The conditions outlined in the federal-Alberta memorandum of understanding (MOU) for a new oil pipeline will increase the province’s oil production costs, rendering it less competitive than U.S. states that produce energy, a new study suggests.
A report by University of Calgary economist Jack Mintz for the Fraser Institute says that while Alberta currently holds an inherent tax advantage, the carbon tax and regulatory frameworks agreed upon in the MOU with Ottawa erode this edge.
These regulatory requirements and the carbon pricing structures will make Alberta less competitive than the two largest oil producers in the United States, he says. Texas and New Mexico do not face the same federal carbon pricing and rigorous mandatory carbon capture requirements, Mintz notes in his report. He contends that their lower production and compliance costs will lure investors away from Alberta….