Alberta’s new government has implemented, or plans to implement, many policy changes that will affect the oil and gas sector. Some of these changes include increases to the corporate income tax (CIT), increases in the carbon levy, and a panel review of the province’s oil and gas royalties and climate change policies.
The 2015 edition of the Global Petroleum Survey was conducted from May 29, 2015 to July 31, 2015, presenting a unique opportunity to assess how Alberta’s policy changes have affected investor confidence.
Alberta experienced a large negative shift from 2014 to 2015 in the Global Petroleum Survey. On the Policy Perception Index, a comprehensive measure of the extent of policy-related investment barriers within each jurisdiction, where a high score reflects negative sentiment on the part of respondents and indicates that they regard the jurisdiction in question as relatively unattractive for investment, Alberta’s score deteriorated from a value of 26.57 in 2014 to 34.21 in 2015. The province’s rank in 2014 was 16th (of 156 jurisdictions), deteriorating to 38th (of 126) in 2015.
The investment driver that experienced the largest shift in negative sentiment from 2014 to 2015 was political stability. In 2014, only 5% of respondents viewed political stability as a deterrent to investment; that increased to 51% of respondents in 2015.
Another large negative shift was in the fiscal terms policy category, which includes the royalty framework. In 2014, only 14% of Alberta’s respondents found this factor to be a deterrent to investment; that rose to 39% in 2015.
These negative shifts may not bode well for Alberta considering that the province’s immediate geographical competitors are perceived to be either attractive jurisdictions to invest in, or are improving.
