Canada's oilpatch handicap not helped by federal budget, observers say

Oilpatch observers say there is nothing in the new federal budget to deal with Canada's competitive disadvantage with the United States in oil and gas.

U.S. cutting federal corporate tax rate from 35% to 21%, as capital spending keeps dropping in Canada

Canada's competitive disadvantage with the U.S. in oil and exploration and extraction is worsening, some experts warn. (Kyle Bakx/CBC)

Oilpatch observers say there is nothing in the new federal budget to deal with Canada's competitive disadvantage with the United States in oil and gas.

Statistics Canada says capital spending to extract oil and gas will fall for a fourth straight year, with the biggest declines projected to be in the oilsands sector.

Hardest hit will be Alberta, but spending will also be down in Newfoundland and Labrador, B.C. and Saskatchewan.

CIBC economist Avery Shenfeld says the numbers are falling because big projects are wrapping up and not being replaced.

He says companies are seeing bottlenecks in the ability to get product to the market and a lighter regulatory environment in the U.S.

Ottawa says more analysis is necessary before considering tax cuts to match the U.S., which announced in December it would drop its federal corporate tax rate to 21 per cent from 35 per cent.

University of Calgary tax expert Jack Mintz says Canada had a tax advantage over the U.S. until recently but that has evaporated.