Sadiq S. Adatia CFA, FSA, FCIA is a bright man. He is currently the Chief Investment Officer (CIO) for BMO Global Asset Management , and he’s responsible for overall investment strategy and risk management across BMO GAM’s investment solutions. In the past, he was Chief Investment Officer at Sun Life Global Investments and Russell Investments Canada, and Mr. Adatia has commented on investment matters on media outlets like CNBC, BNN/Bloomberg and Reuters. Sadiq even holds various degrees, diplomas and accolades. Accordingly, it should surprise no one that he has an Honours Bachelor of Mathematics degree in Actuarial Science & Statistics from the University of Waterloo, holds a CFA Charter holder and is a Fellow, both of the Society of Actuaries (Investment Specialty Track) and the Canadian Institute of Actuaries. As I said, Mr. Adatia is a smart man.

As a result, BMO Global Asset Management – led by Mr. Adatia – said that Chinese “economic fundamentals—including weak demand for oil in China—do not justify a bullish position on oil”, I took notice. BMO Global Asset Management came to this conclusion because “OPEC+, which represents most of the world’s largest oil-producing countries, announced last week that it will pause oil production increases that had been planned for the first quarter of 2026”. This told them that OPEC+ – Organization for Petroleum Exporting Countries (OPEC) and a bunch of countries including Russia – believes that there is an excess of supply at this moment, and that OPEC+ wanted time for demand to catch up with supply. In fact, in their piece, BMO Global Asset Management noted that China is a key market, that they had already taken advantage of the lower prices and it has an excess supply of oil in their own inventory; and “it’s hard to envision global demand catching up to supply unless demand in China rebounds, which is unlikely as long as they are sitting on inventories of cheap oil”. As a result, given supply and demand, BMO Global Asset Management has told their investors that they don’t see a need to pile into oil as either a commodity or as an equity investment opportunity. 

However, Mr. Adatia is not alone. Amily Guo, the China refining and chemicals analyst at UBS Securities, notes that demand for gasoline and diesel—the two pillars of petroleum refining—has likely already peaked. “Assuming a base scenario where new energy vehicles, including hybrids, constitute 83.5 percent of China’s vehicle sales by 2030, we estimate a continuous decline in gasoline demand,” Guo stated. As such, UBS projects that gasoline demand will drop by approximately 3 percent annually, while diesel demand is expected to fall to 157 million tons by 2030—a 22 percent reduction from its 2013 levels. In UBS’ opinion, this move is being fueled by the rapid adoption of electric vehicles (EVs), liquefied natural gas (LNG) powered heavy trucks, and the emergence of hydrogen as a viable energy source.

With this in mind, one question has to be asked: why is the Hon. Danielle Smith advocating for a pipeline? Since she has become Premier, the Hon. Danielle Smith has made an argument: Alberta can solve all of its ills by selling more oil, natural gas and coal on the open market. Someone, she argues, will buy it. Various undefined countries, she says, will pay money for oil or natural gas or coal.

However, there are a number of analysts who argue that. Especially since 2024. After all, in 2024, more than 90% of expansion of the electrical grid was as a result of added renewable capacity. Yup, 585 GWs of new renewable capacity came on-line last year and almost all of it was renewable.  Equity analysts, economists and entrepreneurs have all noted this. Those people will also tell you that this type of record renewable addition will come for many years to come because most turbines that use oil, natural gas or coal, to create electricity, are on a historic backorder – three to five year backorder, if you’re lucky. So why is Danielle Smith pushing for a new pipeline that will be obsolete the moment that it is built? 

I can understand that part of Premier Smith’s reasoning could be a belief that Alberta, or Canada, has a global responsibility, a moral imperative, to supply oil to other countries, particularly in the Indo-Pacific region, to help them achieve “transformational wealth” and displace heavier-emitting fuels from other sources. However, the truth is that most fossil fuel importing countries are skipping or transitioning away from fossil fuels, and moving to an electric alternative. This story is true regardless of climate. This story is happening in arid places like Ethiopia, mild places like Italy and California, warm places like Uruguay, Australia and the Caribbean, or colder places like the Shetland Islands and Norway. 

In arguing for her position, she has indicated that the International Energy Agency’s (IEA) predictions about the transition have been too “rosy” or “political”. Instead, she prefers the optimistic approach to forecasting that is coming from OPEC. OPEC’s divination leads to a view where oil demand grows rather than contracts; where oil’s future is rosy and 2050 is just another roadmark of history, a sign of its record use. 

However, this reasoning lacks evidence; and seems to be an indication of policy paralysis, a result of a form of Innovator’s Dilemma. For context, the Innovator’s Dilemma is an economic phrase which is meant to describe the moment when an inventor, entrepreneur, or company faces competition from a drastically better product; and that same inventor or company faces a choice: either double-down on your existing product, marginally improve your existing product, or move to a radical solution which is expensive, will likely cannibalize existing revenue, and may not be successful in the market. In Canada, we know of a few innovators who didn’t make the right choice. We can name them: Nortel and Blackberry. Those companies were overwhelmed by their own problems and new market entrants. Blackberry, as the best example, had a great, market leading cellular product. The challenger, the iPhone, was a product which radically changed the market’s understanding of what a smartphone could be; and Blackberry (then known as Research in Motion), had trouble adjusting to the new situation. Specifically, innovations – like the App Store, extensive catalogue of 3rd party apps, its ability to easily load and play music and its adaptability to corporate networks – made the iPhone the type of product which could push Blackberry’s devices out of contention. 

Our Premier is equally stuck, as she is walking lockstep with incumbent players like Enbridge. For the first time, Alberta’s Coal, Oil and Natural Gas Industries are contending with the Innovator’s Dilemma; and that competition is coming in the form of electrification. Accordingly, it is hard for her to see or deal with the evidence. It is probably why it is so easy for her to dismiss reports from the IEA, Royal Dutch Shell, S&P Global, Wood McKenzie, and other analysts.

The only question is a simple one: are there any private companies that are going to join her in her effort to build a new pipeline? Are any private oil companies who are going to place an order for space on a pipeline that could be built between now and 2030? Are any private pipeline companies willing to take the risk that the market won’t radically change between now and 2030? After all, two years ago, only Premier Danielle Smith was talking about building a pipeline. Almost five years ago, President Biden killed a pipeline, Keystone XL; a pipeline that President Trump had approved earlier after President Obama killed it in 2015. Since the Harper Government was swore-in in 2006, pipeline policy has been problematic. Given that TransCanada gave up on Keystone XL 6 months after Biden killed, my question is simple: which private sector company would be willing to try to build a pipeline in North American even before a price tag of $40 to $100 billion dollars is leveled? 

My guess is simple: without huge government subsidies, you will not see one. The reason for that is simple: no private pipeline company will build one because very few oil companies will agree to the required fees. Or put differently, a pipeline is like a very long train and rail system. Train systems like CP, CN or Via Rail have to figure out how to get all of their items of their paying customers from point “a” to point “b”. To do so, in Via Rail’s case, because they transport passengers, they get a subsidy from the federal government. In CN and CP’s case, they have to price the cost of moving cargo at a rate that will pay for all of their costs (including maintenance) and make a small profit. 

In the case of pipeline companies, the cost of moving the cargo is unknown. They don’t know how much it will take to build the pipeline and they will not know in the short term who will be willing to pay for space on “their train”. As noted above, China is a wash in oil in the short term. In the long term, most of the world is electrifying, reducing the need for additional oil. Accordingly, when pipeline companies ask banks for loans or securities and insurance firms to become capital investors, the answer will be simple: show us how you will make a profit or we will not participate. For the most part, I think that no economic model will be forthcoming because pipeline companies will not be able to find enough oil players who want to transport oil at any cost. The global energy landscape is approaching a definitive turning point. For decades, the steady rise of oil consumption was viewed as an inevitability of economic growth. However, recent data and analysis from leading financial institutions and investment firms suggest that the tide is turning, and we should take this tide seriously. Throughout this piece, I have noted consistently that there is no evidence for an additional pipeline. Premier Smith’s assumptions ignore the undeniable reality that the world’s largest oil importer is actively and successfully pursuing a strategy to reduce its fossil fuel needs for geopolitical, economic, and environmental reasons. Premier Smith is choosing to ignore, and not witness, the ongoing change. She assumes that if she talks about  “Asia’s ever-growing thirst for oil” that that thirst will materialise into Alberta’s economic favour. However, like cellphones three decades earlier, Asia’s development path seems to be different. They are choosing to eschew the path of endless fossil fuel consumption for the hope of electrification. The only problem for Albertans is that our politicians are not recognizing this. Our politicians are forcing us to go down a path which will pit the majority against individuals and various minorities, which will pit old against young, which will pit those who depend on the social safety net with those who pay for it. I believe that the policies that we create should provide the greatest good for the greatest number, while protecting the individual, the minority or the few. It should be clear that this pipeline provides us with an economic renaissance for one reason: there is no economic case for it. Rather, arguing for a pipeline is merely a tool of division, ignoring the evidence and the eventual reality: Canada needs to change. That change is inevitable because sooner rather than later, we will find that fewer people want to purchase our bitumen, coal, natural gas and oil.