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September 19 2007

Alberta Royalty Review Panel releases report

Contributed by: N Say

Edmonton. The Government of Alberta has publicly released the final report of an expert panel asked to examine the province’s energy royalty and tax regime, following through on a commitment to make the royalty review process open and transparent. Entitled Our Fair Share, the 104-page report provides recommendations about how the government can modify the existing provincial royalty structure.

“Albertans made it clear that examining the province’s royalty regime was a priority to ensure they are receiving their fair share from energy resource development,” said Premier Ed Stelmach. “Albertans, as owners of the resource, now have the opportunity to examine the details of this report as government thoroughly reviews the recommendations.”

The government will provide a formal response to the report by mid-October.

In the executive summary the panel figures Alberta could make an additional $2 BILLION per year by changing the royalty system! That's a bit better. What an outstanding legacy Ralph Klein has left for Alberta. Hopefully no Ralph Klein lovers get in the way of any changes that could be coming.

http://www.vivelecanada.ca/article.php/ ... 8171521991

   

I read that Alberta was getting minimal royalties from the tar sands, a billion or something annually. I spoke with some other Ontarions and they said it was true and couldn't understand why there wasn't an outrage in Alberta. I suppose royalties are not the only revenues from the oil industry and the accelerated write off of the past was due to the uncompetativeness of the oilsands.

   

Just give me a province where I can work, and I'll worry about my own revenues.

   

Don't we already have a thread on this topic?

http://www.canadaka.net/modules.php?nam ... highlight=

   

Rent seeking is everything but a current event.

   

Sunday, September 23, 2007
alberta's royalty review.


The report begins with the opening statement: "Albertans do not receive their fair share from energy development." The report proves this to be an understatement.

The report revealed that a lack of government accountability has led to billions of dollars in reduced royalty income over the last 15 years - the royalty holidays and adjustments have reduced Alberta's income by nearly $8.6 billion over the past 15 years.

Alberta Liberal Leader Kevin Taft and Energy Shadow Minister Hugh MacDonald pointed out that:

the government failed to report a four year royalty holiday period, which began in 1997, under former Minister of Energy Steve West. In 2001, the Auditor General questioned why the royalty holiday and incentive programs were not reported. The Auditor General started to report these amounts in his annual report. Since then, the Department of Energy has buried the amount of the royalty adjustments in their financial footnotes.

In 2007, Alberta's Royalty Review Panel revealed that approximately $8.6 billion in natural resource royalties owed to Albertans were not collected. This failure occured while Ed Stelmach and Lyle Oberg were sitting at the table in Ralph Klein's Tory Cabinet.

Albertans have been cheated in a big way and should be furious.


http://daveberta.blogspot.com/2007/09/a ... eview.html

   

Benoit - could you please explain your use of the term "rent" in reference to the sale of oil?

   

A economic rent is the difference between the market price of a barrel of oil ($80) and the total cost of production including the cost of keeping the capital in the business (the total cost is around $35 for a barrel of oil from oil sands).

   

No its not. That's profit.

Economic rent is different.

http://en.wikipedia.org/wiki/Economic_rent

The Mods should merge the threads since they're identical.

   

Thank you for the clarification.

   

Yes it is:

«Economic rent is the difference between what a factor of production is paid and how much it would need to be paid to remain in its current use.»

   

And less complicated people simply call it profit.

   

Abused people call it profit.

   

No, its a different.

You assume that what a factor of production "would need to be paid to remain in its current use" is merely the cost to keep capital in production. That is wrong. It also includes an appropriate return on capital. Otherwise, as any econ 101 student knows, capital will leave the industry until the return on capital equals an appropriate risk-adjusted return on capital.

Generally, in economics, "rent" is thought of as excessive profits - defined as a return above the appropriate risk-adjusted return - not profit itself. In an industry where economic rent exists, capital often (but not always) enters the industry and drives returns down until equilibrium is reached.

   

The Bolsheviks are back at it again ... now in Alberta.

   

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