Though the biggest driver of innovation, economic growth and social equality in Canada is the nation's oil & gas industry, executives from the industry face a staggering list of challenges.
Crude oil exports are what pay the rent for Canada, in the words of economist Patricia Mohr, yet we seem content to watch the industry be weighted down with a growing and disturbing number of constraints.
According to Bloomberg News, the shortage of pipelines is a major source of the problem: "Strangled by the pipeline shortage, the price of Canadian crude has climbed less than 5 percent in the past two years, compared with 57 percent for the U.S. benchmark."
Yet a long list of other issues was on the minds of oil and gas executives at a meeting in Calgary Nov. 1 hosted by the Petroleum Services Association of Canada (PSAC) that I attended. The frustration I heard most often was the painfully true awareness that Canada's losses are America's gains.
Opposition to Canadian oil and gas production often comes in the guise of environmental aims. Yet the only significant result of this opposition is the encouragement of production in areas that do not match Canada's standards for environmental protection.
While the long-term arc of climate policy is one that plays out over many decades, the inescapable short-term fact is that world consumption of oil is going up, not down as this chart (from the U.S. Energy Information Administration) shows:
There is a long list of competitiveness challenges that Canadian oil and gas executives believe they are facing. While not all of these individual challenges are going to be easy to escape, what's remarkable is how many of them are self imposed. According to PSAC's presentation, these are the major disruptive forces in Canadian energy right now:
- Foreign paid activism
- Rapid U.S. resource development
- Pipeline delays
- U.S. tax reform
- Discounted crude prices Canadian product
- Global LNG competition
- Capital being pushed to U.S. hydrocarbon basins
- Refinery maintenance
And all of those factors are further exacerbated by a litany of deliberate policies:
- Stacking up of taxes, including carbon tax
- Lack of access to tidewater that will reduce the discount
- Bill C-69 covering environmental impact assessments
- The ill-conceived Bill C-48 that was created specifically to serve foreign lobbyists
- Quebec's ban on hydraulic fracturing
- Unhelpful inter-provincial bickering
- Various other legislation
The oil and gas industry tends to be its own worst enemy, having failed for the most part in reaching Canadians with the positives of the industry and instead leaving an army of opponents to air grievances on a large variety of issues. Fortunately, a majority of residents do have enough common sense to see the issues in perspective. Yet every day they are presented with some fresh attempt to undermine their confidence, occasionally for a good reason but much more often than not because of a deliberate, long-term strategy that operates continuously without regard for the facts.
Crude oil is the country's major export commodity, so you'd think that politicians at all levels would be working very hard to ensure that the benefits are preserved while the risks are effectively managed. In November 2018, one thing is clear: if Canadians are to enjoy today's levels of prosperity into the future, in the setting of a clean environment and equitable society, industry needs to become much more effective in telling its story.