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plantguy





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Location: Lower Economy, Nova Scotia

PostPosted: Fri Oct 26, 2007 10:13 am    Post subject: New Alberta Royalties Reply with quote

I'm interested in hearing reactions on the new Alberta oil royalties. I've heard the reaction from the oill industry ( layoffs and hiring freezes, the movement of capital to friendlier markets) government (a fair compensation in line with other provinces and countries) and environmentalists (put the enhanced royalties back into clean air projects) but I have yet to hear any comments by the average Albertan as to whether this is a good or a bad decision. I also wonder if the Provincial Cons are taking a page from Danny Williams playbook? The one where taking on big oil = more votes. I don't have enough facts to render an opinion but I would be interested on some Albertans views.
kwlafayette





Joined: 03 Sep 2006
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Location: Saskatoon Saskatchewan

PostPosted: Fri Oct 26, 2007 11:53 am    Post subject: Reply with quote

Maybe it will drive some investment into Sask oil fields? Likely, we will just raise our rates to keep them out.
Bleatmop





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PostPosted: Fri Oct 26, 2007 4:56 pm    Post subject: Reply with quote

I can tell you the reaction of my family about raising the royalty rates during our discussion at Thanksgiving. It was a discussion with my brother (current middleshot, as opposed to a bigshot, in the oilfield) and my father (retired oilfield operator). Both of them are also voters for the CPC, but vote for more conservative choices in Alberta than the PC party.

Both of them took the position that we should get our fair share from the Oilfield companies, and that the oil isn't going to last forever. When asked what a fair share is, they didn't know. When asked if they thought it would hurt jobs, they said no. When asked if they thought they'd see one red cent of the extra money the government is going to take from the oil companies, they said no. When asked again why they wanted the government to raise the royalties, they didn't know.
kwlafayette





Joined: 03 Sep 2006
Posts: 6155
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votes: 28
Location: Saskatoon Saskatchewan

PostPosted: Fri Oct 26, 2007 5:29 pm    Post subject: Reply with quote

Some hard numbers please. What was the royalty before, and what is it now? Or has anything actually changed yet?
Craig
Site Admin




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PostPosted: Fri Oct 26, 2007 6:50 pm    Post subject: Reply with quote

Huge tax hike. Stelmach is a liberal. I can't believe I voted for him. If he doesn't lower business or income taxes by $1.4 billion per year to offset his massive tax hike then I certainly won't vote PC.

I bought www.albertaconservatives.com last night. I'll be putting up a website in time for any election.
Bleatmop





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PostPosted: Fri Oct 26, 2007 8:13 pm    Post subject: Reply with quote

Craig wrote:
Huge tax hike. Stelmach is a liberal. I can't believe I voted for him. If he doesn't lower business or income taxes by $1.4 billion per year to offset his massive tax hike then I certainly won't vote PC.

I bought www.albertaconservatives.com last night. I'll be putting up a website in time for any election.


Sounds great! Let us know when it's up and running, as I'd to read what you have to write there.
Craig
Site Admin




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PostPosted: Fri Oct 26, 2007 8:54 pm    Post subject: Reply with quote

Bleatmop wrote:
Craig wrote:
Huge tax hike. Stelmach is a liberal. I can't believe I voted for him. If he doesn't lower business or income taxes by $1.4 billion per year to offset his massive tax hike then I certainly won't vote PC.

I bought www.albertaconservatives.com last night. I'll be putting up a website in time for any election.


Sounds great! Let us know when it's up and running, as I'd to read what you have to write there.


I'm thinking it will be some sort of ranking system...

Provincial and municipal politicians will be listed with a conservative ranking and comments.
mrsocko





Joined: 29 Oct 2006
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Location: Southwestern Ontario

PostPosted: Fri Oct 26, 2007 9:00 pm    Post subject: Reply with quote

Quote:
Some hard numbers please. What was the royalty before, and what is it now? Or has anything actually changed yet?


The papres keep quoting a 20% increase in revenue or 1.4 billion a year. There were 5 or 6 different rate increases involved. The columnist's in the National Post were all infavour of the increase, comparing it favourably to rates in other countries. If the Post was in favour of it the Star editors must of been be having an orgasm.

Craig I'd like your opinion of the Heritage fund. Is it the fault of the previous PC governments policies low individual tax rates that there is only 14 billion in the fund or is it because of royalties on oil being too low? The Heritage fund seemed to be a sore spot with many commentators.


Last edited by mrsocko on Fri Oct 26, 2007 9:01 pm; edited 1 time in total
FF_Canuck





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Location: Southern Alberta

PostPosted: Fri Oct 26, 2007 9:01 pm    Post subject: Reply with quote

Personally, I think its a rediculous hike. I was expecting a compromise that would result in maybe $500 million in additional revenues. Stelmach caved to media distortions from the usual suspects.

Quote:
Both of them took the position that we should get our fair share from the Oilfield companies, and that the oil isn't going to last forever. When asked what a fair share is, they didn't know. When asked if they thought it would hurt jobs, they said no. When asked if they thought they'd see one red cent of the extra money the government is going to take from the oil companies, they said no. When asked again why they wanted the government to raise the royalties, they didn't know.


That's pretty much it. People are supportive of a royalty increase when most of their position is based on vapid coffee-shop talk about 'crumbling infrastructure' and 'record profits', but if you help them think through it more, the truth of the situation is clear.

Stelmach's a bum. But then, I was pushing for Morton.
FF_Canuck





Joined: 02 Sep 2006
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Location: Southern Alberta

PostPosted: Fri Oct 26, 2007 9:04 pm    Post subject: Reply with quote

Quote:
I'd like your opinion of the Heritage fund. Is it the fault of the previous PC governments policies low individual tax rates that there is only 14 billion in the fund or is it because of royalties on oil being too low? The Heritage fund seemed to be a sore spot with many commentators.


I'm not Craig, but my understanding is this: the Klein government in its later years reduced contributions to the Heritage fund, in order to pay off our debt ahead of schedule. Some see it as a mistake. I don't, but I think the time for increased investment is now.
FF_Canuck





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Location: Southern Alberta

PostPosted: Fri Oct 26, 2007 10:50 pm    Post subject: Reply with quote

Here's an interesting analysis from Angry Roughneck

Quote:
First off, drilling levels will be fine through this winter. Companies have already bought their land rights, so they are already committed to winter drilling projects. This will be great for Ed and the Progressive Communist party of Alberta. Ed will be able to sit back on his throne, sometime in mid February and point triumphantly to the record drilling levels and say “see, helping Albertans did not deter drilling. We must not be afraid of the big oil companies”. Most people will cheer and then once summer comes, and the election is over, and pink Eddie is re-elected, the industry will come to a grinding halt, but the pubic won’t be interested in the debate anymore. The lack of drilling will be attributed to a downturn in the industry, a bust cycle, possibly blamed on a high dollar or more access to middle east oil.

The big energy companies like Encana, Talisman, Conoco, CNRL… etc will spend their dollars elsewhere (see Saskatchewan) out of principle. They will make a stand because they know who’s next in line (see looting feds) for their profits. People think it is hard to move a giant corporation like Encana. Well its not, Encana is just a bunch of engineers. Pipelines, compressors and pipelines can be rebuilt (cost can be spread out amonst competitors) or in a lot of circumstance already exist on other parts. All the equipment associated with oil production is owned by Albertans— the rigs, wellheads, pipe, welding units, trucks, trailers, tools, and heavy equipment are all owned by Albertans who rent their capital to energy producers. The energy companies have no stake in any of this capital expenditure.

Some other points:

So the Alberta government decides to raise royalty rates on oil 20%— and oh by the way they want to get into the bitumen upgrading game as well. This is a direct transfer of wealth from the people who extract bitumen to the people that upgrade it. As I said in my last post this is the moral landscape of the mixed economy.

The feds created the NEP (the nationalizing of the energy industry) and they crippled the province. The government bought all the foreign owned companies for 10 times their worth and then watched the industry die. Then they got out of the energy game by reselling all the same companies that they had just bought for inflated prices for 10 cents on the dollar. Next the government spends tax payer dollars in order to create incentives for rich oil giants to drill again. Then, predictably energy companies use our money to drill again (sometimes knowingly dusters—very funny to hear these stories). 20 years later, companies are drilling at ultra high levels with their own money and the government steps in raises the royalty taxes on oil to potentially 50%. I wonder what happens nex?

I hate having to hear people say “A slowdown is good for the province” —huh 8.5% unemployment is better than 4%. Investment leaving the province is better than investment coming into the province. Stagnation is never beneficial. Alberta has bought into the Canukistan dream.


I agree.
kwlafayette





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Location: Saskatoon Saskatchewan

PostPosted: Sat Oct 27, 2007 1:33 am    Post subject: Reply with quote

I think there is a lot of ado about not much here.

Where are the oil companies going to go? Chavezland? Mullahville? The fact is, Alberta has more oil than just about anywhere, it is politically stable, and there are no criminals running around bombing pipelines. This is not such a big hike that everyone will up stakes.

This may slow down the Alberta economy enough that a few people can be pried away from the oil companies to pave roads and such. Alberta actually needs some brakes applied, in a pretty bad way.

Yes, it is a little more expensive to do business in Alberta, but there are many advantages remaining to keep the oil companies there. This is not the end of the world, nor is it some great thing that will assure the future of the province. It is just another politically driven decision that may not be the best idea, but is at least adequate.
Craig
Site Admin




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PostPosted: Sat Oct 27, 2007 10:59 am    Post subject: Reply with quote

mrsocko wrote:
Craig I'd like your opinion of the Heritage fund. Is it the fault of the previous PC governments policies low individual tax rates that there is only 14 billion in the fund or is it because of royalties on oil being too low? The Heritage fund seemed to be a sore spot with many commentators.


I've only been in Alberta for two years so I'm not really qualified to comment. But I think you aren't presenting all the choices. I would suggest that spending was too high - especially in Klein's later years.
FF_Canuck





Joined: 02 Sep 2006
Posts: 3360
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votes: 17
Location: Southern Alberta

PostPosted: Sat Oct 27, 2007 8:10 pm    Post subject: Reply with quote

Quote:
This may slow down the Alberta economy enough that a few people can be pried away from the oil companies to pave roads and such. Alberta actually needs some brakes applied, in a pretty bad way.


I hadn't realized just how successful the Sask NDP were in their attacks on 'Alberta-style prosperity'. Surely you don't buy that bunk?

The swipe at our roads, or any of our infrastructure, is pretty rediculous. Having done a lot of extended travel across the country this summer, I feel totally safe in saying that we have the best maintained infrastructure of any province. Our access to healthcare, despite media assertions to the contrary, is still better than most of the country.

Issues like affordable housing and crime are being blown out of proportion as well. While I feel some empathy for some of the hard-luck cases we hear about, they're not the norm.
Craig
Site Admin




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PostPosted: Sat Oct 27, 2007 8:31 pm    Post subject: Reply with quote

kwlafayette wrote:
This may slow down the Alberta economy enough that a few people can be pried away from the oil companies to pave roads and such. Alberta actually needs some brakes applied, in a pretty bad way.


I live in Alberta and the roads here are far better than in Ontario. We don't need the brakes applied at all - certainly not in a "bad way".
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