Debate rages over Stelmach's plan to raise oil royalties

Apparently public ownership (PO) in Alberta is like body odour (B0). It can't be mentioned. Most countries in the world even reactionary states such as Saudi Arabia nevertheless have enough sense to realise that it is through owning and developing resources themselves that the most returns are generated. However, in Alberta the political discourse is now framed to exclude that reality. Perhaps the NDP stands for such development but if they do they are not penetrating the mainstream media fog sufficiently to make it publicly known. Liberals squawk that there should be even higher royalties. They might indeed be justified but Big Oil will when possible move to lower royalty regimes where profits are bigger. However, with public ownership as long as there are some profits the benefits of employment etc. will justify investment.
CBC interviewed people in Fort MacMurray. Most of the coffe shop crowd seemed to favor what Stelmach has done. I think that his electoral victory is assured. He could even have been harded on the oil patch without that much worry. There may very well be some slowdown in some areas but that might not be a bad thing for Alberta in general.

ALBERTA

Debate rages over Stelmach's plan to raise oil royalties
KATHERINE O'NEILL AND DAWN WALTON

October 27, 2007

EDMONTON; CALGARY -- To most Canadians, Alberta won the lottery this week with news their government plans to collect even more money from its booming oil patch. So why are all Albertans not celebrating?

An emotional debate over the future of the debt-free Alberta's royalty program raged across the province yesterday, as people flooded call-in radio shows and on-line forums to give their opinion about the Progressive Conservative government's new plan that was released on Thursday.

During an interview yesterday with Premier Ed Stelmach, popular Calgary-based call-in radio host Dave Rutherford even asked him whether he was intentionally trying to kick the energy industry "in the nuts" with his scheme that could hike royalties by 20 per cent in 2010, potentially bringing an additional $1.4-billion to the treasury.

Many people who phoned Mr. Rutherford's show worried that the new rules are greedy and could put the brakes on the boom. Others argued it's a short-sighted political play designed to win the next election for the Tory Party, which has seen its support plummet since Mr. Stelmach became Premier last December after Ralph Klein retired.


While the Premier's plan, which would collect less than a government-commissioned panel recommended last month, received a rough ride from some yesterday, he did receive support from an unlikely source: former British prime minister Tony Blair.

"He said, 'stay the course,' " Mr. Stelmach told reporters about a private conservation they had in Calgary. Mr. Blair was delivering a lecture in the city.

Mr. Blair speaks from experience in getting more from oil companies, as Britain several years ago raised taxes on North Sea oil production. The controversial move was made without consultation and announced as a done deal in the annual budget.

Mr. Stelmach told reporters there is no wiggle room for lobbying between now and Jan. 1, 2009, when the new framework is implemented in Alberta. "The decision has been made."

Despite that assertion, the topic is expected to dominate an annual Tory Party policy convention in Calgary this weekend. The right-wing party has governed Alberta since 1971.

Mr. Stelmach said the new framework will offer "certainty" and "predictability" to the oil and gas industry and "secure the future" for the wealthy province. Before the new plan was rolled out, the energy industry had threatened billions of dollars of capital spending cuts if increases were too high, saying thousands of jobs are on the line.

Mr. Stelmach pointed out that financial markets did not react negatively yesterday to the news of Alberta's royalty reforms. "I didn't see much of a decline. In fact, I thought everything held its own," he said.

Mr. Stelmach shrugged of comparisons to Hugo Chavez and Venezuela, pointing out Alberta's stable and secure supply of energy. He also dismissed criticism that the new rules don't go far enough, describing the decision as a "balance" based on research and public input. "As a Premier you make a decision."

His government launched a 10-day, $225,000 advertising campaign in Alberta newspapers and radio stations yesterday to sell the new royalty system to the public. The newspaper advertisements feature a photograph of Mr. Stelmach and the quote: "I made a commitment and I delivered."

Alberta Liberal Leader Kevin Taft slammed the ad campaign as "partisan." He said a provincial election could be called as early as December if the government's internal polling in the coming days tells them that voters are happy with the reforms.

The Liberals wanted royalty rates to be hiked higher and Mr. Taft accused the Premier of "selling Albertans short."

One Albertan who notably didn't want to talk about the new higher royalty rates was Mr. Klein. "I'm out of it," he told reporters.

This month Alberta's Auditor-General said Mr. Klein's Tory government had rejected calls from its own Energy Department to raise royalties, saying they could get billions more without hurting industry.