Welcome, Guest

• Forgot your password?
• Apply for membership

1. •  
     CommentAuthorSputnik
   • CommentTimeApr 29th 2008

    
   <blockquote><cite>Posted By: Mr. Nobody</cite>thats fine, ignore Norways success. When oil diminishes in value, I'm sure you'll come calling for some help.
   
   The US is not acting rationally under Bushco, in case you've been on vacation for the last 6 years.</blockquote>
   
   You are missing my point completely. I am not ignoring Norway. I am just stating that it isn't a very fair comparison. To tell Alberta or Canada to "just be like Norway" is ignoring the things that makes both Canada and Norway unique.
   
   Norway has $350 billion the bank and better social services for the following reasons.
   
   - Oil is cheaper to extract and is of higher quality.
   - Norway outputs FAR more oil than Canada with a population the size of AB and SK combined.
   - Residents are heavily taxed compared to Canadian standards.
   - A large portion of the oil reserves is owned by state owned Petoro. StatoilHydro was also once also state owned but privatized in 2001.
   - Norway only has a population of 5 million people (far easier to manage and provide social services to than 35 million)
   - Norway is a far smaller and more dense country making it easier to manage on a governmental level.
   
   Some other notable facts.
   
   - Norway is one of the top countries when it comes to countries with the highest cost of living. It is on average 30% higher than the US.
   - Unleaded gas in Norway is currently $2.50/L
2. •  
     CommentAuthorSputnik
   • CommentTimeApr 29th 2008

    
   <blockquote><cite>zander</cite>All else aside, I think the issue that Tekim is making is that Norway (along with the majority of other oil-producing areas) charges higher royalty rates and invests them wisely. Alberta's rates are low, and the argument has been made (repeatedly) that Alberta short-changes itself in doing so. When the oil is gone, Norway will still be in a strong economic position as they have invested their wealth wisely. Alberta? They charge low rates and give away $400 cheques. What will happen when the oil is gone?</blockquote>
   
   Granted. Is Alberta really short changing itself? Are oil companies in Canada running away with massive profits while Norwegian energy companies are barely getting by?
   
   Norway charges 2.7 times more per barrel in oil royalties than Alberta. However sucking high quality oil out of the ocean floor is considerably cheaper than digging it out of the ground and then separating it from the sand and other hydrocarbons around it. Could Alberta charge more? Perhaps. I am sure the bigger companies can afford it, but what about the smaller junior oil companies? What about the exploration companies?
3. •  
     CommentAuthorcancelbot
   • CommentTimeApr 29th 2008 edited

    
   Moderator

   Posted By: zanderAnd what would that be? Secession? This is where the provincial mentality gets in the way of running the country and is a further argument for why provincial governments have outlived their usefulness. I'd rather see Alberta's oil wealth accrue to the country as a whole instead of really benefiting only one province.

   
   
   I think there is some merit to the way things work right now. There is clearly an economic incentive for all of Canada to develop the natural resources in western Canada. To a certain extent, a person or a company need to have a presence in Alberta to take full advantage of it. As a result, Joe Blow decides he wants a piece of the action, leaves the fish plant in Newfoundland, and moves to Grande Prairie or wherever. His lifestyle probably improves, and there is one more person building up Alberta's economy. It's the invisible hand working as it should.
   
   Under a completely centralized system, western provinces wouldn't reap the same benefits - the money would flow east, and probably wouldn't be reinvested where it came from. Instead, there would be much more redistribution among other provinces. This isn't necessarily bad in and of itself, but it is unsustainable in that it is providing a bit of a false incentive for people to stay in economically laggard regions and thus deprives western provinces from reaching their full economic potential (and generating more wealth from everyone).
   
   Having equalization payments is a good thing, but the region that is the source of natural resource wealth should reap the benefits - otherwise everyone is worse off. With few exceptions, Manitoba would not be better off if oil prices plummeted (unlikely to say the least) and the Alberta economy tanked.

   Thankful People: Sputnik
4. •  
     CommentAuthorzander
   • CommentTimeApr 29th 2008

    
   <blockquote><cite>Posted By: Sputnik</cite>Granted. Is Alberta really short changing itself? Are oil companies in Canada running away with massive profits while Norwegian energy companies are barely getting by?</blockquote><p>
   
   Yes Alberta is IMO. Here's <a href=http://www.pembina.org/op-ed/1217>another take</a> on it. And Norwegian companies do just fine (as do companies in Alaska, Texas, etc). <p>
   
   <blockquote>Norway charges 2.7 times more per barrel in oil royalties than Alberta. However sucking high quality oil out of the ocean floor is considerably cheaper than digging it out of the ground and then separating it from the sand and other hydrocarbons around it. Could Alberta charge more? Perhaps. I am sure the bigger companies can afford it, but what about the smaller junior oil companies? What about the exploration companies?</blockquote></p>
   
   All the talk of high quality vs. low quality oil obscures the real issue - namely that Norway charges 2.7 times more per barrel. Alberta could certainly take production costs into account when setting royalty rates (different for tar sands vs. light sweet crude, etc). And with oil prices edging $120/barrel, Alberta can afford to charge more in royalties.
5. •  
     CommentAuthorzander
   • CommentTimeApr 29th 2008

    
   <blockquote><cite>Posted By: cancelbot</cite>I think there is some merit to the way things work right now. There is clearly an economic incentive for all of Canada to develop the natural resources in western Canada. To a certain extent, a person or a company need to have a presence in Alberta to take full advantage of it. As a result, Joe Blow decides he wants a piece of the action, leaves the fish plant in Newfoundland, and moves to Grande Prairie or wherever. His lifestyle probably improves, and there is one more person building up Alberta's economy. It's the invisible hand working as it should.<p>
   
   Under a completely centralized system, western provinces wouldn't reap the same benefits - the money would flow east, and probably wouldn't be reinvested where it came from. Instead, there would be much more redistribution among other provinces. This isn't necessarily bad in and of itself, but it is unsustainable in that it is providing a bit of a false incentive for people to stay in economically laggard regions and thus deprives western provinces from reaching their full economic potential (and generating more wealth from everyone).<p>
   
   Having equalization payments is a good thing, but the region that is the source of natural resource wealth should reap the benefits - otherwise everyone is worse off. With few exceptions, Manitoba would not be better off if oil prices plummeted (unlikely to say the least) and the Alberta economy tanked.</blockquote><p>
   
   You've raised some very good points here. I don't entirely agree, but I see where you're coming from. I don't deny that wealth should accrue to the region, although it can also be argued that it will happen in the form of jobs and the related economic development. I guess the way I see it is that natural resource revenues more properly (although not constitutionally) should accrue to the central government and be used to fund national priorities. What good does it do for Alberta to send out $400 royalty cheques when said resources could be used for any number of national priorities. And greater access to natural resource revenues could also lower the need for federal tax revenues.
6. •  
     CommentAuthorSputnik
   • CommentTimeApr 29th 2008

    
   <blockquote><cite>Posted By: zander</cite>Yes Alberta is IMO. Here's<a href="http://www.pembina.org/op-ed/1217">another take</a>on it. And Norwegian companies do just fine (as do companies in Alaska, Texas, etc).</blockquote>
   
   The Pembina Institute? Was Al Gore and Greenpeace unavailable for their unbiased opinions as well? ;-)
   
   That opinion says nothing about the increased costs of manpower and related industry costs to extract and refine a market ready barrel of oil and assumes that all Alberta oil is sold at light sweet crude prices. Alberta's largest oil company EnCana has decreased spending on oilsands development in Alberta because the costs are currently not worth the effort and long term risk. Remember that while oil might be $120/barrel now. Most oil companies look at 5-10 year projections in terms of oil prices and development and exploration costs before investing in a certain project. Hence the reason they are currently investing a ton of money in Nova Scotia's Deep Panuke projects instead.
   
   <blockquote><cite>Posted By: zander</cite>All the talk of high quality vs. low quality oil obscures the real issue - namely that Norway charges 2.7 times more per barrel. Alberta could certainly take production costs into account when setting royalty rates (different for tar sands vs. light sweet crude, etc).</blockquote>
   
   I am sure it has been taken into consideration. Hence the figure Alberta came up with. There is a fine balance that must be met. To look at a select few big oil company profits as a the only deciding factor that "Alberta isn't charging enough" is rather short sighted and fails to recognize the contingency plans for low oil that these companies also must maintain.
   
   <blockquote><cite>Posted By: zander</cite>And with oil prices edging $120/barrel, Alberta can afford to charge more in royalties.</blockquote>
   
   Alberta royalties go up with the price of oil. It is not a fixed rate per barrel. Unfortunately the more aggressive oil companies get trying to produce as much as possible so do the costs of doing business.
7. • CommentAuthorDeanK
   • CommentTimeApr 29th 2008

    
   "recognize the contingency plans for low oil that these companies also must maintain."
   
   HAHAHAHA... thats so funny....
   
   the contingency plan is to lay off as many employees as possible.... dont believe me? Gave into the crystal ball of the 80's
8. •  
     CommentAuthorSputnik
   • CommentTimeApr 29th 2008

    
   <blockquote><cite>Posted By: zander</cite>What good does it do for Alberta to send out $400 royalty cheques when said resources could be used for any number of national priorities.</blockquote>
   
   Consider it Alberta's "Spirited Energy" campaign with instant national coverage. :-)
   
   <blockquote><cite>Posted By: zander</cite>And greater access to natural resource revenues could also lower the need for federal tax revenues.</blockquote>
   
   Like for bailing out manufacturing companies in Ontario that have been crippled by greedy unions?
9. •  
     CommentAuthorzander
   • CommentTimeApr 29th 2008

    
   <blockquote><cite>Posted By: Sputnik</cite>The Pembina Institute? Was Al Gore and Greenpeace unavailable for their unbiased opinions as well? ;-)</blockquote><p>
   
   Unbiased or realistic? Personally, I find it refreshing (and quite rare) to see views out of Alberta that don't cater to the oil industry. Honesty is something that comes in very handy. ;)
   
   <blockquote>That opinion says nothing about the increased costs of manpower and related industry costs to extract and refine a market ready barrel of oil and assumes that all Alberta oil is sold at light sweet crude prices. Alberta's largest oil company EnCana has decreased spending on oilsands development in Alberta because the costs are currently not worth the effort and long term risk.</blockquote><p>
   
   Nor does it talk about the low-risk and secure environment of Alberta. It doesn't talk about the high security costs (including bribes) that oil companies have to pay elsewhere. It doesn't address the fact that NAFTA eases the trans-border shipment of oil. Nor does it take into account the fact that Alberta has a trained and educated workforce available. ;)
   
   The reality is that with oil at nearly $120/barrel, OPEC at capacity, Africa and the Middle East unstable, and both the North Sea and Mexican oil fields in steep decline - Alberta has many natural advantages. It's up to them how much of the economic rent on their resource they want to capture. Up to date, it hasn't been much. Oil companies like to cry poor and threaten to leave. Is that reason enough to bend over for them? Newfoundland sure didn't. <p>
   
   (<a href=http://www.cbc.ca/canada/calgary/story/2007/09/19/royalty-reaxn.html>Energy companies should quit whining: royalty review member</a>)<p>
   
   <blockquote>I am sure it has been taken into consideration. Hence the figure Alberta came up with. There is a fine balance that must be met. To look at a select few big oil company profits as a the only deciding factor that "Alberta isn't charging enough" is rather short sighted and fails to recognize the contingency plans for low oil that these companies also must maintain.</blockquote>
   
   Pembina did a report on Alberta's royalty structure. Regardless of what you think of their "bias", it' worth reading and it has some surprising statistics (especially with regards to the royalty rates on oilsands). And I think the real short-sighted view is to assume that what's best for the oil companies is what's best for the people of Alberta. Oil companies have demonstrated that they will work with all sorts of different royalty regimes.<p>
   
   <a href=http://www.pembina.org/pub/1541>Our Fair Share: Pembina's Resource Royalty Primer</a>
10. •  
      CommentAuthorzander
    • CommentTimeApr 29th 2008

     
    <blockquote><cite>Posted By: Sputnik</cite>Like for bailing out manufacturing companies in Ontario that have been crippled by greedy unions?</blockquote><p>
    
    Or for cleaning up the environmental disaster zone in the oil sands? ;)
11. • CommentAuthorDeanK
    • CommentTimeApr 29th 2008

     
    or for figuring out what to do about geothermal heating ...which is cooling all the underlying rock/earth and causing the next environmental disaster in 100 years? Actual quote from one of the proponents of Geothermal heating on TV the other day "well sure it cools the rocks, but its so slow we wont notice if for at least 70-100 years"
12. •  
      CommentAuthorsmjpilot
    • CommentTimeApr 29th 2008

     
    <blockquote><cite>Posted By: DeanK</cite>or for figuring out what to do about geothermal heating ...which is cooling all the underlying rock/earth and causing the next environmental disaster in 100 years? Actual quote from one of the proponents of Geothermal heating on TV the other day "well sure it cools the rocks, but its so slow we wont notice if for at least 70-100 years"</blockquote>
    Doesn't that heat get replaced by pumping heat down to "the rocks" in summertime?
13. • CommentAuthorEdWin
    • CommentTimeApr 29th 2008

     
    The price out here in Abbotsford ranges from 118.9-122.9. Isn't this more than prices in Winnipeg???????
    
    Wierd that gas in BC would be cheaper than Winnipeg.
14. •  
      CommentAuthorzander
    • CommentTimeApr 29th 2008

     
    <blockquote><cite>Posted By: smjpilot</cite>Doesn't that heat get replaced by pumping heat down to "the rocks" in summertime?</blockquote><p>
    
    That's what I thought too.
15. •  
      CommentAuthorJimmytufish
    • CommentTimeApr 29th 2008

     
    More record profits....
    
    "BP's pre-tax profits rose 48 per cent in the first quarter to $6.6 billion (£3.3 billion) while Shell increased its profits 12 per cent to a record $7.8 billion (£3.9 billion). "
    
    This is simply ridiculous already.
    
    http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3837029.ece
16. • CommentAuthorDeanK
    • CommentTimeApr 29th 2008 edited

     
    <blockquote><cite>Posted By: smjpilot</cite><blockquote><cite>Posted By: DeanK</cite>or for figuring out what to do about geothermal heating ...which is cooling all the underlying rock/earth and causing the next environmental disaster in 100 years? Actual quote from one of the proponents of Geothermal heating on TV the other day "well sure it cools the rocks, but its so slow we wont notice if for at least 70-100 years"</blockquote>Doesn't that heat get replaced by pumping heat down to "the rocks" in summertime?</blockquote>
    
    nope...over time there is more of heat pumped up then down and it warms up the underlying rocks/etc.
    
    in fact every major city in the world has already warmed up the ground underneath it just by exsting... enver mind all this pump the heat up crap.
17. •  
      CommentAuthorSputnik
    • CommentTimeApr 29th 2008

     
    <blockquote><cite>Posted By: zander</cite><blockquote><cite>Posted By: Sputnik</cite>Like for bailing out manufacturing companies in Ontario that have been crippled by greedy unions?</blockquote><p>Or for cleaning up the environmental disaster zone in the oil sands? ;)</p></blockquote>
    
    Apparently according to the Liberals that just requires signing a magic paper and waving it in the oppositions face.
18. •  
      CommentAuthorcancelbot
    • CommentTimeApr 29th 2008 edited

     
    Moderator

    Posted By: zanderYou've raised some very good points here. I don't entirely agree, but I see where you're coming from. I don't deny that wealth should accrue to the region, although it can also be argued that it will happen in the form of jobs and the related economic development. I guess the way I see it is that natural resource revenues more properly (although not constitutionally) should accrue to the central government and be used to fund national priorities. What good does it do for Alberta to send out $400 royalty cheques when said resources could be used for any number of national priorities. And greater access to natural resource revenues could also lower the need for federal tax revenues.

    
    
    These are undoubtedly some good times for people in Alberta. However, the milk and honey being enjoyed in Wild Rose Country are, and will continue to be diluted by the continued influx of people from across the country. The marginal benefit from moving there will decline as costs go up and demand for labour goes down (although it's clearly not at that point yet). Also, the tremendous costs of developing infrastructure (not just roads, but hospitals, schools, social services, and all the mundane stuff that goes along with it) will put a damper on the party in a hurry.
    
    If you take the view that the government's economic goals do (or should) include the goal of maximizing wealth across the board, there is probably no more efficient way to do that than to provide tangible incentives for people to go to the source of said wealth, and work towards developing it even further.
    
    I agree that equalization is good. Important government-provided services like health care, education, etc. should be of a consistently high standard across the country. Indeed, that is the stated purpose of equalization. No one wants to see gold-plated hospital toilets in Calgary while people in New Brunswick make do with third-world style health care. However, it would ultimately be to everyone's detriment if royalties went to Ottawa and redistributed without regard for reinvesting it in areas where it would likely create even more wealth.
19. •  
      CommentAuthorzander
    • CommentTimeApr 29th 2008

     
    <blockquote><cite>Posted By: Sputnik</cite>Apparently according to the Liberals that just requires signing a magic paper and waving it in the oppositions face.</blockquote><p>
    
    And that would be an improvement on what the Alberta government is currently doing. ;)
20. •  
      CommentAuthorSputnik
    • CommentTimeApr 29th 2008 edited

     
    <blockquote><cite>Posted By: zander</cite><blockquote><cite>Posted By: Sputnik</cite>Apparently according to the Liberals that just requires signing a magic paper and waving it in the oppositions face.</blockquote><p>And that would be an improvement on what the Alberta government is currently doing. ;)</p></blockquote>
    
    They are at least saving paper.