In the late 1980s, the Syncrude oil sand facility was profitable, but due to former prime minister Pierre Elliott Trudeau’s National Energy Policy (NEP), the Shell Alsands project and the Imperial Oil Cold Lake Expansion project had been cancelled. With strengthening oil prices and the NEP wreckage behind them, the owners of Syncrude wanted to know the value of their other leases. Accordingly, work began on a new oil sand mining project known as OSLO, which stood for “Other Six Leases Organization.” As with Syncrude, the provincial and federal governments were participating in the OSLO project..THOMSON: NDP are going to poison their own well.In 1990, the rug was pulled out from under OSLO by the Mulroney government when it decided to participate in Newfoundland’s Hibernia project rather than OSLO. Losing this level of financing was a serious blow to the OSLO Project, but the remaining owners decided to finish the cost estimate and look for new financing. Apart from stimulating most of the technological changes which drove future oil sand projects, the OSLO Project also explored fiscal terms that would allow the owners to make a reasonable return on their investment. One of those proposed fiscal terms was the immediate write-off of 100% of the capital costs of the project against taxable income until project payout.The OSLO Project was cancelled in 1991, but oil sand business leaders continued to press the federal government to change the fiscal terms for oil sand operations. Those negotiations resulted in changes to the taxation of capital-intensive oil sand projects, and the boom got underway in the late 1990s..With this as background, it was interesting to read that Mr. Trump’s “Big Beautiful Bill” allows all capital costs from all corporations to be deducted from taxable income in the year they are incurred. Such a provision started a renaissance in oil sand development. What might it do for the US economy and how might this impact Canada? I don’t think we have to guess. A recent KPMG survey found that 19% of Canadian businesses planned to move production to the United States. That number rises to 37% in the industrial manufacturing sector.Let’s say you manufacture car parts for export to the United States. Today you face a 25% tariff which will destroy your profit, but the tariff will go away if you move to the US. But if you move to the US you will have to spend money to build a factory and move your equipment. With the new US tax break and the money saved from the tariff, the move makes economic sense. And you don’t have to be constantly worrying about future changes in tariffs. .GWEN MORGAN: Canada’s healthcare monopoly is killing us.Honey, we are moving. As if this wasn’t enough, the US Environmental Protection Agency (EPA) is proposing to reverse the 2009 Endangerment Finding which is the legal basis for the Clean Air Act regulations of carbon dioxide emissions. If this proposal gets through the courts, it will dramatically lower regulatory and manufacturing costs in the US. Think of all the EPA-inspired equipment on your vehicle that will no longer be required. American cars will see a significant decrease in price. .Will Canada follow suit? Canadian productivity and competitiveness relative to the US has taken an existential hit by these changes in US policy. It could result in a weak dollar, and we Canucks may be about to get considerably poorer. Will Mr. Carney notice? Will he care? Premier Doug Ford thinks Mr. Carney is a swell guy who is very smart. I wonder what his constituents in Windsor are thinking. .HANNAFORD: Mark Carney’s reality check — or not....Canada, at least in the short to medium term, will have to revert to its “drawers of water and hewers of wood” economic foundation. In this, we Albertans are in the cat-bird seat. This is our turf. But with the coming economic wreckage in eastern Canada, do we really think that there will be an opportunity to revisit the Equalization formula? It turns out that the timing for such a discussion is propitious. It is called a referendum on Alberta independence.Elbows up, Mr. Carney.
