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.