Capital investment is crucial to the economy. Investment creates jobs, economic growth, and revenues for governments to help fund our schools, hospitals and roads.
What is capital investment?
Capital investment is money a company spends to further its business goals and objectives and to acquire or develop long-lived (i.e. capital) assets. Examples include building a pipeline, expanding a factory or drilling a well. Capital investments create long-term jobs and drive economic growth, and are a sign that companies are confident in the future.
Capital Investment in Canada's Oil and Natural Gas Industry
Capital investment has plunged 56% here in Canada since 2014. It’s easy to understand why. Canada’s has become more complex and uncertain, and our inability to move forward on pipeline projects has driven away investment to other jurisdictions such as the United States.
Each quarter, CAPP publishes its Capital Investment and Drilling Forecast, which provides an overview of the impact of declining commodity prices, upstream capital investment in Canada and industry capital spending.
The global market is fierce, and if Canada wants its industry to be a major player internationally, a number of factors need to be considered
Rising government costs, the burden of inefficient regulations, and the lack of infrastructure to move Canadian energy to growing markets are all undermining investor confidence in Canada and negatively affecting the country’s ability to attract the capital needed to create jobs and national prosperity.
Investment and Tax Revenue
The oil and natural gas industry is Canada’s largest private sector investor, with oil sands alone injecting almost $14 billion into the economy in 2017.
The oil sands industry and its suppliers contribute to government revenues through corporate taxes, personal income taxes, property taxes, royalties, land sales and other costs.
Over the next six years, the oil sands industry is expected to pay an estimated $8 billion in provincial and federal taxes (Economic Recovery Pathways For Canada’s Energy Industry 2020-2025, CERI). These revenues contribute to government spending on infrastructure, social services and other important programs. A healthy oil sands industry results in higher revenues for governments.