This content is FREE to use Enter your name and email to download
534 words, with tag
By Kenneth P. Green
and Ashley Stedman
The Fraser Institute
Investor confidence in British Columbia’s energy sector is crucial, since the province is rich with vast natural gas resources. But according to this year’s Fraser Institute Global Petroleum Survey, B.C. ranks dead last among Canadian provinces in investment attractiveness in the oil and gas sector.
With tanker moratoriums, liquefied natural gas (LNG) plant cancellations, calls for a fracking review and a government dedicated to pipeline obstructionism, it’s not surprising that investors are deeply wary of putting more assets into the province’s energy sector.
Indeed, this was reflected in this year’s survey, which tracks the perceptions of investors eyeing jurisdictions worldwide. The survey spotlights policies (royalties and taxes, duplicative regulations, etc.) that govern the oil and gas industry, and make a jurisdiction attractive or unattractive to investment.
This year, B.C. saw its global ranking deteriorate rapidly, dropping out of the top 50 per cent to the bottom 25 per cent. It now ranks 76th of 97 jurisdictions. Survey respondents cited political instability, fiscal terms and the high cost of regulatory compliance as significant deterrents to investment.
The percentage of negative responses due to B.C.’s protected areas and disputed land claims also remains high. In fact, most survey respondents – nearly 80 per cent for disputed land claims and 65 per cent for protected areas – said these factors deter investment.
B.C.’s significant decline in this year’s survey can be blamed on a wide array of policy changes. In particular, the recently-elected New Democratic government (supported by the Green Party) has promised to raise the carbon tax by 66 per cent and it opposes the Kinder Morgan Trans Mountain Pipeline System expansion. The Green Party also opposes LNG production and export.
While B.C. becomes less attractive to investment, other Canadian provinces continue to fare better. This year, Newfoundland and Labrador (fourth) and Saskatchewan (seventh) ranked in the global top 10. Neighbouring Alberta (33rd) saw its score increase slightly this year (although the province remains the second least attractive jurisdiction to invest in Canada).
Meanwhile, in the United States, LNG terminals are opening and President Donald Trump is implementing sweeping energy sector reforms that cut taxes and regulations. Trump’s administration is opening additional lands, suspending onerous regulations, dropping international greenhouse gas obligations, allowing oil exports and promising to cut taxes on business. Ultimately, Trump’s policy decisions pose competitiveness challenges north of the border.
B.C.’s policies raise concerns about whether the province’s energy sector is open for business. Why would investors put their money into B.C., as opposed to other provinces or U.S. states, if the government insists on increasing taxes and regulatory uncertainty?
B.C.’s drop in the eyes of investors should concern policy-makers in Victoria. Petronas has already pulled the plug on a multibillion-dollar LNG project. With low commodity prices and variable market conditions, policy decisions matter. Adding costs and uncertainty moves the province in the wrong direction and only pushes future investment – and the potential prosperity it carries –away from B.C.
To improve B.C.’s image in the eyes of investors, the government of Premier John Horgan should pursue competitive and stable policies, for the benefit of British Columbians and their families.
Kenneth P. Green and Ashley Stedman are the co-authors of the Fraser Institute’s annual Global Petroleum Survey.
Troy Media Marketplace © 2017 – All Rights Reserved
Trusted editorial content provider to media outlets across Canada
Terms and Conditions of use