The Canadian fossil fuel industry is taking a long fall into becoming a poor cousin to its peer in the United States, according to an annual review of the North American energy scene by the Fraser Institute.

Sharp national contrasts between stagnation and growth show in economic statistics compiled by the private research agency’s report, “Investment in the Canadian and U.S. Oil and Gas Sectors, A Tale of Diverging Fortunes.”

“Whereas capital expenditures in the upstream segment -- production and exploration -- were around 41% higher for the U.S. when comparing 2018 to 2016, they were only about 15% higher in Canada.”

Canadian industry spending touched bottom at C$41.9 billion ($31.4 billion) in 2016, recovered to C$51.8 billion ($38.8 billion) in 2017, but shrank to C$50.7 billion ($38 billion) in 2018, Fraser researchers said.

The U.S. total grew consistently from C$197.9 billion ($148.4 billion) in 2016 to C$215.2 billion ($161.4 billion) in 2017 and C$239.3 billion ($179.5 billion) in 2018, data indicated.

The contrast between sluggish Canada and the bustling United States also showed on the drilling activity barometer of fossil fuel industry vigor, the annual review noted.

In the United States, the active rig count increased by 18% in 2018 to 1,032 from 876 in 2017. Meanwhile, in Canada the count dropped by 7% to 191 in 2018 from 206 in 2017.

The contrast is becoming sharper this year.

“Rig counts for the first six weeks of 2019 relative to the same period in 2018 show a 33.5% drop in Canada and a 12.1% increase in the U.S.,” researchers said.

Investor surveys show the contrast too.

“Of the 10 most attractive jurisdictions in 2018 for investment in petroleum exploration and development, eight were U.S. states and one was the offshore Gulf of Mexico. The only jurisdiction outside the U.S. making the top ten list was the UK North Sea.”

Fraser’s researchers recited producer and investor explanations that oil and gas consistently fetched lower prices in Canada than in the United States because production surpluses have piled up behind pipeline projects stalled by public, political and legal opposition.

The Alberta oil benchmark Western Canada Select has endured annual average discounts of US$11.90-26.40/bbl below the West Texas Intermediate standard in the United States. Western Canadian natural gas lately goes for 60-70% below U.S. levels.

“Numerous ongoing reviews and changes to provincial and federal regulatory systems that create uncertainty for oil and gas companies are also prominent concerns of Canadian oil and gas executives and asset managers,” said researchers.

“In the absence of substantive changes to government policies affecting Canada’s oil and gas sector, it is difficult to see any abatement in the drift of investment to U.S. oil-producing locations and away from Canadian locations.”