Alberta’s Oilsands Just Became Investable Again
Ottawa’s policy pivot and Alberta’s regulatory win just rewrote the investment story for Canada’s most misunderstood sector.
For the better part of a decade, if you mentioned Canadian heavy oil in a room full of global investors, the reaction was somewhere between eye-rolling and a polite cough. The narrative was brutally simple: Alberta’s oilsands were a giant, sticky stranded asset – too carbon-intensive, too far from tidewater, and politically radioactive. Capital fled, valuations cratered, and the energy weight in the S&P/TSX Composite shrank to embarrassing levels.
Fast-forward to December 2025 and that obituary suddenly looks premature.
National Bank of Canada strategists, led by chief economist Stéfane Marion, just fired a shot across the bow of the ESG crowd: the oilsands are no longer persona non grata in Ottawa, and that policy U-turn could be the rocket fuel the TSX needs after gold’s monster 2025 run finally takes a breather.
The numbers this year have been absurd. The S&P/TSX Composite is already up roughly 30% year-to-date and flirting with its best annual performance since 2009. Gold stocks, riding the yellow metal past $3,000 an ounce, now make up more than 12% of the entire index – a record high more than double the long-term average. For the first time since 2016, Toronto is actually embarrassing the S&P 500 in an up market.
But gold doesn’t grow on trees forever (well, technically it does, but you get the point). So where does the next leg come from?
Enter two under-the-radar November moves that, taken together, amount to the clearest pro-fossil-fuel signal Ottawa has sent in years.
First, the federal budget tabled on November 4 quietly shifted tone from punishment to pragmatism on conventional energy. Then, later that month, Ottawa and Alberta signed a memorandum of understanding that effectively kills the long-threatened federal emissions cap on oil and gas production. Alberta now has a clear green light – ironic phrasing intended – to develop its resources without looking over its shoulder for the regulatory guillotine.
National Bank didn’t mince words: “We view this agreement as foundational to making Canada investable again.” Translation: the adults are back in charge, and the grown-up money might finally return.
The implications are massive. Canadian energy giants have been trading at valuation discounts to U.S. peers so wide you could drive a fully loaded upgrader through them. Remove the political risk premium and those discounts start to look like the bargain of the decade.
National’s official stance remains underweight U.S. equities – where valuations are stretched thinner than a Bay Street intern in December – while calling for investors to pile overweight into Canadian energy equipment & services and, yes, plain old oil, gas and consumable fuels names. In other words, load up on the very sector everyone swore was dead five years ago.
Add in the near-certainty of friendlier Canada-U.S. trade talks in the months ahead – because nobody in Washington actually wants to kill North American energy security – and the setup starts to look deliciously asymmetric.
Gold had its moment in 2025. Apparently 2026 is reserving a seat at the table for something a little heavier, a little dirtier, and a whole lot more Canadian.
The stranded asset is dead. Long live the stranded asset.