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Tuesday, September 25, 2007

Fair's fair

So it's been about a week since Alberta's Premier Ed Stelmach's royalty review commission released its much anticipated report, which calls for the government to increase its natural resource revenue take by $2 billion. I'm sure all you shotgunners have had time to digest what this means to the province and to Canada (indirectly). So, do you agree with these guys, who agree with the report's conclusion that Alberta is not getting their fair share and can do so without hurting the economy? Or do you believe any drastic changes to the royalty regime would negatively impact Alberta's economy and Canada's (indirectly)? A position these guys are taking. Or is the answer some where in between?

Posted by Cyril Doll on September 25, 2007 | Permalink


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When Eddy says he stands up for Albertans with this scheme, I have to ask, which ones? He has done a "Harper" like the Income Trust ruling. Big government needs cash flow to pay their government employee wages and (hello) governemnt pensions. The rest of us who work in the private sector can go pound sand. Our jobs and futures are secondary to the continuance of "government". We work for government, not wages, those wages are secondary to taxes, or there would not be a constant reference to "Tax Freedom Day", with regards to our paychecks. What is Alberta's, June something? Meanwhile we all stand in line at the Health care corral, waiting for for the "service" we all pre-paid. By the way, an earnest MSM reporter should ask Eddy if this decision helps out in the solution to that $6 billion pension shortfal that the ATA has with their teachers. I would be curious as to what his answer would be.

Posted by: jt | 2007-09-25 6:22:55 PM

In the first instance of "these guys" it is well known that the Pembina Institute focuses all their research on digging up anti business information thinly disguised as "enviromental protectionism". To see who runs the Pembina Institute click http://www.pembina.org/about/board
See how many you would judge to be sympathetic to private enterprise ahead of big government.

Posted by: Bob Wood | 2007-09-25 8:07:11 PM

That Pembina home page says it all. The Board members work for "non-profit" orgs. - translated, that means they are paid very well and have all their expenses taken care of.

No different than Sierra, Greenpeace, and Peta among others whose upper staffs earn between a half and three quarter of a million dollars each.

Posted by: obc | 2007-09-25 8:14:42 PM


The Lieberals are being abandoned by their own:

"Garneau surprises Grits by closing door on politics"

OTTAWA -- Faced with ambivalence on the part of the Liberal party and the need to support his family, former Canadian astronaut Marc Garneau said Tuesday he has closed the door on the idea of seeking the Liberal nomination in Westmount-Ville Marie or any other riding.

The news came as a surprise to a group of Liberals who had been discreetly organizing and setting up a campaign website for him, who believed up until Tuesday their star candidate was in the running. It also came as a surprise to some Liberal party officials who believed, since Garneau never officially withdrew nomination papers he had filed, that he was still interested.

However, in an interview Tuesday, Garneau said he decided with his family a month ago to close the door on politics and pursue job opportunities in the private sector.

"I have to move on with other things. There's too much uncertainty. I was ready last April, but I'm not ready anymore."

THIS OPENS THE door for an English-speaking Lieberal to run in Westmount, something the locals have been clamouring for. A sigh of relief was heard by the Anglos in this riding, now that Garneau won't be imposed on them by DeYawn.

Posted by: obc | 2007-09-25 8:24:55 PM

Nice topic-shift.

Posted by: set you free | 2007-09-25 9:14:29 PM

I read the report. It is a sham.

In all of the charts where energy production is shared out, the Alberta Government pretends that the producers and the Alberta Government's shares add up to 100%.

In reality they do not.
The Federal Government takes in the neighborhood of 25.5% Royalties in all cases. That is a cost on the producers(Energy Companies) that the Alberta Government ignores.

Over and over the Alberta government states that the resources belong to the People of Alberta and then lays out polls showing that the People think the Alberta Government should get a larger share.

Well I agree.
But my agreement is
conditional such that if the resource belongs to the people of Alberta, then any additional share should be the percentage that the Federal Government is taking in Royalties that they do not deserve because the Federal Government is neither the producer nor the owner of the resources but merely a parasite on Alberta's economy.

This information has been entirely left out of the Alberta Government's report and the report is useless without reference to the Royalties that the Federal Government is taking from the Energy Companies and the
People of Alberta.

In effect, this report demonstrates that the Government of Alberta represents the Federal Government against the interests of the true owners of the resources, the People of Alberta.

If the central purpose of the NEP in 1980 was to keep prestige and political economic might from moving West to Alberta, this purpose will undoubtedly be fulfilled if the Government of Alberta demands 20% more Royalties from the Energy Industry instead of the Federal government in Ottawa.

The cost of the production of resources in Alberta by Energy Companies must be understood to produce Royalties for the Federal Government as well as the Government of Alberta.

In every instance in this report the shares of both the Energy Companies and the Government and people of Alberta are misrepresented by excluding the Royalties that the Federal Government is taking.

To be a true representation, the share of the Energy Industry should be compared to both Federal and Provincial Royalty regimes.

Posted by: Speller | 2007-09-25 10:17:03 PM

We have a tragedy of the commons problem here. If the provincial government owns the mineral rights then it should sell them in lots to the highest bidder. As the land and its resources become more scarce, the price will go up. Beyond that the energy companies should pay corporate income taxes.

Posted by: DML | 2007-09-25 11:09:42 PM

Truly; I am not a communist. BUT! If the return on investment ends up being so poor as to make it unprofitable for the oil companies, could we not run it ourselves, and keep ALL of the money, (Spellers comment regarding the Federal Government notwithstanding).

I am still honestly depressed about the way utility companies operate in this province since Klein essentially privatised them. We could be making money there as well.

Posted by: Mike D | 2007-09-26 3:44:27 AM

Truly; I am not a communist. BUT! If the return on investment ends up being so poor as to make it unprofitable for the oil companies, could we not run it ourselves, and keep ALL of the money, (Spellers comment regarding the Federal Government notwithstanding).

I am still honestly depressed about the way utility companies operate in this province since Klein essentially privatised them. We could be making money there as well.

Posted by: Mike D | 2007-09-26 3:48:58 AM

Truly; I am not a communist. BUT! If the return on investment ends up being so poor as to make it unprofitable for the oil companies, could we not run it ourselves, and keep ALL of the money, (Spellers comment regarding the Federal Government notwithstanding).

I am still honestly depressed about the way utility companies operate in this province since Klein essentially privatised them. We could be making money there as well.

Posted by: Mike D | 2007-09-26 4:12:06 AM

SORRY! messed up with the post button

Posted by: Mike D | 2007-09-26 4:13:06 AM

Mike D ~

To the Principal's office - post haste! ! !

:) :) :) :) :) :) :) :) :)

Posted by: obc | 2007-09-26 5:27:07 AM

Remember the Envirowhackos' accusations that Big Oil is fundibng Globull Warming deniers? Well, look who is financing their side! :

"The Soros Threat To Democracy"


Democracy: George Soros is known for funding groups such as MoveOn.org that seek to manipulate public opinion. So why is the billionaire's backing of what he believes in problematic? In a word: transparency.

How many people, for instance, know that James Hansen, a man billed as a lonely "NASA whistleblower" standing up to the mighty U.S. government, was really funded by Soros' Open Society Institute , which gave him "legal and media advice"?

That's right, Hansen was packaged for the media by Soros' flagship "philanthropy," by as much as $720,000, most likely under the OSI's "politicization of science" program.

That may have meant that Hansen had media flacks help him get on the evening news to push his agenda and lawyers pressuring officials to let him spout his supposedly "censored" spiel for weeks in the name of advancing the global warming agenda.

Hansen even succeeded, with public pressure from his nightly news performances, in forcing NASA to change its media policies to his advantage. Had Hansen's OSI-funding been known, the public might have viewed the whole production differently. The outcome could have been different.

That's not the only case. Didn't the mainstream media report that 2006's vast immigration rallies across the country began as a spontaneous uprising of 2 million angry Mexican-flag waving illegal immigrants demanding U.S. citizenship in Los Angeles, egged on only by a local Spanish-language radio announcer?

Turns out that wasn't what happened, either. Soros' OSI had money-muscle there, too, through its $17 million Justice Fund. The fund lists 19 projects in 2006. One was vaguely described involvement in the immigration rallies. Another project funded illegal immigrant activist groups for subsequent court cases.

So what looked like a wildfire grassroots movement really was a manipulation from OSI's glassy Manhattan offices. The public had no way of knowing until the release of OSI's 2006 annual report.

Posted by: obc | 2007-09-26 7:31:27 AM

Simply put -- I think Eddie is doing the right thing by taking a serious look at all the factors and perspectives before making a decision. Things are good right now, oil companies have been good for Alberta and we have been good for the oil companies. If it stays the same that is fine by me.

Posted by: Young | 2007-09-26 7:56:20 AM

The report is terrible and quite frankly is a very rudimentary analysis....quite amateurish really.

A word to Stelmach.....If I lose my job because of this report, you lose yours.

As for Mike D's comment, "Truly; I am not a communist. BUT! If the return on investment ends up being so poor as to make it unprofitable for the oil companies, could we not run it ourselves, and keep ALL of the money, (Spellers comment regarding the Federal Government notwithstanding)."

You seem to have forgotten just one little matter, Tovarich....the INVESTMENT needed to "run it ourselves"....or are you, like most commies, advocating simply "nationalizing" all the infrastructure already in place and paid for?

Posted by: John Luft | 2007-09-26 8:29:00 AM

I have a suggestion to MikeD and all the other Albertans who have been brainwashed through media that the oil is "theirs" and it is all Albertans right all to reap the benefits, if you feel it is yours why don't you simply go out and get some it for yourself then?

Why don't you invest the millions/billions that are required to extract it from the ground?

Anyone who is paying any attention to the facts knows that the patch anywhere south of the tar sands, that of course being much of Alberta, and in particular southern Alberta has for the past couple of years nearly ground to a halt.

Why? Because the cost of production has simply made it not feasible for these companies to continue the way they were. Anyone in the know knows that the large American companies have trimmed their Alberta operating budgets and concentrate their recourses back down south where it is far cheaper to produce their product.

The cost of exploration, drilling, pipelining and servicing has become so astronomical in Alberta that investment is already beginning to wane here.

It is unbelievable to me that overnight, Albertans who have the best of everything, healthcare, education, lowest tax's, through a media driven shit storm are willing to overlook the facts and like a pack of rabid NDP'ers, turn on and demonize the very industry that has brought Alberta to where it is today.

Sickening. Albertans has better get their head out of their asses or the "boom" will be over as quickly as it came.

Need proof? Look what socialist politics, and taxes did for Saskatchewan during Alberta's boom years.

Posted by: deepblue | 2007-09-26 8:47:19 AM

Right on, deepblue.

Isn't the basic Conservative motto supposed to be:
"If it ain't broke, don't fix it!"?

One of the more dishonest point the Alberta Government tries to make is that because most of the resource is now bitumen there isn't much of an expense for exploration.

This ignores the fact that extraction costs are higher for heavy oil than exploration costs were for light sweet crude. The cost of extraction and R&D to improve methods for extraction are borne by the Energy Companies.

We've always known the bitumen was there.

As I've said earlier, the report is an attempt at deception by the Alberta Government because it leaves out the fact that production costs are borne by the Energy Companies and these companies are paying Royalties to the Federal Government who then gives a share of Royalties to the Alberta Government.

The report pretends that the division of shares is only between the Energy Companies and the Alberta Government and this obfuscation makes the share of the Energy Companies look bigger than it is by ignoring the cost of producing a share for the Feds.

Stelmach said the need for a firewall was a perception built upon the past, but a firewall is needed in order to get Alberta's share that the Feds are stealing.

Grow some stones, Mr. Premier and go after the Feds share if you want 20% more Royalties.

Posted by: Speller | 2007-09-26 10:18:27 AM

The last recession/near depression was triggered by the dreaded NEP instigated by Central Canada interests in the '80s.

If we are not careful, this royalty review is going to end up triggering a made in Alberta recession/near depression.

There is a middle ground between the blatant Klein et al sell out to the oil patch (probably with the full backing behind the play of the Feds) and we had better find it quickly.

Surely the chart appearing in the Royalty Review Report showing the Share of AB Gov't v Share of the Developer royalties is an understatement -if not a downright oversimplification of what is/has been happening as regards royalties. At first look, there is no mention of the place of the Feds in all of this - and it is not helping to understand the issues. Of course the feds are in this and probably to a higher degree than most of us realize.

One of the huge problems is that those out of the loop really have no understanding at all about how these royalties are negotiated, who really does the negotiations, where the feds really are in all of this, and what exactly the feds share of the pot is v AB share of the pot. Questions like who exactly collects the royalties, how are they actually collected based on exactly what calculations to arrive at the dollar amounts is not readily available. At first look, this report does not seem to help in understanding the complexities, but rather to unduly fan negative emotions against the oil patch.

All of the above must intertwined with all manner of prov/fed corporation taxes with all the applicable tax write-offs, perks, grants, etc.

It strikes me that this report is about to do a whole lot more damage than it is good.

Posted by: calgary clipper | 2007-09-26 2:35:33 PM

The review document has some merit in that it exposes the overly complex way that conventional oil and gas are taxed. Those sectors would be much further ahead with a simple royalty regime like that in place for the oil sands.

That said, the review is seriously wrong in it's proposal to raise the royalty rate on high producing wells while reducing the rate for low production wells. How exactly will this encourage an increase in total provincial (conventional) production?

The current oil sands royalty system is actually quite well designed in that it does not skew the production decisions of the companies and is similar to mining royalty systems in other countries. A very hard system to game or manipulate. The proposed changes would remove this neutrality. The upgrading credit, in particular, could cause integrated producers to game the system.

Let's hope that the next review is of the stumpage rates that companies such as Hunter's former empoyer (ALPAC) are paying. I expect that Oberg would not have much difficulty recruiting ex-oil executives to lead that one.

Posted by: George | 2007-09-26 3:54:03 PM

Mike D. and any others who may feel that government may run the oilfield more profitably; may I suggest you look into the history of Petro Canada before going any further.

That company was created on just the same logic that you propose. It lost billions until the government finally got out of it. Now that it is private it makes profits, employs Albertans and pays massive taxes (and royalties).

Look to Saskatchewan to see how successful nationalizing their potash was as well.

Government run business is pretty much always a failure. There are countless examples of this all over the world.

It is a losing idea.

Posted by: Cory Morgan | 2007-09-30 12:23:59 PM

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