Newfoundland's Danny Boy brings home the bacon while Albertans suffer from a-give-away-a-day by Eddie Stelmach. And both of 'em are Conservative Premiers.
William's victory of State Capitalism for the Public Good is a lesson for Stelmach as Erin Weir points out;For months, Newfoundland and Labrador Premier Danny Williams has stared down the country's largest oil companies. Wednesday, "Big Oil" -- as the bombastic Williams likes to call the multinationals -- blinked.
At a St. John's news conference, the premier announced a "memorandum of understanding" outlining a deal that will develop the $5-billion Hebron offshore oil project located 350 kilometres southeast of the provincial capital. In a rare public-private arrangement, the province will invest $110 million in return for a 4.9-per-cent equity stake in the venture. Williams said that will amount to about 35 million barrels of oil out of a possible overall haul of 700 million barrels.
On the royalty side, the province received an improved rate structure that would deliver a new royalty of 6.5 per cent of net revenues when oil prices exceed $50 a barrel.
Williams’ victory clearly contradicts the view that oil is a “globally competitive” business in which governments need to give away substantial resource rents to get investment. In fact, Canadian governments have a very strong bargaining position because our country hosts more than half of global reserves open to private investment. Even the Premier of a small, poor province successfully stood up to the multinational oil companies. This outcome begs the broader question of why larger, richer provinces collect such unimpressive royalties on the depletion of their finite oil and gas reserves.
The irony is that Eddie wants to adopt some practices from Newfoundland, unfortunately not those dealing with oil/resource ownership and royalties. As they used to say about Red Rose Tea; 'Pity'.
Stelmach wants to find out how the Newfoundland and Labrador cellphone driving ban, implemented in 2003, has affected vehicle accident rates in that province.
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