How does Canada Respond to Stranded Asset Risk? /

A t the end of 2014, when Saudi Arabia was assessing its loss of market share worldwide, the tally showed a loss of close to 500,000 barrels a day from the U. S. market, mainly on the back of competition from Canada. [...] At the time, the increase in coking refining capacity in the U. S. Midwest strongly favoured Canadian heavy crude while U. S. crude imports, mainly to the U. S. Gulf Coast, from the Organization of the Petroleum Exporting Countries (OPEC) had been slashed in half since oil’s price peak in 2008. [...] Adjusting royalty rates and taxes during times of low oil prices was an effective strategy used by the U. K. government to protect North Sea investment during the oil price war of the 1980s.7 More recently, Russia has moved to protect the competitiveness of its costly Yamal Liquefied Natural Gas (LNG) project by offering developers, led by Russian firm Novatek, a 12-year tax holiday from the miner [...] The Russian government has also subsidized the construction of port facilities to be used by the project as part of an infrastructure development plan for the Russian Arctic.8 If the politics of adjusting royalty systems are challenging, the Canadian government should consider expanding other kinds of forward-looking programs that signal a commitment to the Canadian oil and gas industry’s long-ter [...] Abundant, inexpensive fossil natural gas is leading to increases in the natural gas vehicles market in the U. S. with several states such as Oklahoma and Utah offering incentives.9 Major corporations are already investing billions of dollars to build infrastructure to feed natural gas into the U. S. trucking industry and expand its use in fleets.