Quote:
Originally Posted by Slava
I have received a lot of emails over the past 6-8 months that say that the oil and gas is 90% foreign owned. There is no industry in the United States that is anywhere near this, and in fact not in most of the industrialised world!
Surely we are smart enough to recognize the issue with this!
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As mentioned, its not really related, but I'm going to discuss it anyway.
The reason for the huge amount of foreign ownership in the patch is due to three major factors (as far as I know):
1. The dark side of currency depreciation. While great for manufacturing, the depreciated dollar of the 1990s made Canadian business discounted targets. Back when the dollar was 65c US, a corporation worth $1B CDN could essentially be bought for $650m US. Furthermore, since the oilpatch works in USD, and employees were paid in discount CDN$, it made good business sense to buy/build Canadian divisions.
2. Taxation. While most major oil companies (Exxon, Conoco, Shell, etc.) have Canadian divisions, they choose to maintain global headquarters in a different country for tax purposes.
3. Global Scope. Canada is a small fry globally. Calgary is an emerging global oilpatch city, but it still lags behind the usual suspects. Big companies from these established centres like what is going on here and buy into it.
There's really only one way to completely curtail this, and that's nationalization. Do that, and you essentially assure economic chaos and the end of foreign investment. The other, lowering taxes, is not a viable (or popular) option.