Texas shines bright while Alberta dims

Alberta and Texas have a lot in common given that oil and gas are key sectors for both jurisdictions. However, they differ significantly when it comes to investor confidence and their approaches to public policy.

In fact, according to this year’s Canada-US Energy Sector Competitiveness Survey, which tracks the perceptions of oil and gas investors by spotlighting policies that affect investment attractiveness (including royalties, taxes and regulations), Alberta’s regulatory environment is fraught with duplication and uncertainties while Texas offers greater certainty and attractive policies.

Alberta ranks 16th (out of 20 jurisdictions included in the survey) while Texas ranks first.

Alberta (and many other Canadian provinces) performs poorly on the regulatory front. In particular, uncertainty about environmental regulations, regulatory duplication and inconsistencies, and the high cost of regulatory compliance, are the top three areas of concern investor cite for Alberta.

Moreover, in 2019, only nine respondents indicated that uncertainty about environmental regulations in Texas was a deterrent to investment compared to 80 per cent of respondents for Alberta.

In another stunning result, 65 per cent of respondents identified the regulatory duplication and inconsistencies as a deterrent to investment in Alberta compared to only 8 per cent for Texas. Sixty-five per cent of respondents for Alberta were also deterred by the high cost of regulatory compliance, compared to only 10 per cent for Texas.

And to be sure, Alberta’s onerous regulatory environment isn’t a problem strictly for the province—it’s a national issue. In Canada and the United States, all of the top five most attractive jurisdictions for oil and gas investment are in the U.S. No Canadian province made the list of top performers. Canada’s poor performance relative to our American neighbours should concern policymakers here at home.

The new Alberta government has acknowledged the province’s lengthy approval processes and is looking for ways to improve the Alberta Energy Regulator. However, we’ve seen little to no serious attempts to streamline Canada’s regulatory environment at the federal level. In fact, Ottawa has moved in the opposite direction with Bill C-69.

In reality, political leadership is needed to restore our energy sector’s competitiveness. To start, easing onerous and duplicative energy regulations should be an integral part of the federal government’s agenda.