Royalty Review

Alberta is currently reviewing the royalties assessed on oil and gas production. this review has come about because ordinary Albertans feel the royalties charged on oil sands production is not sufficient. The sore point is the 1% royalty charged while capital costs are being recovered. This is a particular problem for the oil sands because capital costs are always being incurred because of the nature of the operations. This extends the time before 25% royalties are paid. It isn't the same as drilling a well and hooking it up. The nature of the operation is different and a different approach to royalties is needed if Albertans are to get a fair return on their resources.

An indicator that the royalty returns favour industry is the multiple oil sands projects being built and planned. The current regime is so attractive that companies are willing to pay inflated prices for workers, plants, equipment and mineral rights. (Why wouldn't they, they don`t pay royalties until they have recovered the inflated costs). Meanwhile, Albertans are paying inflated prices for roads, schools, and housing, if they are built at all. Albertans are paying an outrageous price to give away our resources. It is time to curb our generosity and make oil sands development less attractive. Projects are now importing labour; plan to import plants built in Asia; and exporting bitumen to the US. All Albertans are receiving is inflation and pollution.

In addition to the royalty rates, the review committee should be asking:
What is included in capital costs?
Is the definition such that capital costs are never recovered?
After considering the inflation related to the oilsands, do Albertans receive any net benefit?

Labels: oil royalties Alberta

- posted by Larry @ 12:13 p.m.

 
Which Vision?

The Edmonton Journal editorial “Arena verdict too hasty” June 6, 2007 chastises voters for shooting down any politician who raises his or her head above the pot holes. We do want politicians with vision; however, we want that vision to reflect Edmonton and Edmonton's needs. We don't need features of other world class cities foisted on us because the politician thinks they will make Edmonton world class. Edmonton will become world class by meeting the needs of all of its citizens now and in the future. Edmonton has a stadium. What Edmonton needs is affordable housing.

Edmonton Northlands is an integrated stadium, exposition, entertainment complex with room to expand its facilities. Over the years Northlands has demonstrated a willingness (supported by Edmonton taxpayers) to bend over backwards to accommodate the Oilers real and perceived needs. There is no reason (other than setting the groundwork for negotiations) to expect Northlands to change. Further, Northlands is well integrated into the transportation system. As to the impetus a stadium would provide for economic development, look at Northlands. What you see is what you will get.

The city could use the land it wants to use for a new stadium for housing. Not only would this provide a permanent population downtown, it is environmentally and fiscally sound. Increasing the population density near the center of the city reduces the load on roads and provides a core ridership for public transit. Further, care could be taken to make the development people friendly, incorporating parks, playgrounds and services to create a liveable area. Perhaps low income housing could be incorporated into this “vision”.

In contrast a stadium creates dead space in the city center. Crowds surge in for events causing traffic and parking problems and then surge out. Edmonton can have a dead space in the center of the city whose patrons only need parking or it can have a vibrant community that needs all urban services. The “vision” can be of a world class blight or a vibrant downtown community that is active day and night. Edmonton doesn't need visionaries whose vision is limited to cloning features of other world class cities; it needs visionaries who can see what Edmonton needs to be a liveable sustainable city for all citizens.

Labels: Stadium vs. Housing

- posted by Larry @ 12:07 p.m.