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The oil industry wants investors to sell its shares.

Or so it seems. A scan of some of the submissions to Alberta's Climate Change Panel and other recent communications from the sector's lobby group leaves an unintended and unfortunate impression – that in good times or bad, oil companies are a lousy investment.

It's clear that many in the energy sector are downhearted by the prospect of a New Democratic government being in power in the province for the rest of the decade, having had it pretty good during four decades of Progressive Conservative rule. Some seem insulted the NDP isn't picking up where the Tories left off.

Premier Rachel Notley has implemented many of her campaign pledges, including bumps in corporate taxes and carbon levies as well as studies into energy royalty and greenhouse-gas-emission policies.

Obviously, none is wildly popular with the Canadian Association of Petroleum Producers (CAPP) or its member companies.

What is a little surprising is just how dark a picture of the energy sector is being painted for the government and the taxpaying public by a few of its denizens. It's hardly the stuff of corporate presentations aimed at persuading investors that now is the time to buy.

The Alberta Climate Change Panel, charged by Ms. Notley to craft a policy on greenhouse gas emissions ahead of the Paris climate summit, has posted online nearly 460 submissions it received from citizens, academics, environmental think tanks, medical professionals, industry associations, unions, climate-change skeptics and supporters of renewable power as well as leading energy producers.

The responses run the gamut, from well-considered and constructive ideas to help bring down Alberta's emissions to biting criticism of the very idea of going through the exercise, especially as the province's economy sputters owing to the collapse in crude prices.

In its submission, Canadian Natural Resources Ltd., one of the country's biggest and most successful energy companies, goes to great lengths to explain that the energy industry is on a knife edge. It generated poor returns when oil fetched nearly $100 (U.S.) a barrel, it says, and now that crude is well under $60, returns are "extremely poor."

The company does not tie the sector's woes solely to crude. It describes the high costs of operating in Alberta, a mature oil and gas production region. On average, the return on capital employed was just 1 per cent in 2013, when oil averaged $98. Numerous other industries, such as recreation, insurance, banking and pharmaceuticals, perform much better.

Canadian Natural is quick to point out that its own return was 10 per cent in 2014, but that will dwindle to minus 1.9 per cent this year. "The key message: Canada/Alberta's oil and natural gas industry is a poor-return industry even in a high-oil-price environment," the company said in its presentation.

Laricina Energy, a small oil-sands producer that has been under creditor protection, says in its submission that junior energy companies are already "challenged" by the economic situation and fiscal regime, and that they cannot spare money for environmental research and development. It wants a five-year halt on any increase in carbon costs or reduction targets.

I get it. The thrust of these arguments is that if the NDP layers on any new costs – fiscal or environmental – it will be at the industry's peril, jeopardizing jobs and badly needed revenue for the government. But the secondary message seems to be that investors would be wise to look elsewhere for retirement security.

Albertans seem to agree with that assessment, according to a poll publicized by CAPP last week. Among samples of 500 to 1,000 people tracked over several weeks, just 22 per cent now believe that the province should double the price of carbon as mandated by the provincial government, a sign CAPP ties to fears of losing competitiveness.

The Ipsos survey said just 43 per cent of Albertans now believe the overall Alberta economy is in good shape, down from 62 per cent in July. Thirty-two per cent expect conditions to worsen.

It is hard to build a solid investment thesis, at least among long-term holders of stock, when presented with such dour prospects.

So, in some cases, energy companies' government relations and investor relations departments are finding themselves working at cross purposes. When executives warn governments and the public about the mobility of capital, the risk is that investors will overhear.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:15pm EDT.

SymbolName% changeLast
CNQ-N
Canadian Natural Resources
+1.13%76.32
CNQ-T
Canadian Natural Resources Ltd.
+0.87%103.33

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