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?
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?
posted by Technical Bard | 18:02
1 Comments:
Of course they don't think ahead. The people tend to elect those like themselves, and ordinary people aren't bright enough to plan more than one step in advance.
People are dumb, panicky, dangerous animals. And so are the politicians that appeal to them.
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