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Saturday, October 27, 2007

Goodbye Alberta -- hello Saskatchewan?

The timing is perfect: just as Alberta is about to bring in a Tommy Douglas-style tax hike on the oil patch (and -- worse -- rip up signed contracts with the oil sands), Saskatchewan is about to elect the free market Sask Party.

Here's a column I wrote with Lyle Dunkley about it in today's National Post. Here's an excerpt:

Alberta's oilsands can't be moved. But what about oil sands and oil shale in Saskatchewan? The same geological formation that lies under Fort McMurray stretches across the border, into Saskatchewan's Clearwater River Valley. It was explored to some degree in the 1970s, but not developed for economic and political reasons. But new technology has made once-uneconomic oil sands profitable -- and oil at US$90 a barrel helps, too. Combine that with a new, property-rights-respecting Saskatchewan Party and hundreds of experienced oilmen returning home from Alberta, and you've got an interesting possibility. A company called Oilsands Quest is back out there already, drilling exploratory wells.

Don't get me wrong; Saskatchewan has 60 years of catching up to do. But it looks like 2007 alone will close that economic gap by about a decade.

Posted by Ezra Levant on October 27, 2007 | Permalink

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Comments

It was reported this week in New York that a Chinese food deliveryman was found after being stuck in an elevator for 3 days.

A bystander claimed that this was nothing, compared to a French-Canadian environmentalist who had been stuck on a broken escalator for one whole week!

Posted by: obc | 2007-10-28 4:15:04 PM


Marc-

Actually, I wish the connecting flights still landed in Montreal occasionally. I used to enjoy the chance to rub shoulders with French-Canadians. Who screwed that relationship up anyway? I was busy working, and wasn't paying attention. I wasn't thinking province or country, just paycheque.

Posted by: dph | 2007-10-28 4:18:47 PM


That's a good start obc - don't be shy, you can do it.

Posted by: Marc | 2007-10-28 4:24:41 PM


"Actually, I wish the connecting flights still landed in Montreal occasionally."

Of course.
...if you can figure out the ugly name they give that federal airport.

Posted by: Marc | 2007-10-28 4:29:54 PM


"Who screwed that relationship up anyway"

Not sure anyone screwed the relationship in itself but if so, those same people piss on democratie and are against respecting different realities.

Posted by: Marc | 2007-10-28 4:33:33 PM


I recall a bunch of posters here braying at Ralph. In my opinion, the man is still teh genius behind Alberta wealth. He drew a proper balance between tax and spending.

I bet there are a few people here today, who wish Ralph had not left, now that the new left has been expossed.

Talking about economy, Alberta's rate of inflation--is it really the highest in Cnada in the last quarter? Maybe that's the real reason behind the tax--putting the dampers on inflation.

Saskachewam also has a much larger unemployed population than Alberta--therefore many more workers to draw from.

Posted by: Lady | 2007-10-28 5:23:43 PM


Saskachewam also has a much larger unemployed population than Alberta--therefore many more workers to draw from.

The unemployment numbers for Saskatchewan for September of this year were 3.8%, down from 4.9% in the previous month. Alberta's unemployment rate is 3.6%, up from 3.5%. Saskatchewan's decrease in unemployment was the result new jobs being created in the province and not by people leaving for sunny Alberta. Saskatchewan's labour force also increased during September.

Posted by: O'REILLY | 2007-10-28 7:07:17 PM


I have noticed a few people refer to competition between provinces. This is one of the advantages of Canada has and it should be encouraged. Autonomous provinces with the majority of the power. And a weak federal government with little power. This encourages competition between the various jurisdictions and the province with the best system will thrive and the other provinces will follow, or not. The federal equalization payments (and federal unemployment insurance) should be eliminated because all this is is welfare for provincial governments that refuse to improve their situation. This is the way the USA started in the beginning but that was eventually destroyed by a power hungry federal government that continues increase it’s reach to this day.

Posted by: Tom | 2007-10-28 7:23:55 PM


I personally know many Quebecers who are comming back from Fort McMurray. The reason for their return ? They've got tired of the local telling them they're little frogies stealing their job opportunities. They say it's the exact same thing with "other races". I'm sure people from saskatchewan would suffer the same treatment. Before stealing the labour force of others, how about educating your locals better. This way, you will maybe hit better numbers in keeping your ressources.

Posted by: Marc | 2007-10-28 7:30:51 PM


On increased oil royalties.

1. Higher royalties represent an increase in costs.
2. Higher costs will reduce return on investment.
3. Reducing ROI will reduce the amount of capital invested.
4. Reducing the capital invested will reduce future wealth.

“Big Oil” has many choices that do not include accepting a lower ROI in Alberta, they include:
1. Investing elsewhere.
2. Paying out larger dividends to shareholders who can then invest that capital in other ventures with a higher ROI or simply consume it.
3. Not investing at all by not borrowing the billions needed.

Posted by: Tom | 2007-10-28 7:45:03 PM


"Investing elsewhere"

We're talking about the second reserve of oil on the planet. They can, but others would take their places eventually.

Posted by: Marc | 2007-10-28 7:51:02 PM


Marc

I've worked with plenty of "frogies". They don't get harassed any worse than Newfies, or several other groups I won't mention. I got called a herring choker for years. When it comes to getting a job done under poor working conditions or extreme weather, those frogies were pretty darn good in my books. And they aren't scared of wolves like some others are. I think you've just gotten too sensitive lately.

Alberta's unemployment rate is harder to read than Sask's. A lot of Alberta's workforce doesn't pay EI premiums because there are so many contract workers, and small business owners. When we get shut down, we're in trouble.

Posted by: dph | 2007-10-28 8:21:43 PM


What's a herring choker ?
I agree my last post sounded a bit sensitive and allow me to finish it. The problem was when those people were making sabotage on their jobs for that reason.

My friends, good workers far from being sisis are fully adapted to a "speak white" once in a while but were especially tired of facing those useless problems on top of the freezing weather for a small 7 bucks more than here.

Hey you do what you want of this "tranche de vie" but until, it's not like they still work there.

Posted by: Marc | 2007-10-28 8:33:34 PM


Hey Marc, want to know the biggest difference between working for a big oil company, and working for a big eastern company? Out here when you pay out kickback money to get work, you still have to do a good job.

Posted by: dph | 2007-10-28 8:43:11 PM


Good one.
But here workers are able live in appartements, not trailers.

Posted by: Marc | 2007-10-28 8:52:36 PM


The oilsands sat where they were for many many years before we started to exploit them because they were not worth exploiting. That means the ROI was too low. If the ROI becomes too low again, the oilsands will sit there. Right now there is an estimated 2 trillion barrels of oil in the Alberta oilsands, but only a couple of hundred billion barrels can be extracted at a ROI that attracts investors. Simply saying that "they will return because they have no where else to go" is naive. The oilsands in Saskatchewan have been sitting there with no attention because up till now it was not worth getting and investors have not trusted the socialist governments of Saskatchewan to honour any contracts. And as I said, investing else where is only one option. Not investing anywhere is better than loosing your money on a poor investment.

I should point out that increasing costs in the oilsands may not rule out all oilsands investments but it will make some previously marginal ones totally unattractive.

Posted by: Tom | 2007-10-28 9:13:43 PM


"Not investing anywhere is better than loosing your money on a poor investment."

I'm sorry but big oil compagnies cannot lift the nose on Alberta reserves as long as there's a need for oil. I'm sure there's a way to please everyone fairly, the environment included.

Posted by: Marc | 2007-10-28 9:49:54 PM


Tom, You're not gonna make me cry knowing the profits those compagnies are making.

Posted by: Marc | 2007-10-28 9:54:03 PM


Marc-My nephew, also named Marc came out to work in Fort McMurray. The money was good but the hours were horrible until he found a camp job where he could be fed well rather than take the time to provision and cook for himself. He has done well, saving enough money because he neither drinks nor gambles. He has made enough visits to his family in the East so that they are happy and the children know who there father is. Recently he secured an apprenticeship close to home. For a guy without much of a formal education he is now in a position to do well.
Don't discount the jobs out here. They have kept many a home and hearth together in Eastern Canada. I've said it before, Of course Quebec could survive on its own but it would be a much smaller country than it is a province and would have to get rid of its government's interventionis ways.

Posted by: DML | 2007-10-29 1:15:28 AM


thanks for sharing.

Posted by: Marc | 2007-10-29 6:09:00 AM


Tom

The oilsands should sit there for awhile.

The problem right now is that once American investment gets pulled, the Chinese will fill the vacuum. They don't care about royalties. They can print more money. I know a little bit about how Asians do business. Once they secure the reserves they'll start negotiating to bring in Chinese workers. The government won't have much choice but to allow it. Everybody knows about our labour shortages.

Once that door opens, look out. Do you think any government agencies will be able to control that operation? Chinese workers in Chinese camps working on totally chinese facilities. No WCB, no OH&S, no Alberta Environment. If a worker gets killed he'll end up in Mr. Woo's pigpen. So much for the Alberta advantage. That bitumen will get warmed up and shipped out, end of story.

Posted by: dph | 2007-10-29 9:13:52 AM


dph:

That's quite the horror story.

And, so close to Halowe'en.

Posted by: set you free | 2007-10-29 10:17:37 AM


dph,

You missed an opportunity--shame on you.

Although workers out West might live in trailors for a few months or so, the Quebecers live in cheap apartments, because there are so many that are empty all the time, since the population keeps leaving for better pay in Alberta/Saskachewan and maybe even BC (now that their government has put the Province back on track--took them long enough!).

The only reason why Quebec does not have 20% or higher vacancy, is because of immigration. According to Pariseau, "french women are a white race with low birth rate"--that's what he said.... So much for pur laine--must be the only thing that is pur these days--and I am talking about the sheep's wool and not the women...they are not producing like they did up until the 1970s. And, when they figure it out, they want to move to Ontario or out West, where the men and men and the women can have families, because their men can afford to support them.

jab--jab--jab!

Posted by: Lady | 2007-10-29 12:09:43 PM


Sorry, I'm confused. Which opportunity did I miss?

I'm not involved in oilsands, and so far I've read the waters fairly well. No investments in Calgary, a gradual move toward Sask., and a focus on essential services in conventional oil. My rants are just off the top of my head, don't take them literally.

Posted by: dph | 2007-10-29 12:19:38 PM


Tell me Lady,

Do you have to deal with integration problems by French Quebecers in the west...?
Just asking.


Posted by: Marc | 2007-10-29 2:10:06 PM



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