Eric Nuttall, a prominent energy investor, believes Canada's reliance on US energy needs provides leverage in the ongoing trade dispute. Despite the 10% tariff imposed on Canadian energy by the US, Nuttall remains optimistic that the economic pain will be significant enough to lead to a swift resolution. He urges Canadian policymakers to prioritize building out more pipelines to both coasts to diversify customer bases and lessen dependence on the US market.
Portfolio manager Eric Nuttall explains where he thinks Canada could have done more in softening relations with the U.S.
He said that it’s “very clear” the U.S. needs Canadian oil, pointing to some refiners in the upper Midwest,“They have no alternative. They can’t truck it or barge it. And so, their reliance on Canadian oil potentially gives us enormous strength going forward.
“And from an energy perspective, it makes it a necessity to make it a national priority to build out more pipelines both to the east coast and west coast, to diversify the customer base. If we had the ability to circumvent the U.S. refineries, we would not be in this situation as a country.” “We view this as a worst-case scenario. We have cash flow falling by seven per cent, and we have free cash flow falling by 20 per cent. In that vein, we have Canadian energy stocks, those that we could model with some degree of precision, still trading at 10-11, 12-13, 14 per cent free cash flow yields,” he said.“We’ve been taking advantage of the weakness over the past few weeks, adding to those names that we think are most vulnerable to what should be a short-term situation.
Energy CANADA TRADE ENERGY TARIFFS PIPELINES
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