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Last month after Encana, once Canada’s largest natural gas producer, announced plans to change its name and move its corporate headquarters to the United States, the media understandably focused on the likely consequences for Alberta and the Canadian energy industry. However, a key issue—Canada’s declining competitiveness—has been largely ignored.

But our waning competitiveness should come as no surprise. With Canada’s continued pipeline shortage and regulatory uncertainty, investors increasingly view the U.S. as a better place to invest, create jobs and help fuel the economy. Capital is highly mobile and will flow to jurisdictions with stable attractive polices. Unfortunately, investors seem eager to steer clear of Canada’s energy sector.

For example, according to this year’s Canada-US Energy Sector Competitiveness Survey published by the Fraser Institute, which surveys oil and gas investors on the investment attractiveness of 20 energy-producing provinces and states, all top-ranking jurisdictions are in the U.S—no province made the top five. Alberta, Canada’s energy powerhouse, ranks 16th out of 20 while Texas ranked first as the most attractive jurisdiction for investment.

Now, to understand why Canadian provinces underperform in the eyes of investors look no further than regulations and taxes. Simply put, investors have a more positive view of the regulatory and tax environments south of the border and the Canadian energy sector is suffering as a result.

Specifically, in a stunning result, 80 per cent of respondents indicated that uncertainty around environmental regulations in Alberta was a deterrent to investment compared to only 9 per cent for Texas. Similarly, 94 per cent of survey respondents cited uncertain environmental regulations as a deterrent to investment for British Columbia, compared to only 12 per cent for Oklahoma and 13 per cent for North Dakota.

And 65 per cent of respondents identified regulatory duplication and inconsistencies as a deterrent to investment in Alberta compared to only 8 per cent for Texas.

The reality is that policy decisions matter in highly competitive markets. For proof, consider recent investment decisions made by a host of global oil producers. Companies such as Kinder Morgan, ConocoPhillips, Royal Dutch Shell, Marathon Oil, Devon Energy, Equinor, Koch Oil Sands and Total S.A. have all either divested assets or reduced their exposure to Canada’s oilsands in recent years. And again, last month Encana announced plans to move its headquarters south of the border.

Of course, companies consider many factors before deciding where and when to invest, but Canada’s unattractive policy environment is a self-inflicted deterrent to investment. With Canada’s dismal performance in this year’s survey of oil and gas executives and the steady exodus of foreign oil companies from Canada, the new federal government should step up to restore the sector’s competitiveness.

Ottawa has a choice to make. Either it will continue to implement policies that erode the investment climate for Canada’s energy sector or it will forge a new path that will make Canada competitive and attractive again, helping reignite the prosperity once enjoyed by Canadians across the country. To start, easing onerous and duplicative energy regulations should be an integral part of the new government’s agenda.