Lessons from our pipeline paralysis

significantly less regulations, and recently reduced corporate tax rates.

In a nutshell, our customer has become the disruptor and it may be altogether too late to do anything about it.

Capital partnerships should be mutually beneficial

In our opinion, we missed a huge window of opportunity with the flood of Asian capital into Canadian resources. Rather than try and build mutually beneficial long-term relationships we took advantage of this unsophisticated capital by selling them marginal projects and companies at ridiculous prices.

After being burned is it any surprise that this capital has all but dried up? Perhaps if we kept them around they would have made good partners to tackle the ongoing exodus from our country’s better quality projects instead of our domestic companies taking on debt and trying doing it ourselves. Perhaps even a three-way partnership could have been formed directly between government, these capital providers and industry in the infrastructure build-out to enable access to Asian markets?

Don’t own industries overly reliant on requiring governments to act responsibly

Complacency in our provincial and federal governments, which were blinded by strong royalty and corporate tax revenues, has not helped the situation. With pipeline projects deemed a political hot potato most were content to simply talk about putting shovels in the ground, rather than ensuring it actually happened.

We should give some credit to the current Alberta and federal governments for at least attempting a different tactic by deploying an offer of carbon taxes in exchange for pipeline approvals.

Unfortunately, this is looking to be a disastrous move with the worst possible outcome of no pipelines but an additional cost layered on an industry struggling to break even in the current oilprice environment.

While Alberta has been vocal, it is really up to the federal government now to ensure B.C.’s compliance with the build-out of the Trans Mountain pipeline and yet at this stage all we have had is tough words and little action.

Interestingly, other sectors in Canada such as banking and telecommunications have received strong government support and operate in a much more favourable environment, such that they are protected from disruptive threats.

That’s not to say that this will continue indefinitely: Investors might be wise to study what has transpired in our once strong and robust energy sector for potential warning signs.