Not even one week.
That is how long Donald Trump has thus far served as President of the United States. Already he has managed to greenlight two major pipeline projects, pull out of a trade deal that he viewed as unfair, and begin the process of repealing the Affordable Care Act (Obamacare). By all accounts that is productive, and to the many wondering if Trump would follow through on the many promises he made during the presidential campaign, it appears he is planning to…at quite the clip.
And although Trump’s Republicans have full control of both the House and Senate which makes doing stuff while in office far easier, surely there are people around the world beginning to wonder why their own governments constantly are mired in excessive consulting phases, collaborative discussions, and you name it. Surely, they must be starting to envy the rapidity with which Trump is ticking his to do list. And surely they may now be wondering why their own governments can’t get the ball rolling and actually do things as quickly as Trump.
For the oil and gas industry in both Canada and the United States, Trump’s actions are a breath of fresh air (just as Kinder Morgan boss Kelcy Warren has said). Many projects in the oil business take years to plan, obtain approval and then finally build. Billions of dollars are typically on the line. And to have to deal with dithering politicians with minimal industry experience (let alone work experience), it only makes matters more complicated and frustrating. This is especially true for midstream companies such as TransCanada Corp. and Enbridge Inc.
Since the price if oil and gas tanked 2 1/2 years ago, there has been a flight of capital out of the Canadian energy business. Considering how vital the energy business is to Canada, these developments are troubling. Capital is global and unsympathetic. To attract it, certain data points need to be competitive – corporate and income tax rates, royalty rates, and carbon tax rates to name just a few.
Trump plans to reduce United States federal corporate tax rates from 35% to 15%. He also plans to slash a whole host of regulations and red tape that American business has to deal with. These actions are being done to make America a more competitive place for domestic business, international investors, and to above all, increase American real GDP per capita. Trudeau seems to be doing the opposite: tabling a federal carbon tax, and increasing the federal deficit (and thereby decreasing investor confidence in the Canadian treasury bond market) through large scale government spending programs. The most powerful and influential nation under Trump’s leadership is zigging. Canada is zagging.
But there also has to be a proactive dialouge in place between industry and the provincial and federal governments. Trump seems to understand the importance of dialogue with the business community. For the longest time, he was the business community. Trudeau seems to place an infinite premium on ‘consultation phases’ with ‘key stakeholders’. All the while little gets done. Yes, he has approved two pipelines thus far for Canada, but there is a vast uncertainty in Canada’s business community as to whether the pipelines will in fact get built (especially Trans Mountain).
President Donald Trump is moving full steam ahead. Canada and its provinces, under the leadership of politicians like Justin Trudeau and Rachel Notley, can either sit back and watch or engage themselves to keep up.
The stakes are high, and Canadian industry – in particular oil and gas – could sure use some help. It has been a rough few years.