World confidence in Alberta oil sector falling: study
CALGARY — Low energy prices aren't the only struggles facing Alberta's oil industry, says a recently-released study.
Unveiled Tuesday, the Fraser Institute's ninth annual survey of the world's petroleum industry suggests policy changes made by Alberta's NDP government are causing investors to lose confidence in the province's oil and gas industry.
"Since the 2015 provincial election in Alberta, the new government has implemented a number of oil and gas sector policies that may deter investment and hinder the economy" said institute spokesman Kenneth Green. "Initiatives such as an increase to the corporate income tax, changes to environmental policies and a review of the province's energy royalties add additional costs and uncertainty to an oil and gas industry already hampered by declining prices."
While Alberta's oil and gas industry still ranks high among the world's largest oil producers, this confidence is quickly waning. Currently ranking third behind Texas and the United Arab Emirates and ahead of Qatar and Kuwait, policy changes are souring the provinces perception among worldwide energy trendsetters.
"It's clear that, in Alberta, the recent oil and gas policy changes have helped to form an economic environment fraught with uncertainty and risk," Green said.
The survey says Alberta's perception among oil and gas investors has dropped from 16th to 38th among 156 world-wide jurisdictions.
Nationally, the same trend seems to be happening across Canada, with Alberta this year falling from third to seventh. Saskatchewan and Manitoba maintaining their hold on the top two spots, while Newfoundland replaced Alberta at No. 3.
Fraser Institute policy analyst Taylor Jackson says indicators suggest Alberta is running a very real risk of being overshadowed by its closest neighbours, including British Columbia and the American midwest.
"The negative shifts for Alberta may not bode well given that its immediate geographic competitors remain attractive jurisdictions for investment or are improving," he said.
Quebec remains as the least-attractive province for investment in Canada, ranking alongside Bangladesh, Syria, the Ukraine and Libya across the world as jurisdictions with the highest percentage of negative responses.
A yearly look at the world's oil and gas industry, this year's Global Petroleum Survey contains responses from 439 executives, managers, directors and analysts from energy and exploration concerns across the world.