March 28, 2024 9:41 PM

Critics voice out concerns on Canada’s energy policy

The energy policy of Canada is receiving some hard criticisms as the energy industry players in the country continue to struggle.

/ Published 5 years ago

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Another critic has expressed his frustration towards Canada’s energy policies. In a letter sent to Prime Minister Justin Trudeau by Capital Group investor Darren Peers, he said that the difficult market access in the country’s energy sector could make more investors look somewhere else.

One of the greatest frustrations by energy investors like Peers is the failure of Trudeau to build pipelines that would help ease the record discount for oil-sands crude, according to Bloomberg.

The disappointment of industry experts was triggered by the drop in Canadian oil prices with a record of $50 per barrel discount to the U.S. benchmark last month.

Peers’ letter, dated Oct. 19, stated, “Capital Group’s energy investments are increasingly shifting to other jurisdictions and that is likely to continue without strong government action.” He added that he hopes that the government will take a more proactive approach to maintain the Canadian energy sector’s edge by providing better market access for energy businesses.

Canada has been trying to cut down emissions and is looking to energy options that would be more socially responsible—pretty much like other countries such as the United States. But Peers said that the government must help the drillers to distribute crude oil to global markets—which is through pipelines.

And since some of the biggest players in oil like TransCanada and Kinder Morgan are not able to get new pipelines approved, the oil trades in Canada are at a record discount. Peers also said in his letter that “Increasingly, investors are questioning the merits of investing in Canadian energy and with that, Canadian companies will struggle to access capital, create jobs, develop resources and provide a significant revenue stream for the country.”

But the government has already supported some of the pipeline programs such as the Trans Mountain expansion of Kinder Morgan. This expansion will allow the company to transfer more oil to the Pacific Coast. But the pipeline was eventually stopped as environmental groups and British Columbia’s government have criticized the project. Ultimately, Trudeau was forced to buy out the project earlier this year.

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Energy companies have been urging the government to do something about oilsands. (Source)

Peers’ take on the matter is coming from his affiliation with Capital Group, because the company does not just manage $1.7-trillion in global assets, but also has high stakes and investments in several energy companies in Canada including Suncor Energy Inc., Enbridge Inc., Canadian Natural Resources Ltd., Keyera Corp., TransCanada Corp., Cenovus Energy Inc. and Whitecap Resources Inc.

One of the companies mentioned, Cenovus Energy, which is also one of the largest oilsands players in the country, also urged the government to do something about the oil crisis.

According to CBC News, Cenovus Energy is encouraging the Alberta government to enforce  “temporary” production cuts across the oil sector as Canadian crude prices continue to plunge. It was said that the lack of pipeline capacity affects the immense difference between Canada’s crude price and American benchmark—which is costly for both companies and local governments.

Regarding the backlash that the Canadian government is having in Vanessa, spokeswoman for Natural Resources Minister Amarjeet Sohi, stated that they understand the importance of market access to the economic competitiveness of the country, particularly in the energy industry, which is why they are looking and working to expand to other global markets apart from the United States.

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