U.S. Boom, Canadian Bust: A Tale of Two Oil Industries

The U.S. oil industry is capitalizing on surging oil prices while competitors across the border are stagnating. Why?

This article does a good job of comparing the areas in which Canada and the U.S. differ to cause such a marked contrast in outcomes: technology, regulation, and taxes–including a carbon tax. Technology can cross borders easily enough given the right economic incentives, but the other two are country specific.

The result? “Here’s the kicker: by growing, the U.S. oil and gas industry is achieving similar objectives as Canadian governments that are restraining Canadian oil and gas – lower GHG emissions, economic growth and job creation, market diversification and greater innovation.”

Another key quote: “‘Canadian oil prices have completely de-coupled from global benchmarks – with the current strip implying the widest heavy differential in about three years at US$20 a barrel in 2018,’ Peters & Co. analysts say in a recent outlook report.”

Prices don’t decouple without a LOT of government interference. Again, the result? “Canada’s oil and gas sector is looking forward to another year of uncertainty, low prices and increasing tax burdens.”

Given how much is comparable in the industry between the two countries, this is a great real-life opportunity to see what impact government can have on business.

Update: Wow, it’s an Instalanche! Welcome, everyone. I hope to have more Eclectic Goodness up soon.

Comments

  1. Pingback: MLA Ellis Ross – Canada Needs to Wake Up – Conservative Community

  2. Tom Billings

    The difference between industrial hydrocarbon activity in the U.S. under Trump and the U.S. under Obama is slightly less than the contrast between the U.S. under Trump and Canada under Trudeau, but both are illustrative of what the competent definition of the industrial revolution is, and the effects of political intervention. That definition was given by Arnold Toynbee: “When a society moves from allocating resources by custom and tradition (moderns read here, by politics) to allocating resources by markets, that society may be said to have undergone an industrial revolution.”

    This was the accepted definition of the industrial revolution in colleges in 1922. It was only after Willi Munzenberg was given the job of heading the “Cultural Office” of the Comintern in 1922 that this definition began to shift throughout the industrial world’s academic institutions to Friedrich Engel’s definition which was that the industrial revolution happened because of, and consisted of, steam engines, railroads, and mass production lines as the means of production. By 1952, the Engel’s definition was predominant in colleges. By 1972, I found it nearly impossible to get a professor anywhere to admit that there had ever been any other definition. Students, by that time, were not hearing anything other than the Engels definition.

    By Toynbee’s definition, the progressive efforts to insert political decision-making into industrial activity are rightly seen as being anti-industrial. That is true in Canada’s oil industry, and throughout economic activity in the industrial world. That is why, IMHO, Engels wrote his definition in the trivializing way he did. Just a change of hunks of stuff, and we all have an industrial revolution. This is what Antonio Gramsci meant by saying changing definitions was the basis of taking over society in “the long march through the institutions”.

    1. Post
      Author
      Dawn Smit

      Count me in as one of those people who hadn’t heard Toynbee’s definition. I’d learned it was more about the process than about who makes the decisions. But, as you said, that’s what makes the definitions so important. If we still used Toynbee’s definition, the issue would be clear.

      Hmm, I’m now taking that definition and applying it to Africa…

  3. richard40

    The difference is national leadership, having a leader who only wants socialism, vs one who wants capitalism. When Harper was in charge of Canada, and socialist Obama was in charge here, Canada was doing better on oil than we were. Now that we have Trump,and they have socialist Trudeau, we are doing better.

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