Drill baby Drill Canada style! It appears Canada and the new Mark Carney’s government is starting to get more in line with President Trump’s vision of revising the ridiculous and self-defeating energy policies of their predecessors in a market moving report that could make Canadian oil and natural gas great again. With the new 2025 budget out, Ottawa has officially pulled back the curtain on an update to the Oil and Gas Emissions Cap, and boy, does it signal a change of tune.

In the eagerly awaited announcement by those in the Canadian oil and gas industry, it appears that Mark Carney in his new budget is going to revise former PM Justin Trudeau Carbon Cap that essentially would cap Canada’s oil and gas production regardless of any steps that the industry would do even if they become not only carbon neutral or even if they created a carbon generated deficit. This was a direct attack on fossil fuels and an attempt at Biden’s dream to put oil and gas producers out of business. The carbon cap would also raise prices for energy not only for Canada that may need fossil fuels to stay warm with this incoming early cold blast but also for us in the United States that have an affinity for that heavy Canadian oil sands oil.

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When the story broke on Oil Price at 10.30a, the oil market immediately reacted as the market sees this as a green light to open Canada and those fossil fuel loving folks in Alberta to significantly raise oil and gas output over the short and long term. Many Canadian oil producers have held back on production as they have been locked in limbo waiting to see if Mark Carney would indeed reverse the Trudeau era anti-energy policies.

Oil Price is hitting the nail on the head when it comes to Alberta’s fight with Ottawa over the emissions cap. Alberta and its oil patch have argued for years that this so-called “emissions” cap is really just a backdoor production cap—one that in the meantime here in the United States forces energy companies to either shovel piles of money into cleaner tech or slash their output to avoid going over the federally mandated ceiling. Alberta’s Minister of Environment and Protected Areas, Rebecca Schulz, didn’t mince words last year: “This cap is not actually about emissions. This is about the federal government wanting to cut oil and gas production and control our energy sector, even if it costs thousands of jobs and hurts Canadians from coast to coast.” Credit where it’s due—that’s straight from Schulz. Mark Carney’s government is shaking things up mainly because of the pressure from the Canadian oil industry but by President Donald Trump as well as energy market realities.

Carney’s crew is moving toward powering up Canada’s carbon markets, not just slapping down more restrictions. The Climate Competitiveness Strategy makes it clear: if Canada wants to keep selling oil and gas to the world—especially the markets demanding greener energy—we need to cut emissions but do it smart. Carney’s climate play is all about, “driving investment, not prohibitions, and on results, not objectives.” That’s the kind of talk that can get investment dollars moving and keep oil rigs running.

This is directly from the budget: “Effective carbon markets, enhanced oil and gas methane regulations, and the deployment at scale of technologies such as carbon capture and storage would create the circumstances whereby the oil and gas emissions cap would no longer be required as it would have marginal value in reducing emissions.” Translation? If Alberta’s energy sector steps up with new tech and real carbon cuts, the old cap might just get tossed on the scrap heap where it belongs.

And back here in the United States the diesel crack spread, and the gasoline crack spread continue to surge because of tight supplies in cold weather. Want to learn more about spreads? Call Phil Flynn 888-264-5665. This could put a focus back on the globally tight inventory of diesel fuel globally and focus on the risk to heavy supply as Venezulea output falls to a 100 year low and Russian sanctions are keeping Russia oil locked out a sea with no place to go because of sanctions fear.

Yesterday’s Energy Information Administration (EIA) report really didn’t make that situation any better, driving the diesel crack spread to the highest level we’ve seen in years. U.S. commercial crude oil inventories, not counting those in the Strategic Petroleum Reserve, rose by 5.2 million barrels from the previous week. However, at 421.2 million barrels, total crude stocks remain roughly 4% below the five-year seasonal average, underscoring ongoing supply tightness. Motor gasoline inventories fell sharply by 4.7 million barrels and are now about 5% below the five-year average, with both finished gasoline and blending components showing declines.

Distillate fuel inventories also dropped by 0.6 million barrels and are hovering around 9% below the typical level this time of year, further heightening concerns about limited availability heading into colder months.Although propane/propylene inventories saw a slight increase of 0.4 million barrels and currently stand 15% above the five-year average, the total commercial petroleum inventories only edged up by 0.6 million barrels last week. Overall, these figures point to persistent tightness in U.S. fuel supplies, raising ongoing worries about meeting demand during periods of increased consumption which might happen as someone released Mr. White Christmas Early.

Demand remains strong, though the four-week moving average shows total products supplied at 20.3 million barrels per day, a 1.2% decrease compared to last year. Motor gasoline averaged 8.7 million barrels daily, down 2.1%; distillate fuel averaged 3.8 million barrels, down 1.7%. Jet fuel, however, increased by 6.2% from the same period last year. Yet look for demand to increase significantly if the cold weather forecasts hold up.

Natural gas is also running and the first cold blast for winter may start to raise questions about the ample storage narrative. Fox Weather is reporting thatthe, “Blast of arctic air invades Upper Midwest and Northeast next week, bringing early winter preview for millions. The colder temperatures will reach parts of the Southeast with projected low temperatures in the 30s on Monday for places like Atlanta and as far south as Jackson, Mississippi. The early winter preview is forecast for the Upper Midwest, the Ohio Valley and the Northeast next week, as a strong dip in the polar jet stream is expected to plunge temperatures anywhere from 10-20 degrees below average for more than 200 million Americans.

The colder conditions will also create the potential for light to moderate snow across that region, beginning Sunday, the first of the season for many. A strong area of low pressure will usher in the coldest air of the season from Canada into parts of the Lower 48 beginning Sunday. Major cities around the Great Lakes could see temperatures plunge more than 20 degrees between Friday and Monday.

Cleveland has a forecast high temperature of 60 degrees on Friday and will struggle to reach 40 degrees come Monday. The colder temperatures will reach parts of the Southeast with projected low temperatures in the 30s on Monday for places like Atlanta and as far south as Jackson, Mississippi.

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