Stupid idea #3 from the Stelmach government

Carbon Intensity caps and penalties

OK - this story is three months old - but I've been busy.

The problem with this is that they gave companies 9 MONTHS to meet the commitment. Impossible considering it would take at least that long to do the engineering, let alone buy eqiupment and construct anything to abate CO2 emissions. Since industry's only alternative is to pay the carbon tax, they will pay. This is a government tax grab designed to look like "greenness". Of course, coupled with the federal plans, the truth is that none of the penalties are high enough to force investment. All they will do is push investment out of Canada. See my explanation from a few months ago when the federal Liberals proposed a similar system.

Stupid idea #2 from the Stelmach government

Royalty Review

This process is simply going to cause grief for everyone. Most Albertans are happy with the level of taxation the province receives from the oil industry. Oil sands in particular are not a super-attractive business. Returns are generally <15%. This is because the capital investments are huge, energy input costs are huge and the value of the product is variable, as it is the world price for crude oil. The current very high oil prices (~US$65 this week) may make people think that the oil companies in Alberta are making super high profits. But they aren't as good as they could be because the costs of doing business here are high. If the capital and operating costs eat up $40/bbl, and then the government increases the royalty, and imposes a carbon tax of $5/bbl the margins suddenly don't look spectacular. Increasing royalty rates now would put a huge damper on the oil sands.

Of course, doing nothing will bring out those who will claim the government is in the pocket of the oil industry. And they won't lower the rates. So investigating was just bad political judgement. Don't these people think ahead?

Stupid idea #1 from the Stelmach government

Well, Ed Stelmach and his government have come up with some doozies for bad ideas. Most of them are clearly those espoused by "red tories", people who believe in growing government for the sake of government...

Stupid Idea #1
High Speed Rail Link

I admit that driving the QE2 (Highway 2) between Calgary and Edmonton isn't exactly fun, and the traffic is terrible. I will also admit that the security precautions at the airports (and the fact that Edmonton's airport is in Leduc) make flying between the cities prohibitive from a cost and time perspective.

But the solution is NOT to have the government spend >$10 billion of valuable tax money on a white elephant. If a high speed rail line made sense, the private sector should be willing to step up to the plate. If such a private sector company were to step forward, I would accept the government help with zoning, obtaining right of ways, etc. But there should be zero government money invested as capital and zero government money used as subsidy for the project. Government will always be distracted by political issues and the money will be wasted and I doubt the project would ever see the light of day.