Musings: Low Prices And Liberal Politics Change Canada's Energy Biz

Musings: Low Prices And Liberal Politics Change Canada's Energy Biz
Canada Counts On Resource Investments
Source: Natural Resources Canada

Another analysis prepared by Natural Resources Canada shows the value of major new projects both planned and under construction. Given the substantial decline in commodity prices and the poor price outlook, the bulk of projects listed as of 2014 as planned are likely to be delayed or cancelled. That means there will be a meaningful slowdown in future investment, which will create a drag on Canada’s economy, and quite possibly send it into a recession.

For energy companies, not only are managers dealing with low commodity prices but they now have less support from local and national politicians. In Alberta, the political shift happened with the provincial election last May that propelled the New Democratic Party (NDP) into power. The newly elected NDP legislators elevated Rachel Notley, the head of their party, to be premier for the province. Shortly after assuming control of the provincial government, the NDP raised corporate and personal taxes. Premier Notley also announced she would appoint a commission to review the province’s royalty structure that had last been examined in 2007.

Musings: Low Prices And Liberal Politics Change Canada's Energy Biz
Potential Price Paid For Low Oil Prices
Source: Natural Resources Canada

The NDP charged that the people of the province were not receiving their ‘fair share’ of the income from the natural resources industries. The NDP’s election platform also emphasized that it would redirect the provinces’ policies with regards to climate change.

Because the watchwords behind the royalty review was ‘the province’s fair share,’ the people in the oil and gas industry became convinced that the examination would lead to higher royalty payments. This review came just as the energy world began experiencing sharply lower prices. At the time of the campaign and election, oil prices were higher than currently and industry forecasters held out hopes that a recovery leading to higher prices might occur before the end of 2015. However, energy executives feared higher royalties could derail the impending industry recovery.

Last week, the commission appointed to review the royalty structure delivered its report. It concluded that the province was being paid its fair share based on current prices. As Ms. Notley told CBC Radio in an interview, “If we were still in a $100-a-barrel environment, I would suggest that perhaps we could have done better as a province. But the fact of the matter is that what we’re dealing with now is fundamentally different.” For the oil and gas industry, Ms. Notley’s observations were welcomed.


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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Jurg Burg  |  February 15, 2016
Great article. Its amazing how the greenies manage to have their trolls monitoring sites to quickly challenge any criticism of their new global warming poster child. If pipelines need emission tests, why dont windmills or solar panels? Do you have any idea how much GHGs are generated when steel for them are made, or the terrible environmental degradation from the mining of rare earths that are required to make the turbines and panels? Did you know that towns in China where rare earths are mined are poisoned, and people are dying? Wheres Friends of the Earth or Greenpeace? As long as Notley and Trudeau are in power, the oil sands are doomed.
Ron Heffernan  |  February 14, 2016
Just another slobbering lowbrow elected by pot heads and 18 year olds who dont have a clue. Turdeaus experience in life as a drama teacher and as a spooled brat makes us look like Zimbabwe. We will elect Kevin Oleary a responsible conservative Business Man in 4 years.L1T
michael mclaughlin  |  February 13, 2016
Using 2014 stats is not accurate. It might be the only numbers you can get but the price of crude was high back then. To blame the liberals in Canada is misleading. Mister T has only been PM for months.He is right putting GLOBAL CLIMATE CHANGE as important. The tar sands project stinks and is in todays climate not feasible. The low prices for crude, as we ALL know, is caused by OPEC and the Saudis. Blame them for Albertas problems. Don;t worry in short time the price. of crude will go back up to the magic number of $77 dollars to make producers happy.


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