As I’ve said many times in the past, any time thousands of jobs are at stake, expect to see government intervention when those jobs/votes are threatened, particularly in Canada.
In the Canadian oil patch, which has been absolutely trounced of late, even the largest and what most investors consider to be safest producers such as Suncor Energy Inc. (TSX:SU)(NYSE:SU) have seen equity declines the likes of which are truly incredible.
Suncor is, at its core business, a heavy oil producer, and with the price of Western Canadian Select (WCS) falling below $10 U.S. per barrel (even below $7.50 U.S. per barrel at one point), prospects are not very good for profitability in the coming quarters should this rock-bottom commodity price environment persist.
That said, being Canada’s premier oil sands producer, and one of the key blue chip stocks many Canadians own, Suncor has more than just oil to consider.
The company has vertically integrated its operations over the years, engaging in a number of acquisitions to diversify away from a "heavy oil only" business model, which will undoubtedly be the end of many smaller players in the Canadian oil patch in the months to come.
The number of jobs Suncor provides Canadians are likely to spark increased Federal and Provincial government support, as I do believe Canada’s oil and gas industry is one of the few strong points standing in the way of economic catastrophe/depression, rather than a short-lived recession.
Invest wisely, my friends.
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