As businesses and individuals grapple with soaring energy costs, the situation could become significantly more precarious if Russia were to scale back oil and natural gas production, according to the head of Calgary-based Whitecap Resources Inc.

“If Russia does decide to reduce the amount of production that they do have, that they are putting into the market, then all bets are off,” Grant Fagerheim, Whitecap’s president and chief executive officer, said in an interview Monday.

Russian energy has become a lightning rod for controversy following President Vladimir Putin’s invasion of Ukraine. Many European countries that have become dependent on Russian energy have looked to source oil and natural gas from elsewhere, while some parts of the Western world, such as Canada, have implemented boycotts, even though they’re mostly symbolic.

This disruption, coupled with demand far outpacing global supply, has driven the price of American benchmark West Texas Intermediate to largely trade above the US$100 per barrel since March.

In a note to clients last week, analysts at JPMorgan Chase & Co. warned oil prices could skyrocket to US$380 per barrel if Russia were to implement production cuts in retaliation against the G7 for seeking to put a price limit on Russian energy. 

Fagerheim said he expects crude to continue to trade within a range of US$85 to US$125 per barrel in the near term, and worries about how that will impact the cost of living for Canadians.

One of the big underlying factors for why oil prices have hit their highest levels in about six years, he said, is federal energy policies.

“This underinvestment was created as a result of the policies we were having in Canada and in the U.S., where there was no reward for return of capital, the narrative around ecoactivism and not respecting, you know, how far the energy sector has come with decarbonizing,” he said, without noting there have also been two severe oil price collapses since 2014.

“This didn't come about deliberately from energy producers, this is the result of political policy that started, you know, we'll say five to six years ago, on wanting to limit the amount of capital that was put into oil and gas. So we're living with the challenges now of trying to play catch up and it takes a long period of time to play catch up into an undercapitalized world.”

He said he has a “clear” message to the federal government – that energy security and affordability should be priorities.

“There are all forms of federal tax that could be reduced on a go-forward basis and encourage development of our resources in our country,” he said.

Whitecap is bulking up its operations in Alberta, buying XTO Energy Canada from Imperial Oil Ltd. and ExxonMobil Canada in an all-cash deal of approximately $1.9 billion.

The assets are focused in the Montney and Duvernay regions of the province and have a long shelf life.

Fagerheim said the bidding process was highly competitive, with companies from Canada and the U.S. making offers, but that Whitecap had two primary advantages.

“I think that the winner always ends up paying the most and there is no remorse here for winning this asset. The second component is we were able to bring total cash without [equity] financing behind us.”