Monday, October 22, 2007

Alberta needs a publicly-owned energy company

It is interesting that even a Conservative premier had the sense to set up Alberta Energy Corporation with the government retaining enough shares to control the company. Klein of course sold off the government shares. This not only put money in government coffers but offered cheap shares for his buddies and no doubt bought him some votes or even more likely donations.
In Saskatchewan the NDP govt. established a crown investment company, SaskOil but it too was privatised for the benefit of capital. The NDP has made no move to re-establish a crown corporation. NDP government's have decided to follow the "third way" and the result is that they sit by the wayside and scream about how corporations don't pay there fair share. It never dawns upon them that their is an alternative and that is to finance public corporations to compete with big (and small) oil.This is from this website.
1985 SaskOil's status as a Crown is ended when it becomes a corporation under the Business Corporations Act. In 1986, the majority of SaskOil is sold to the public, with government retaining a minority interest. SaskOil is renamed Wascana Energy Inc. in 1996. In 1997, CIC sells Saskatchewan's remaining interest in Wascana to Canadian Occidental Petroleum.
The ideological atmosphere is framed in such a way that you will not see a sensible article such as this anywhere in the mainstream media I expect. As the article points out about 80 per cent of the world's oil even in reactionary sheikdoms is under government control.
Canadians are the world's patsies. We pay more for US products when our dollar is at par. We sign energy agreements which make us the guaranteed supplier of energy to the US at bargain prices. We send our soldiers off to Afghanistan to help maintain US hegemony in the world-- or perhaps it is so that Karzai can form a coalition government with the Taliban "terrorists".


Alberta needs a publicly-owned energy company

Peter Lougheed's EnCana showed the world the advantages of public ownership in the energy sector.

Dateline: Monday, October 15, 2007

by Ricardo Acuña

In the weeks following the release of the recommendations of Alberta's Royalty Review Panel, energy giant EnCana has been one of the loudest opponents of any moves that might increase the direct benefits Albertans receive from their natural resources — going as far as publicly threatening to cancel a billion dollars worth of investment if the panel's recommendations are implemented.

The irony of these threats and the desire to see Albertans get less than full value for their oil and gas will not be lost on those who remember EnCana's history.

EnCana was born in 2002 out of a merger between energy giants PanCanadian and Alberta Energy Company (AEC). It is the history of AEC in particular which holds clear lessons for Albertans in light of EnCana's recent threats.

There is nobody in Alberta's energy sector today who is looking out for the well-being of Alberta or Albertans.



The Alberta Energy Co was set up in 1975 by the Lougheed government. The idea was that it would provide a way for average Albertans to invest in and benefit from Alberta's natural resource wealth.

By selling AEC shares to Albertans, the government insured that the direct benefits and profits generated by the company would stay within the province. By maintaining a controlling interest for itself, the Lougheed government made sure it would have an active presence in an oilpatch dominated by foreign multinationals.

Like much of Lougheed's energy policy, the creation of AEC was a strategic, insightful and visionary move.

The company's share value increased by leaps and bounds, it was able to purchase equity in energy ventures throughout Alberta and Canada, and it enabled Alberta to play a determining role in the development of its own oil and gas.

This strategy of local ownership and government equity participation has since been adopted by jurisdictions around the world. More than 80 percent of the world's oil is exclusively in the hands of national oil companies, and is off limits to private for-profit oil companies. Most of the remaining 20 percent is extracted and processed in joint partnerships between national companies and private companies, or by equity purchase arrangements by the local government.

This is even the case in Canada, where Newfoundland and Labrador Premier Danny Williams has recently signed an agreement with the multinationals developing the Hebron oilfield, which would ensure the province a 4.9 percent equity stake in the project.

Like much of Lougheed's legacy, however, the benefits of AEC for Alberta were short-lived once Ralph Klein became premier. In an effort to make the government's books look good for his first budget as premier, in 1993 the province sold its remaining 25 million shares in AEC at the bargain basement price of $19 a piece. No assessment was made of the true value of infrastructure, land leases and equipment (which had all been paid for by Albertans) controlled by AEC at the time. The extent of the giveaway became crystal clear as the share price more than doubled over the next five years. By the time of the merger with PanCanadian, AEC shares were trading at close to $62 each — more than triple what Albertans received for them.

The fact that AEC's successor, EnCana, is today doing everything in its power to minimize the benefits Albertans receive from their resources is a clear endorsement of the wisdom of Lougheed's strategy.

There is nobody in Alberta's energy sector today who is looking out for the well-being of Alberta or Albertans. Albertans have no direct participation in the industry, and the only benefit we derive are from the meagre royalties we charge for those resources.

Moreover, people in countries such as Norway and China stand to benefit more directly from our own resources than we do, as their state-owned companies begin buying up equity in oilsands ventures.

Alberta needs a publicly owned energy company, not only to maximize the benefits we get from our oil and gas, but also to ensure we have a direct presence and say in an industry that is still almost entirely controlled by foreign multinationals. Had we kept our controlling interest in AEC, they would not be spending millions today to convince us that what we need to do is give away our oil and gas for next to nothing.

It is difficult to fathom how a company making record profits off of capital and infrastructure originally paid for by Albertans can think it is justified in issuing these kinds of threats. Thank you, EnCana, for so clearly articulating the benefits of a publicly owned energy sector.

Ricardo Acuña is executive director of the Parkland Institute, a non-partisan public policy research institute housed in the Faculty of Arts at the University of Alberta.



--------------------------------------------------------------------------------

No comments: