Bad policies have bad consequences, and Canadians are paying the price for Trudeau’s decision to strangle our energy industry.
The evidence continues piling up, showing that the policies of the Trudeau government are having a devastating impact on the ability of our Canadian energy industry to compete.
That’s contributing to a collapse in confidence among investors, many of whom no longer see a benefit to investing in the Canadian energy industry under current Trudeau government policies.
As reported by BNN, “With pipeline, regulatory and political frustrations reaching new heights, the nation’s energy stocks slumped to their lowest level in almost two years this month. The iShares S&P/TSX Capped Energy Index ETF, which tracks Canadian energy companies, has seen about $56 million in outflows this year versus $32 million in inflows for an ETF focused on U.S. stocks. The pain has extended to the fixed-income market, with U.S. dollar high-yield bonds from Canadian energy issuers returning less than their global peers in the past 12 months.”
The report notes that a lack of pipeline capacity is a huge concern, and the new regulatory process the Trudeau government claims will speed things up, “is instead seen delaying projects…”
As if that’s not enough, “On top of that, the industry is facing carbon taxes other jurisdictions don’t have to pay and it’s competing with American drillers which are seeing taxes cut under the Trump Administration.”
As if that isn’t bad enough, some see the new regulatory process as designed to block projects all together:
“The proposed legislation appears to effectively prevent any major new project from reaching any form of positive recommendation, the research team at GMP FirstEnergy, a major investment bank to the energy sector, said in a note.”
According to the report, Geof Marshall – described as “the guardian of $40 billion of assets at CI Investments'”, said “I’m inclined to believe that we don’t see another oil-sands project built.”
“The majority of his energy holdings are concentrated in U.S. regions like the Permian Basin, where there’s more capacity to move the commodity, he said.”
Finally, Rafi Tahmazian of Canoe Financial, “said he began trimming holdings of Canadian energy equities after Justin Trudeau was elected in 2015. He started shifting further into the U.S. after Donald Trump became president and vowed to trim regulations and environmental protection.”
He says Canada needs to cut taxes and “ensure pipelines and LNG terminals get built.”
Tahmazian’s comments show how investor confidence is collapsing – and in many cases has fully collapsed:
“My job as an investor is to gauge and make investments based on my confidence in a leader of a company and a country, or a province or a state. And I have zero confidence there right now.”
Bad policy = bad outcomes
The oil market is tough, with increasing competition as US production grows, and prices that have been lower for some time.
Yet, that means the way to support our Canadian energy industry is to make sure pipelines and energy projects are approved, and ensure competitive tax rates.
So, the fact that Trudeau is doing the opposite – imposing a carbon tax and increasing regulatory burdens – is leading to the predictable outcome: Our energy sector can’t compete, and Canadians are poorer as a result.
This will have a massively negative long term impact on our nation, with tens of thousands (expanding to hundreds of thousands) of lost jobs, hundreds of billions in lost investment, worse services, and higher taxes.
This is all being done willingly by the Trudeau government, and they are acting against our national interest.
The resulting collapse in confidence can only be reversed by a new government that supports Canadian oil, eases the tax burden, and stops strangling our Canadian energy industry.