivalency deal with Alberta, a trilateral MOU between industry Alberta and feds on this big carbon capture storage project.
And then, July 1, we will have this potential for a pipeline project to be submitted into an environmental review process through the major projects office. I can only predict one thing is we’ll be talking a lot about this in 2026. I can’t predict if this is all going to get done on the very aggressive schedule, but I hope it does because we do need that oil pipeline in my view.
Peter Tertzakian:
We need the oil pipeline. We need ports, rail, you name it, and we don’t have the luxury of time given the real time events that are playing out. So, I predict the realization is going to set in that this matter under Bill C-5 building infrastructure is a lot more urgent than it was even made out to be in 2025 and that we’re going to have to get shovels in the ground.
So, I don’t know how we develop a metric to test this prediction of mine other than the biggest metric we would have is that there’s going to be shovels in the ground in 2026 on some of these projects necessarily, and that the urgency to deal with our export markets is going to accelerate.
Jackie Forrest:
Okay. Shovels in the ground would be good. By the way, just aside, I hope there’s shovels in the ground on a new pipeline here for water in Calgary too. Okay. So, other quick topics, lightning round, we’re running out of time. Will Mark Carney’s Liberal get a majority in 2026?
Peter Tertzakian:
Yes.
Jackie Forrest:
Okay. And I think there’s a number of ways that that can happen, so I’ll agree with you. Will Daniel Smith call an election here in Alberta?
Peter Tertzakian:
Yes.
Jackie Forrest:
Really? Okay. I’m going to say no on that one. I think she’s going to wait to the very last minute, October of 2027.
Peter Tertzakian:
I don’t think so. I think there’s a lot of things that are going on and that the political calculus will favor going sooner than later.
Jackie Forrest:
Okay. Quebec election, that one we know will happen in 2026. It can be no later than October of 2026. The PQ, the separatist party, is leading in the polls. If they win, what are the impacts of that in terms of all of this national unity and getting stuff done and…
Peter Tertzakian:
Not good. Yeah, not good. Everything from our currency to all things. Potentially, will have consequential impacts from that sort of thing.
Jackie Forrest:
Yeah. And, of course, at the time when we’re in this trade war, potentially with the Americans. So, we’ll watch for that in October. So, wrap up, what I can predict very well is that we will still be talking all of 2026 about all of these topics. I can’t say we were right on any of our predictions, but we will be talking about these topics. I think they’re really going to shape a year to come here.
Peter Tertzakian:
Yeah. Well, everything is going to be unpredictable, so don’t hold us to account on any of these predictions, most of which were pretty fuzzy, to be honest.
Jackie Forrest:
Well, I think it’s fuzzy for everyone. So, we hope to help you navigate what’s going to be an eventful year in 2026.
Peter Tertzakian:
Yeah. Well, and we wish everyone a good 2026, notwithstanding all the issues that are going on in the background.
Jackie Forrest:
Yeah, get out and ski.
Peter Tertzakian:
Happy New Year.
Jackie Forrest:
All right. Well, thanks to our listeners. If you enjoyed this podcast, please rate us on the app that you listen to and tell someone else about us.
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