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Tuesday, September 25, 2007

Raising Alberta's taxes

Well here's a shocker: a Montreal editorial writer thinks Alberta should raise royalty taxes on the oil industry. You know it's a credible, well-researched editorial because it uses phrases like "oil barons" and "major-league profits". My favourite line is "black gold in those tar sands," because you know that's how we speak out here.

Here's my two cents on the subject, on Don Newman's Politics yesterday. Fast-forward the clip to 26 minutes into the show. The oil sands can't be moved out of the province, but money and jobs can.

Posted by Ezra Levant on September 25, 2007 | Permalink


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Let's cut through the propoganda, Ezra.

How does Alberta's royalty regime compare to other jurisdictions, notably Texas?

How about the reasons for the pipelines taking our crude to the US? Follow the money and you'll see that most of the taxation benefit accrues to the federal government.

Is it any wonder the Liberals approved those pipelines?

Posted by: set you free | 2007-09-25 11:41:51 AM

"Is it any wonder the Liberals approved those pipelines?"

You don't even mention the possibility of Swiss bank accounts for these politicians, set. After all, most of these politicians were from Queerbec where this is SOP.

Posted by: obc | 2007-09-25 11:46:41 AM

...i start to worry when a "Montreal editorial writer thinks" about Alberta.

Posted by: tomax7 | 2007-09-25 12:05:35 PM

As you should know, set you free, private Americans own the mineral rights to their land.

There isn't a royalty regime in the U.S. like we have here.
What they have is straight taxes where Americans can be taxed on their net profits.

Alberta Oil companies, however, pay royalties on their gross production.

I read in the Alberta Report magazine, which I subscribed to through the 90s until it's end in 2000-2001(Report Magazine,)which covered the proposition that IF Alberta Oil companies Royalty payments were seen as a tax on the NET that the Americans were paying in the neighbourhood of 25% while Alberta companies were paying over 40%.

This is the reason that today people in Calgary are referring to Mr. Stelmach as Mr. Chavez.
Asking for 20% more Royalties from the Energy companies is very radical.
Mr. Stelmach should be asking for that 20% from the Federal government which hasn't a right to any in the first place. But that is what a loyal Albertan would do.

Mr. Stelmach's government has a surplus of $8 billion dollars from energy revenues.

He wants 20% more revenues. The energy companies are paying about 37% to the Federal government which keeps 25.5% and gives the Alberta government the rest.
Mr. Stelmach, beholding as he is to the LPC for being Alberta's new Premier, wants to add 20% more Royalty payments, from the people who make the very production of energy possible, which will ravish the operating capital these companies need to pay for exploration and field companies such as Schlumberger.

What are the CEOs supposed to tell their investors?
That there won't be any dividends and that the immediate value of the stocks has taken a 20% hit when oil is selling at $80/bbl?

The stocks are already losing ground just from the Premier talking like this.

Very little oil properties are freehold or Indian holdings here. Alberta will become like Saskatchewan used to be or is as an investment environment and the economy will die.

Posted by: Speller | 2007-09-25 12:12:40 PM

>"He wants 20% more revenues."

Should read Royalties and remember these Royalties are on gross production not net profits.

Even 5% more from the Energy companies and 5% more from the Feds over a decade would be less radical.

What will people who have come to Alberta from other provinces and countries do when they have purchased houses at such high prices and are then thrown out of work?

Their house values will drop through the basement, creating surplus housing, and they won't be able to sell or continue to pay the mortgage.

Does anyone really think that with an $8 billion surplus that it's time to get radical and mortally wound the economy?

You can shear a sheep over and over again but you can only skin it once.

Mr. Stelmach's idea is tantamount to a 'made-in-Alberta' National Energy Policy.

Posted by: Speller | 2007-09-25 12:32:12 PM

...as I said before, if Premier Stelmach wants to make an impression, lower the taxes on gasoline.

No reason why we shouldn't be paying the same amount as the States, even our dollar is on par.

Posted by: tomax7 | 2007-09-25 12:55:10 PM

Norway's trust fund which started in the early 70s with North Sea oil, is over $200 billion. Saudi Arabia's 'trust fund' is over $400 billion.
And Alberta's trust fund is peanuts.

In fact, under the math whiz Ralph Klein, it turns out that there wasn't even an accounting check that the bbls of oil produced by oil comps was the same number of bbls of oil that they were paying royalities on.


No bloody wonder Ralphie wants to keep the same system.

If the amount the oil comps have to pay under new and proper accounting suddenly increases more than a little, then the oil comps were stealing from Albertans. And Ralphie looks real bad.

As for people who tell sad stories about how expensive it is to find oil in the world, that is diddly squat here.
We know where the oil is in Alberta oil sands, the only thing they have to do is process it.

No costly 3d seismic over thousands of miles of unknown sea water.
No costly 3d seismic processing jobs by notorious seismic data processing people of questionable abilities and/or knowledge.
No throwing darts at a map to pick drilling sites.
No multi-million dollar drilling long shots in 10000 ft of water in the South China Sea on that lovely looking, possibly oil-bearing structure.

Ah hell, put the royalties at 10% and call it a day's work.

Posted by: rockyt | 2007-09-25 4:26:04 PM

>"The association also says the report's take on cost pressures facing the oilpatch "are simply not up to date," especially with new oilsands projects that are now averaging around $11 billion each.

"They do not adequately reflect the costs of some of these big projects," said Alvarez.

When it was released last week, the royalty report caught nearly everyone in the energy industry by surprise, from top executives to traders, and it trimmed several billion in stock values off many of Canada's biggest producers."

IF Ed Stelmach's PC Alberta government, which is awash in $8 billion surplus from the regime Peter Lougheed established with Pierre Trudeau, even though Ralph Klein blew the money that should have gone into the Heritage Fund on public sector union raises, ups the Royalties it takes by 20% or 10% or 5%, it should get those Royalties from the Federal government's 25.5% Royalties which it has NO right to.

Let the Feds get their Royalties from Newfoundland.

Canada is supposed to be a Confederation of equal Provinces.
The 1867 Confederation Act says the resources belong to the respective Provinces NOT the Federal government.

Posted by: Speller | 2007-09-25 4:59:23 PM

You know where those oil companies are going to cut back first?

They are going to cut back on operational costs in Northern Alberta. That's right. The will start layoffs and cutting back on services in Steady Eddie's neck of the woods and it'll impact Edmonton long before it does Calgary.

Then when the axe falls on Calgary the first people that get hit will be lifers in the Energy Companies who have all those costly benefits, not consulting firms like mine who deal with accounting.

All those people who get cut won't be able to dine out or get haircuts or buy cellphones or other luxuries and the housing market will crash sending the developers into a spiral along with other durable goods merchants.

Posted by: Speller | 2007-09-25 5:10:58 PM

"In fact, under the math whiz Ralph Klein, it turns out that there wasn't even an accounting check that the bbls of oil produced by oil comps was the same number of bbls of oil that they were paying royalities on.

rockyt | 25-Sep-07 4:26:04 PM

DUH! is right, rockyt.

The Alberta government doesn't count the bbls or count the Royalties.

That is MY job. I count the production and pay the Royalties to the FEDERAL government and the Alberta government has to go cap in hand to get their share of the Royalties from the FEDS.

And if I don't do my job right, the penalties are truly painful.

Posted by: Speller | 2007-09-25 5:36:59 PM

'and Ralphie Klein (the Ab govt) had to go cap in hand to get their share of the royalties from the FEDS."

Now that is rich.

Ralphie, cap in hand, begging all these years from the federal Crooked Liberal Party of Canada.
I did not know that. Thanks Speller.

Reminds me of Premier Grant Devine of Sask back in those backbreaking 1980s droughts, when he had to go begging to PM Mulroney to let prairie farmers get their OWN grain back from the CWB terminals in Thunder Bay so that they had feed for their livestock.

Those sweethearts at the CWB sure weren't going to let them have it back.

Amazingly, Mulroney had the good sense to make the changes to do it, because of the Reform Party.

And now western grain farmers have to beg PM Harper to give them freedom from the CWB.

Gee, I wonder how soon that will happen?

If at all.

Posted by: rockyt | 2007-09-25 5:59:49 PM

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