Alberta Needs A Chavez

Big Oil is using all the hype it can to say it will divest itself from Alberta if they have to pay increased royalties. Yeah sure. We have the oil and gas that they need. So quit making idle threats. They threaten to leave, they compare us to Venezuela So either they pay the pittance asked of them by the Royalty Review Committee or we should do exactly what they say; nationalize them under workers control.

After all they seem to forget that while they and their right wing apologists claim that they 'invest' in the development oil and gas, and this makes them the real owners, their investment is the result of capital accumulated from living and dead labour. Labour is required not just capital. And we have both.

International oil producers will flee Alberta if the Western Canadian province's government implements a proposed hike to oil and natural gas royalties and taxes, an investment bank said on Monday.

Going ahead with a recommended 20 percent, or C$2 billion, hike to Alberta's take from oil and gas production in the province will actually cause government revenue to drop as production falls by half-a-million barrels a day, according to Tristone Capital Inc, an investment bank that serves the oil and gas industry.

Shoddy report on royalties robs Alberta

Terence Corcoran, Financial Post

Published: Thursday, October 04, 2007

Another Alberta resource player, this time Jim Buckee at Talisman, has joined the growing corporate chorus against proposals to raise royalties on the province's energy output. If the plan goes ahead, said Mr. Buckee in a letter yesterday to Premier Ed Stelmach, Talisman "would likely cut $500-million" in capital spending.

Other companies waiving red flags over Alberta -- described jauntily by Deutsche Bank analysts as a new "Bolivarian Republic" -- include EnCana, Crescent Point Energy and Petro-Canada. By now, several billion dollars in new investment have been put in doubt since the royalty proposals were floated two week ago by an outfit called the Alberta Royalty Review Panel. Claiming Albertans aren't getting their fair share of energy-resource royalties, the panel proposed a new regime to extract another $2-billion a year out of oil and gas production.

Based on the great socialist-statist principle revered by Alberta Conservatives, that mineral resources are "owned by the people," the review panel easily worked its way up to the idea that the people weren't getting enough of a share as owners.

Socialist Conservatives? Oh please gimme a break. They were the heroes of neo-cons for the past decade, heroes to dweebs like Corcoran. Now by asking for a fair share, and mind you its a small share based on extensive lobbying by the industry during the committees public hearings, Prince Eddie is suddenly being compared to Hugo Chavez.

The reality is that they already knew that Alberta's conventional oil and gas reserves are in a serious decline. Increasing royalties will not change that.They are making much ado about nothing to scare Albertans into accepting less than our fair share.

Don't Let Big Oil Set Our Royalty Rates make sure Ed hears from you.

SEE:

Albertans Are Simpletons Says Government

Royalty Is NOT A Tax

Fearless Prediction Confirmed

Morons

More Shills For Big Oil

Stelmach Sells Out

King Ralph Shills For Big Oil

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The Big Four oilsands companies’ influence threatens Alberta democracy, argues political scientist



BY ROBERT (BOB) L. ASCAH, RESEARCH FELLOW, THE PARKLAND INSTITUTE, UNIVERSITY OF ALBERTA

 ON AUGUST 22, 2022.


Over the past five years, ownership of oilsands production has become hyperconcentrated in four companies: Cenovus Energy, Canadian Natural Resources Limited (CNRL), Imperial Oil Limited and Suncor Energy.

These four producers – known as the Big Four – account for about 84 per cent of Alberta’s daily production of 3.3 million barrels of bitumen, a type of crude oil found in oilsands deposits.

Not only that, but it is the oilsands that have driven Alberta’s economy and finances for the past two decades. According to Alberta’s 2022 budget, oilsands production will make up 87 per cent of the province’s total oil production, as conventional fields empty.

In the face of growing environmental concerns and regulatory requirements, some international companies have decided to exit the oilsands. Between 2016 and 2019, foreign oil companies Chevron, Shell, BP and Statoil sold their oilsands holdings.

But other major Canadian producers, like CNRL and Cenovus Energy, have doubled down. They see the emission-intensive extraction operation as a golden opportunity to dominate an increasingly single-industry province.

As a political scientist who has worked in a large Alberta-based financial institution and the provincial treasury department, I am familiar with the booms and busts of Alberta’s economy and its correlation to provincial finances. The financial dependence of the Alberta government on bitumen royalties has increased enormously over the past several years.

An industry flush with cash

By comparing the amount of bitumen royalties and corporate income taxes from the Big Four to Alberta’s total revenue, it is possible to estimate the province’s fiscal dependency on these companies.

The numbers show that no province, other than perhaps New Brunswick with its dominant Irving family, comes near Alberta’s level of corporate fiscal dependency.

The revenue expected from the Big Four oilsands producers in 2022, assuming an average per barrel price of $115, will be a staggering $116 billion – about 25 per cent of Alberta’s GDP.

During the first half of 2022, Imperial Oil, Cenovus Energy, CNRL and Suncor Energy have reported net income of $17.1 billion.

What is less understood is what this vast increase in revenue means for the Alberta treasury and, to a lesser extent, the federal government.

During the first six months of 2022, the Big Four paid an estimated $8 billion in royalties to the Alberta government. Most of their $6.8 billion in income tax expenses went to the federal government, with the remaining 30 per cent going to the Alberta government.

Since Alberta has the lowest corporate tax rate in the country, this creates an enormous incentive for these companies to create as much taxable income as possible. The taxes and royalties so far this year amount to about $10 billion, which would easily pay for Alberta’s K-12 education system.

Lining the government’s pockets

The concentration of economic and financial power in the Big Four means Alberta’s next premier must heed the needs of these massive oilsands players. As oil prices rise, the financial dependency of the provincial treasury on the Big Four will grow.

Alberta’s 2022 budget adopted a very conservative oil price estimate of US$70 per barrel, which deliberately understated the expected surplus. It estimated bitumen royalties would return $10.3 billion during the fiscal year.

For every dollar above this US$70 per barrel estimate, an additional $500 million in oil royalties will flow to the government. At US$100 a barrel, an additional $9 billion in bitumen royalties would be paid, but with oil prices averaging US$116 since April 1, an additional $23 billion in oil and gas royalties could roll in.

Using this conservative oil price forecast, Alberta’s budget estimated its total revenue will be $52 billion. In reality, its revenue will likely be much higher.

The Big Four contribute about 20 per cent of Alberta’s total revenue. At US$100 per barrel, the Big Four contribute about 30 per cent of the province’s revenue and, at US$116 per barrel, the contribution exceeds 30 per cent. This gives these companies an enormous amount of control over Alberta’s finances and, by extension, politics.

Pathways Alliance

The Big Four’s political influence has most recently manifested in its dominant position in the Pathways Alliance. This lobbying consortium – known as COSIA – consists of the Big Four, ConocoPhillips and MEG Energy.

According to their website, COSIA’s purpose is to reduce greenhouse gas emissions from oilsands production and achieve net zero greenhouse gas emissions. The Pathways Alliance sees oilsands production carrying on for nearly three decades and beyond.

Central to this lobby effort has been successfully convincing Ottawa to give the firms a tax credit in the 2022 federal budget. This sets a dangerous precedent – if Ottawa itself is willing to grant the wishes of the Big Four, what chance will the Alberta premier have in refusing similar requests?

The fiscally dependent Alberta government will continue its battles against Ottawa on behalf of the Big Four. Whether or not this is good for Alberta’s democracy, its residents and the planet is another matter entirely.

This article is republished from The Conversation under a Creative Commons license. Disclosure information is available on the original site. Read the original article: https://theconversation.com/the-big-four-oilsands-companies-influence-threatens-alberta-democracy-argues-political-scientist-188567

A Half Billion Short

Not our Fair Share. It's short by a half billion. It doesn't take effect until two years from now, and Ed still has to address the fact that while he was in cabinet we lost between $1 billion and $2 billion a year in what was owed us for ten years.

The new royalty framework announced today will boost overall royalties by $1.4 billion or 20 per cent in 2010. But Stelmach has rejected a call to impose an oilsands severance tax that established producers would have had to begin paying next year.

The new rates, which will hike royalties from current highs of 35 per cent to a maximum 50 per cent for conventional oil and natural gas, won't take effect until 2009.

Under the new framework, which will take effect on Jan. 1, 2009, the government projects it will squeeze $1.4-billion more from the oil and gas sector, with most of the increases coming from the oilsands.

The government take from oilsands projects will increase from the current 1% before project payout, to a range of 1% to 9%, depending on oil prices.

When investment is recovered, projects will see royalty increases from the current 25% to a range of 25% to 40%, depending on oil prices. At current oil prices, that translates into a government take of about 65% of net revenue, up from the current 47%.

The new framework will boost government take for natural gas from 58% today to 60%, rather than 63% recommended by the panel; for conventional oil, government take goes up 5% to 49%, which is what the panel proposed; for oilsands, government share increases to between 57% and 66%, when the panel was recommending an increase of 64%.

Even so watch the whining and sniveling begin, as was shown by Oil Lobbyist and Ralph Klein's brain; Rod Love on CBC today.

What Big Oil pays in royalties is a mere $2.2 billion more than what the government brings in from you and I.

Energy royalties and taxes are vital to the Alberta government's Canada-leading wealth. They brought in $9.8 billion last year, compared to only $7.6 billion in personal income taxes.

Auditor General Fred Dunn bolstered the case for higher royalties earlier this month, when he revealed that the government has ignored its own conclusions since 2004 that it could reap $1 billion more a year without damaging oil and gas companies' business prospects.

SEE:

Hugo Stelmach

I Am Malcontent

Who Will Decide About Royalties

Headline Says It All

Ohhh Pulllleeeaasse

Alberta Needs A Chavez

Albertans Are Simpletons Says Government

Royalty Is NOT A Tax

Fearless Prediction Confirmed

Morons

More Shills For Big Oil

Stelmach Sells Out

King Ralph Shills For Big Oil

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The Big Four oilsands companies' influence threatens Alberta democracy, argues political scientist

This article was originally published on The Conversation, an independent and nonprofit source of news, analysis and commentary from academic experts. Disclosure information is available on the original site.

___

Author: Robert (Bob) L. Ascah, Research Fellow, The Parkland Institute, University of Alberta

Over the past five years, ownership of oilsands production has become hyperconcentrated in four companies: Cenovus Energy, Canadian Natural Resources Limited (CNRL), Imperial Oil Limited and Suncor Energy.

These four producers — known as the Big Four — account for about 84 per cent of Alberta’s daily production of 3.3 million barrels of bitumen, a type of crude oil found in oilsands deposits.

Not only that, but it is the oilsands that have driven Alberta’s economy and finances for the past two decades. According to Alberta’s 2022 budget, oilsands production will make up 87 per cent of the province’s total oil production, as conventional fields empty.

In the face of growing environmental concerns and regulatory requirements, some international companies have decided to exit the oilsands. Between 2016 and 2019, foreign oil companies Chevron, Shell, BP and Statoil sold their oilsands holdings.

But other major Canadian producers, like CNRL and Cenovus Energy, have doubled down. They see the emission-intensive extraction operation as a golden opportunity to dominate an increasingly single-industry province.

As a political scientist who has worked in a large Alberta-based financial institution and the provincial treasury department, I am familiar with the booms and busts of Alberta’s economy and its correlation to provincial finances. The financial dependence of the Alberta government on bitumen royalties has increased enormously over the past several years.

An industry flush with cash

By comparing the amount of bitumen royalties and corporate income taxes from the Big Four to Alberta’s total revenue, it is possible to estimate the province’s fiscal dependency on these companies.

The numbers show that no province, other than perhaps New Brunswick with its dominant Irving family, comes near Alberta’s level of corporate fiscal dependency.

The revenue expected from the Big Four oilsands producers in 2022, assuming an average per barrel price of $115, will be a staggering $116 billion — about 25 per cent of Alberta’s GDP.

During the first half of 2022, Imperial Oil, Cenovus Energy, CNRL and Suncor Energy have reported net income of $17.1 billion.

What is less understood is what this vast increase in revenue means for the Alberta treasury and, to a lesser extent, the federal government.

During the first six months of 2022, the Big Four paid an estimated $8 billion in royalties to the Alberta government. Most of their $6.8 billion in income tax expenses went to the federal government, with the remaining 30 per cent going to the Alberta government.

Since Alberta has the lowest corporate tax rate in the country, this creates an enormous incentive for these companies to create as much taxable income as possible. The taxes and royalties so far this year amount to about $10 billion, which would easily pay for Alberta’s K-12 education system.

Lining the government’s pockets

The concentration of economic and financial power in the Big Four means Alberta’s next premier must heed the needs of these massive oilsands players. As oil prices rise, the financial dependency of the provincial treasury on the Big Four will grow.

Alberta’s 2022 budget adopted a very conservative oil price estimate of US$70 per barrel, which deliberately understated the expected surplus. It estimated bitumen royalties would return $10.3 billion during the fiscal year.

For every dollar above this US$70 per barrel estimate, an additional $500 million in oil royalties will flow to the government. At US$100 a barrel, an additional $9 billion in bitumen royalties would be paid, but with oil prices averaging US$116 since April 1, an additional $23 billion in oil and gas royalties could roll in.

Using this conservative oil price forecast, Alberta’s budget estimated its total revenue will be $52 billion. In reality, its revenue will likely be much higher.

The Big Four contribute about 20 per cent of Alberta’s total revenue. At US$100 per barrel, the Big Four contribute about 30 per cent of the province’s revenue and, at US$116 per barrel, the contribution exceeds 30 per cent. This gives these companies an enormous amount of control over Alberta’s finances and, by extension, politics.

Pathways Alliance

The Big Four’s political influence has most recently manifested in its dominant position in the Pathways Alliance. This lobbying consortium — known as COSIA — consists of the Big Four, ConocoPhillips and MEG Energy.

According to their website, COSIA’s purpose is to reduce greenhouse gas emissions from oilsands production and achieve net zero greenhouse gas emissions. The Pathways Alliance sees oilsands production carrying on for nearly three decades and beyond.

Central to this lobby effort has been successfully convincing Ottawa to give the firms a tax credit in the 2022 federal budget. This sets a dangerous precedent — if Ottawa itself is willing to grant the wishes of the Big Four, what chance will the Alberta premier have in refusing similar requests?

The fiscally dependent Alberta government will continue its battles against Ottawa on behalf of the Big Four. Whether or not this is good for Alberta’s democracy, its residents and the planet is another matter entirely.

___

Robert (Bob) L. Ascah does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

___

This article is republished from The Conversation under a Creative Commons license. Disclosure information is available on the original site. Read the original article: https://theconversation.com/the-big-four-oilsands-companies-influence-threatens-alberta-democracy-argues-political-scientist-188567

Robert (Bob) L. Ascah, Research Fellow, The Parkland Institute, University of Alberta, The Conversation

More Shills For Big Oil

Add Link Byfield to the list along with Ralph Klein and Ezra Levant of those who don't believe Albertans deserve a fair share for our resources. Heck I say we should charge 100% royalties on our resources. Given that I am a socialist after all, most Albertans being reasonable folks like the Royalty Report.

And Link, like other conservatives of his ilk, always dismisses the fact that some of those resources also belong to the First Nations.

Funny thing though his announcement at the first meeting of his new political party fell flat amongst the severely normal Albertans that were there.

A townhall meeting by Alberta‘s newest political party was marked by bickering among the 60 people who attended over whether the province should increase energy royalties.

The fledging Wildrose Party has yet to gain party status or adopt policies, but called the meeting to talk about a government-appointed review panel‘s call for a 20 per cent hike in royalties.

Senate nominee Link Byfield chaired the meeting and denounced the proposed royalty increase, saying it would force energy firms to curtail exploration, resulting in thousands of job losses.

But others at the meeting disagreed, arguing that energy companies earning record profits can afford to pay higher royalties and that other countries are getting a larger take from their resources.

The crowd included former supporters of Alberta‘s governing Progressive Conservatives and some who had been members of the Alberta Alliance Party, which holds one seat in the legislature.

Byfield says putting an extra $2 billion in the hands of Premier Ed Stelmach‘s government would simply generate more waste, while leaving this money in the oilpatch generates jobs and prosperity.

EDMONTON/630 CHED - A townhall meeting called by a hopeful new political party brought in a few dozen people, and they weren't all on-side.

Even after the microphones were turned off, people kept up the debate. The Wildrose Party is yet to be officially registered in the province, but called a town hall to talk about why royalty rates need to stay where they are.

we seem to have the assumption that that money's going to go to us," said the party's executive director, Link Byfield. "I mean, how foolish can you be?"

Byfield talked to the small crowd about driving Alberta's economy with prosperous energy companies, and how a proposed hike in royalties would drive out investment. More than a few people taking to the mic were against that idea though, and were for the report recently released which calls for Albertans to take a larger share of oil and gas profits. (js, jk)

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 Nfld. & Labrador

Ottawa, N.L. disagree on who will foot hefty Bay du Nord royalty bill

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Project's location leaves Canada on the hook for

 international payments

Patrick Butler · CBC News · Posted: Apr 21, 2022 

Equinor's Bay du Nord project, seen here in a rendering, will be located in deep water about 500 kilometres east of St. John's. Given the distance from shore, Canada will have to pay international royalties under a United Nations convention. (Equinor)

Canada could soon be the first country on Earth to pay millions of dollars in international oil royalties as a consequence of the Bay du Nord megaproject in Newfoundland and Labrador's offshore — but just how that bill gets paid remains to be seen.

Article 82 of the United Nations Convention on the Law of the Sea (UNCLOS) allows countries like Canada — known as "broad margin" states that have larger-than-normal continental shelves — to extract offshore oil beyond their 200-nautical-mile limit.

But that extraction comes with a catch: broad margin states must pay royalties on that oil, money which then gets redistributed to developing countries.

Bay du Nord, spearheaded by Norwegian oil giant Equinor, is the first project to move the province's offshore oil industry past Canada's nautical limit and into the deep waters of the Flemish Pass, which sits 270 nautical miles — about 500 kilometres — east of St. John's.

Although Bay du Nord moved closer to commissioning this month – with a green light from the federal environment minister on April 6 – Ottawa and the Newfoundland and Labrador government still haven't agreed on just how the hefty royalty bill resulting from the United Nations convention will be paid.

Hundreds of millions of dollars at stake

Michael Gardner, a Halifax-based consultant who previously studied the issue for Natural Resources Canada, said Wednesday that UNCLOS royalties from the project could reach hundreds of millions of dollars.

"It all comes back down to, what are the production levels that you reach and what's the price of oil?" Gardner said.

So, where will that money come from?

The federal government negotiated UNCLOS in the 1970s, and Parliament ratified the document in 2003. Ottawa says the provincial government should help pay the royalties, but the province, which expects to receive $3.5 billion from Bay du Nord, rejects that suggestion outright — and has for years.

"The federal government is the signatory to UNCLOS, and would be responsible for making payments under Article 82," said Andrew Parsons, Newfoundland and Labrador's energy minister, in a statement last week.

"The province does not see a role for itself in this agreement."

The Newfoundland and Labrador government receives all of its offshore revenues through a deal with Ottawa known as the Atlantic Accord.

The Bay du Nord project will use a floating, production, storage and offloading vessel (FPSO) like the one pictured in this rendering to extract oil from below the ocean floor. (Equinor)

Couldn't Equinor pay the difference?

Ottawa could impose an additional levy on Equinor to help meet its international obligations.

But that approach carries risks, warned Gardner.

"At some point, if the operator is squeezed sufficiently, it no longer is an economic proposition," he said.

"It's that old Norwegian expression, you don't want to kill the cow you're trying to milk."

In a statement, Equinor spokesperson Alex Collins said, "Decision making regarding the implementation of UNCLOS royalties rests with the Government of Canada."

• Bay du Nord could be N.L.'s last oil project, hints federal environment minister

• Oil industry calls Bay du Nord approval triumph, climate advocates condemn it

Collins declined to answer further questions.

"The implementation of this mechanism in Canada, including the input from the various parties, is still under development," said Miriam Galipeau, a spokesperson for Natural Resources Canada.

N.L. position called 'almost petty'

Armand de Mestrahl, a member of the Canadian team that negotiated UNCLOS in the 1970s, said he believes a compromise between the provincial and federal government is inevitable.

"Don't forget that without that international agreement, which was painstakingly negotiated over several years by the federal government, there would be no formula. There would be no rights. We had to fight so that the international community would respect Canada's right," de Mestrahl said in an interview in French with Radio-Canada.

"People in Newfoundland… say, 'They stole our rights away.' It's easy to say that, but it's almost petty because the federal government and the Canadian delegation put in incredible effort to ensure that the continental shelf would be recognized."

He added, however, that Ottawa would be remiss to overlook the provincial government's current considerable debt load and series of structural deficits.

"It's hard to see how the government won't concede anything," de Mestrahl said.

Andrew Parsons, seen here in a file photo, is Newfoundland and Labrador's minister of industry, energy and technology. In a statement he said the province is not on the hook for royalty payments. (Patrick Butler/CBC)

Still time to negotiate

Ottawa and the provincial government still have years to come to an agreement.

Production at Bay du Nord isn't expected to begin until at least 2028 and under UNCLOS, no international royalties are due during the first five years of production, in a measure meant to help operators recoup upfront capital costs.

Annual royalty payments of one per cent of gross production revenues begin after the sixth year of production, and increase by one percentage point per year until the 12th year. Thereafter, royalty payments remain at seven per cent, according to the Canada Energy Regulator's website.

Bay du Nord is expected to produce at least 300 million barrels of oil over 30 years.

Risk of prolonged litigation

In a 2020 article, Dalhousie University law professor Aldo Chircop warned "there could be the realistic prospect of prolonged federal-provincial litigation" over who pays the UNCLOS royalties.

But in an interview last week, he said he believes "we live in the era of co-operative federalism. So basically what that means is that the federal and provincial governments will work together on this to find a way."

"Newfoundland would recognize that the reason why there is this offshore development out there is because of the Law of the Sea convention, which creates an obligation for them. And therefore, they would have to work with the federal government to honour this international obligation."

In an email regarding UNCLOS from October 2021 and obtained through access to information legislation, an employee at Newfoundland and Labrador's energy ministry wrote, "discussions between the federal and provincial governments, and industry are ongoing as to how to meet this obligation."

Read more articles from CBC Newfoundland and Labrador

King Ralph Shills For Big Oil

Well that didn't take long. King Ralph went from Premier to Oil Lobbyist in a blink of an eye. Faster than Lougheed and even Getty, his old big oil nemesis.

Klein slams Alberta royalty recommendation

And luckily he did it in Alberta, where weak tea lobbyist legislation was only just passed this spring. So it doesn't affect him. And he is doing it as they say; pro bono. Yep the Big Guy is out defending the Oil lobby and his own political decisions when it comes to selling out Albertans to the Calgary Oil Lobby.

Remember Ken Kowalski's 1994 appointment to chair the Alberta Energy and Utilities Board? It stirred up so much oilpatch opposition that then premier Ralph Klein had to rescind the post he gave the former deputy premier who'd been freshly bounced from cabinet.

Governments in Alberta and elsewhere have traditionally rewarded loyal supporters with plum appointments, often over the hue and cry of opposition parties and the general public.

The Kowalski appointment enraged a sector with considerably more clout: Big Oil. When it said the position required somebody more qualified and less political, Klein was forced to respond.

For a decade Albertans have been ripped off of profits from our resources, shoring up the oil industry with subsidies directly and indirectly, the latter being our penny on the dollar royalty rate for developing the tarsands. The result was the famous neo-con Klein Revolution, for which he annually collected gold medals from the Fraser Institute, which then went on to hire him once he retired as premier.

Should we be surprised he defends his regimes sell out of Alberta, native and Canadian resources? Of course not. He was after all the Premier the Party of Calgary picked. The Party of Calgary has become the bugaboo of Edmonton Sun columnist Neil Waugh, who describes them as the oil aristocracy.

Which, in a sentence, is Big Oil's strategy as the Stelmach Tories attempt to claw back $2 billion a year in energy revenues - largely from Calgary's oilsands aristocrats,who have been awarding themselves multimillion-dollar annual salaries while the owners of the resource get a penny on the dollar payout until the massive capital costs are recovered.

While Rick Bell his counterpart at the Calgary Sun gleefully pulls Big Oils beard in his column. Reminding us from his window view of Petro Plaza,

The outrage from the highest offices in the tallest towers is so loud it is being heard all over the provincial government.

Tory MLAs are being reminded of who runs the show, or who think they run the show, or who did the show until now.

On Tuesday, mere minutes after a report called for the province to hike oil and gas royalties and get a fair share for the resource Albertans own, the oil industry sent the provincial powers a simple one word e-mail.

It read: "Disaster."

Interesting the oilpatch isn't commenting on the fact, on natural gas alone, Albertans are out about $6 billion. That's $6 billion that could have gone to affordable housing, schools, health facilities, other public building projects, a tax break, savings to the Heritage Fund and on and on.

The reality is that the Hunt Report outright says that Albertans have been shortchanged for a decade when it comes to oil royalties.

Royalty review calls for massive jump in oilsands payouts

A panel reviewing the fairness of Alberta's royalty take from oil and gas development said today Albertans are not collecting a fair share and recommended a massive jump in royalties paid by oilsands projects.

The six-member panel headed by Bill Hunter recommended that the government's overall take from oilsands projects be raised to 64%, from 49% today. The panel recommends leaving the 1% pre-payout royalty unchanged, but that the post-pay out royalty be increased to 33%, from 25%.

"Albertans do not receive their fair share from energy development and they have not, in fact, been receiving their fair share for quite some time," Mr. Hunter said in a letter to Alberta Finance Minister Lyle Oberg. "Royalty rates and formulas have not kept pace with changes in the resource base, world energy markets and conditions in other energy rich jurisdictions. Albertans own the resource."

Billions of dollars have been pocketed by the private interests while Ralph declared debt and deficit hysteria, cut jobs, delayed infrastructure, destroyed the health care system by laying off nurses and reducing graduates for their jobs and those of doctors, contracting out services, etc. He told us we were broke, and had to tighten our belts, the debt and deficit crisis was described by King Ralph as the need to not renovate our house, but to demolish and rebuild.

One of his would be heir apparent's is our current provincial treasurer Lyle Oberg, a true believer, who says dark days are upon us. Of course he too opposes asking for what belongs to the people, a just royalty for our resources.

In that wonderfully twisted world of social conservatism the politics of giving unto Caesar has become the economics of giving unto Big Oil. The logic goes like this, if it weren't for big oil the PC party would be nothing, so it does it all it can for Big Oil. Now like all One Party States this logic is then transformed into what is good for Big Oil is good for Alberta.

The irony is that this royalty scam was not even created by Klein. Rather it was created after the collapse of the global oil market in 1984 by then Petro Premier Don Getty. Don being the oil boys insider for the moment, Klein was able to scape goat him for all of Alberta's economic problems which were a result of the market melt down, the recession of the eighties. So when the momentary debt and deficit crunch came world wide, Klein was ready to step in. Rather than end the tax and royalty holiday for Big Oil, he continued it and turned on the people of Alberta to pay for the deficit.

Deficits are not permanent, they are a year by year accounting phenomena. A debt on the other hand exists and transfers from year to year. A debt is what you owe someone else. You cannot have a debt to yourself. But in the wonderful Wizard of Oz Topsy turvy world of neo-con logic, government financed and owned infrastructure was seen as a business cost rather than as an asset.

The wailing and gnashing of teeth from the industry lobbyists, including Klein, and those in the investment business is predictable if somewhat disingenuous. After all this is Alberta, not Saskatchewan or Manitoba. This is a Tory run one party state at the beck and call of the Petroleum Club in Calgary. And the panel doing the review well it was stacked with capitalists.

The report was written by a six-member, blue-ribbon panel named by the government. The members included two economics professors, a chief economist for an Calgary-based energy research firm, a businessman, a forestry executive and a former senior executive with an oil company.

If anything, the panel was seen as too pro-business. In fact, the appointment of Sam Spanglet to the panel caused a stir back in February when news broke that the former oil executive still had "a couple of million" dollars worth of stock options with Shell Canada.

As if to bolster the opposition's accusation, the Canadian Association of Petroleum Producers was reportedly pleased with the panel's members and their credibility.

It seemed just about everyone was predicting the panel would deliver an industry-friendly conclusion.

One of the funniest comments comes from an one of those dime a dozen investment newsletters;

"Do they really wish to kill this golden goose with one fell swing of the tax axe?" said economist Dennis Gartman, editor of the Gartman Letter, an influential investment newsletter based in Virginia, who was "shedding tears" about Alberta going "socialist" and wondering whether the provincial government has "gone mad."

Socialist, well gee where has he been. Let's see Alberta is dominated by one party, a party that has been in power so long it naturally thinks it is the government. One that has subsidized the oil industry at the cost of the owners fair share. That spells socialism to me....well state capitalism actually, but for the rabid right they are the same. As ex- King Ralph pointed out;

"It was a regime created by industry and government. Those kinds of rules don't change on a whim. Companies are nervous."

And then there are those who, like our Treasurer Lyle Oberg, are doom and gloom proponents who claim that the sky is falling and once again are declaring impending debt and deficits. The reality is that it was the royalty holiday that Getty gave the industry that led to the deficit crisis of 93-95 that gave Klein an excuse to implement the Fraser Institutes neo-con revolution in Alberta.

On page 23, for example, the report points out "The panel was constantly told by companies and by energy industry trade groups that Alberta ranked very high in Government Take." However, those companies and groups were citing from an outdated 1997 report by an international expert. The review panel commissioned the same international expert who compiled new data and concluded "the very opposite is now unequivocally true."

In this case its also the oil and gas industries who are claiming a crisis in their industry and again have their hands out asking for more state subsidies.

Yet, because of public expectations, it's unlikely the panel will recommend what's needed at this time: a reduction in royalties to salvage what's left of this vital part of the sector. Indeed, there are indications the slump is not just another cycle, but a structural change that will require new thinking from everyone -- industry, government and labour -- to reduce costs so it can compete with the cheap imports of liquefied natural gas invading the U.S. market, once dominated by Alberta producers.

Oh you didn't know there was a slump in the oil and gas business? It didn't appear that there was according to the markets this week.

Oil prices hit record highs

Oil dips, but gas prices set to rise

Taking Cues From Fed, Speculators Bid Up Oil

More oil firms hike fuel prices

Crude oil sails over $80 buoyed by bullish mkt

Oil near new high amid tight supplies

Well there is. It's called peak oil and the industry is panicking over its potential impact. Alberta's conventional oil and gas reserves will peak in 2020 and begin to decline, as will provincial revenues. And so the oil business in Alberta is focused on developing the tarsands output, regardless of costs to the public or the environment, by then.

A litany of Canadian investment banks also pulled no punches in their assessment of the proposals in the Our Fair Share report.

FirstEnergy Capital Corp. warned the proposed measures, in a report entitled "Albertastan? Misguided Intentions and the Fair Share Option," would be "negative if adopted, and will slow down the development of oilsands."

Well frankly that's a good thing since the boom is artificial and has caused untold problems in Alberta. We need a planned economy from our 'socialist' government, since the oil sands development has gotten out of control.

Since Prince Eddies government refuses to adopt such a plan, then if the royalty regime forces a slow down all the better. Alberta is an overheated economy. One that is sure to bust big, because no boom is sustainable. And woe betide Albertans if that happens. The boom of the seventies and early eighties was followed by a quarter century recession in the province. One that was used as an excuse to rack up surpluses at the expense of public services and infrastructure expenditures.

Stelmach says he'd stand up to big oil

Be still my beating heart. Anyone who thinks Farmer Ed is going to accept this report in whole, has missed the fact he has not accepted the recommendations of any public reports that he called for upon his appointment as Alberta's CEO. He has adopted the minimum to make him look good sometimes that has meant rejecting the public reports and making a big deal out of the fact he asked for them.

We need only remember the Alberta Housing Report, which called for rent controls. He rejected this outright. He has rejected the public commission calling for controlled growth and a slow down in oil sands development as well.

A columnist at the U of C student newspaper the Gauntlet sums it up well.

Furthermore, even if the provincial government does go for the whole 20 per cent increase, Alberta’s royalty rates will still be some of the lowest in the world. And don’t try to tell me that all the oil companies will uproot and flee the country the second people start talking about increasing royalties. As a fellow editor commented to me recently, “They’re in the oil business. They’ll go where the oil is.” The oil companies have invested too much money and stand to make far too much money for them to vanish in a cloud of carbon monoxide like the conservatives are arguing.

Anybody who has studied the provincial Conservatives in even the shallowest capacity knows that Premier Ed “Steady Eddy” Stelmach will likely not raise royalties at all come Oct. when he makes the decision. If royalties are increased, it will likely be by just enough for Stelmach to seem like a populist without putting even the slightest dent in Big Oil’s beer budget. This isn’t necessarily is bad thing; the quality of life in Alberta will continue to improve at the same rate it always has if nothing is done. There’s no immediate negative consequence in deferring to the oil companies on this one, and that’s likely why nothing will be done: nobody wants to rock the boat. However, it’s worth considering the possibilities of even a slight increase.

And those who are in the known when it comes to economics agree. Big Oil will stomp their feet and wail but all is for naught. They will go where the oil is and if they don't well there are the Chinese, and Japanese, and....

Alberta premier walks into lion‘s den with business leaders over royalty review

Many of the business leaders attending the event said whether Stelmach chooses in the coming weeks to adopt the report‘s recommendations or not will be his most important decision, not just for now but for generations to come.

“My view is that the province should just out of hand reject this report because ... the decisions that they made are totally out of touch with the economy and what‘s happening around the world right now,‘‘ said Doug Mitchell, co-chairman of the forum.

“I don‘t see any credibility whatsoever in the report.‘‘

But one energy specialist said regardless of what Stelmach decides, the oilsands are too rich and vast for industry to ignore.

Ken Moors, a managing partner of Risk Management Associates in Pittsburgh, Pa., said he has brokered royalty deals around the globe and he believes Stelmach has been smart to make this dispute a public one.

“This is a rare opportunity for a democracy to do things in the open,‘‘ he said.

“But you must remember that every other time these royalty situations have been advanced in other countries, they‘ve been advanced in a market in which the expectation was that supply was going down. This is the only example I‘ve ever seen where these are being introduced in a market where the supply is bound to go up.‘‘

He said the province will still be very competitive with other countries.

"It is not going to take place . . . this is the only major supply side push left in the international oil market, so people either invest here or they see their profit margins dwindling in the future -- there is no other alternative," he said.

That is rich, There Is No Alternative. TINA. The famous neo-con excuse for selling off government services to embrace the Market. And now the shoe is on the other foot for Big Oil. TINA. LOL.

Amongst the sturm and drang of capitalist outrage in columns in the National and Financial Post comes a whiff of wisdom if not prudent observation.

Royalty review just good business

Diane Francis, Financial Post

Published: Saturday, September 22, 2007

It's important to note that what is being discussed is not taxation but the royalty paid to Albertans who own the lion's share of subsurface mineral rights in the province. And they are not getting as much revenue from their resources as competing jurisdictions are, according to the report. Industry spokesmen dispute the numbers and say Alberta's take is already high enough, and any higher will drive away investment.

For instance, conventional oil and gas royalties and taxes in the U.S. average 67% while they are 50% in Alberta, said the report.

Non-conventional oil production -- offshore and heavy oil -- is another interesting story. Heavy oil royalties in Cold Lake are 60% compared with Nor-way's offshore royalties of 76%, California's heavy-oil royalties (and taxes) of 67.5% and Venezuela's 72%.

To me, both the markets and media have been hysterical about nothing. Stelmach is not some fiscal confiscator. He's the CEO of the most valuable jurisdiction in the Western hemisphere and his review of royalties is simply prudent business practice.

Just like Danny Williams is doing in Newfoundland except in order to get his folks the best deal he didn't sell the goose, just a part of the golden egg. Funny thing the same folks whining over the Alberta Royalty report said this about Danny's provincial version of Petro-Can;

Paul Barnes, the St. John's-based spokesman for the Canadian Association of Petroleum Producers, said state equity stakes are common throughout the world beyond North America and Europe. He said his members are prepared to negotiate exact figures for specific deals. "It's not overly concerning to our members that equity participation is on the table here because we experience it on worldwide basis."

Gee you don't hear that from the CAPP when it comes to Alberta's Royalty Revue.

"At first blush," gulped Canadian Association of Petroleum Producers spokesman Greg "Sky is Falling" Stringham, "this is far worse than anticipated."

So what is all the fuss about, why the chicken little exercise in outrage? What does this dastardly commie socialist pinko report say. Well it is damning of years of incompetence by an entrenched and debouched Tory party of Calgary Oil insiders.

A tired old party that instead of collecting what is owed to Albertans by Big Oil for the past decade, forget just the last few years of booming oil prices, gave them a royalty holiday paid for by Albertans. We paid in increased user fees, privatization, contracting out, wage freezes in the public sector, caps on AISH payments and claw backs,kicking the poor off welfare, selling off the ALCB at fire sale prices, systemic mistreatment of seniors in seniors homes, the Health Care premium which is a tax grab, failure to invest in infrastructure, firing of nurses and doctors, capping of nursing and doctor graduates in Alberta universities, not only closing but blowing up hospitals, lack of vocational and technical education that has led to current labour shortages, etc. etc.

The government makes more money off gambling then it does off either royalties or taxes on conventional oil and gas and the tarsands.

And no matter what Stelmach does, he cannot make up for being part of a government that at best was asleep at the wheel for two decades, at worst was implementing harsh cuts and reconstructing the state according to a neo-con agenda that was never for the benefit of the people of Alberta but to please the Fraser Institute and its pals.

Stelmach will never, ever, ask for the billions Big Oil owes the people of Alberta who had to pay for Ralph Klein's renovation of the province for their and the Fraser Institutes benefit.

The Conservative regime has forgotten that natural resources belong to Albertans and not developers, says the report from the royalty review panel appointed by the same government.

And the Alberta Energy ministry is bracing for another unsparing probe next month of how it handles royalties from Auditor General Fred Dunn.

His office has chided the government in past years for being unable to effectively track what companies owe in royalties, and suggested the problem was costing hundreds of millions of dollars in royalty losses.

But the royalty review panel took the criticisms much further, recommending a new oversight body and far better reporting to the public.

"During our review we discovered an absence of accountability from the government to Albertans, the owners of resources," panel chairman Bill Hunter told reporters this week. "We encountered significant difficulty in accessing information -- to have even simple questions answered."

"How the administration or public leaders make informed decisions in this vital arena is an open question," says the review report, made public Tuesday.

"In the case of Alberta's multibillion-dollar energy reserves, seen as an enterprise, the onus on government to inform the public should actually be orders of magnitude higher," the report said. "Stated politely, this standard of disclosure is not presently being met.

"The panel is of the opinion that the government has not built up sufficient expertise and capacity to administer and manage this complexity."

It also identified a specific problem of missing money, or "what preliminarily seems like a pattern of material deferral of payments that is not in the interests of Albertans."

Once again the real Alberta Deficit is revealed, the democratic deficit. So the next time some Alberta Conservative MLA or MP, they are after all joined at the hip, talks about accountability, transparency, honest government, usually pointing fingers at Liberals in Ottawa, just ask them if they know where the missing billions from Big Oil are squirreled away.


Read it for yourself.

Royalty Review Panel final report

SEE:

Transparency Alberta Style

Closing The Barn Door

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