[dave_ca]

Yeah, Alberta is defenatly as high risk as Iraq or Nigeria. Gotta watch those terrorist Newfies who fly in.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'T')he way I see it: why not raise royalties even higher. Even if oil companies only got to keep 10% of their profits there would still be plenty of incentive and enough money available for them to grow their operations.

Every drop of fossil fuel on this planet that is accessible and can be sold for more than it costs to extract will eventually be removed in any case. Why not slow down the frantic, environmentally destructive pace of extraction and have the profits that are being reaped actually benefit Albertans at the same time??

One final point... Alberta is one of the only places with oil in the world still open to private investment. So despite all the whining of the likes of Syncrude, where else are they going to go?

[Blacksmith]

quote]Let's see....my short list:
North Sea, Norway, Argentina, Trinidad, Niger, Gabon, Australia, Equatorial Guinea, Papua New Guinea, Azerbaijan, Benin, Malaysia, vietnam, Uganda, Indonesia, Egypt, Chile, Peru, Colombia....etc.[/quote]

Pack your bags.

[drew]

Thanks for all the replies folks. Politics too! Ah well, it looks like the screaming from the pinstripe crowd didn't amount to much. All the Alberta based oil cos I checked out today were doing rather well, no doubt supported by the 90+ dollar oil we are seeing. Oh well, no buying opportunity for me, as 100 dollar suncor is way too expensive, as are the others I looked at. Hell I have some expensive Nexen that I bought in April that I am still down on money with. I bought at the absolute peak this year it seems. Live and learn.

Drew

[Denny]

$this->bbcode_second_pass_quote('drew', ' ')Oh well, no buying opportunity for me, as 100 dollar suncor is way too expensive, as are the others I looked at. Hell I have some expensive Nexen that I bought in April that I am still down on money with. I bought at the absolute peak this year it seems. Live and learn.

Drew

[oilluber]

THANKS ROCKDOC !!!!

The cheapo commies that have never thought of peak oil,
nor had to wisdom to invest in the oil sector years ago,
too cheap to invest their own hard earned money,
now suffering from sour grapes , will of course, vote to
nationalize oil production.

Take any referendum,,, whereby the question is to increase taxes or
royalties on any business sector, whereby the avg joe has nothing at stake, will of course vote for increasing the tax punishing the
industry.......

I for one am unloading my oil stocks doing significant
business in alberta. Let the albertans pay for their own
production in the future.

There are alot of dummies that don't know dick about the oil industry except sour grapes.

[Chesire]

Seems to me with that kind of revenue flow . Every Albertan should have 2 years of food stocked and a nice selection of other crash proof goodies. No matter who controls the production the average Albertan is going to freeze and starve in the dark in abandoned public buildings , when things go really wrong.

[Ferretlover]

It's Canada's oil.
Just be thankful they haven't cut the US off.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'I')t's Canada's oil.
Just be thankful they haven't cut the US off.

[Blacksmith]

Natural gas iss roughly half the price of oil, stock up now.

[Blacksmith]

Encana and Talisman are heavily into gas, which has reached its peack as far as finding costs are concerned. Petrobank ( god bless) is a theory that if sucessful will triple over the next three years.

[oilluber]

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('', 'I')t's Canada's oil.
Just be thankful they haven't cut the US off.

[drew]

Thanks for the suggestion to stay the course, Denny. I certainly don't want to escape NXY just breaking even do I? I have to agree it has been weird how the shares haven't made a huge increase along with the price of oil. I played Nexen 3 times previously quite sucessfully and this change is disconcerting. I also played ECA to a certain degree with Katrina. The only ones I just held steady were CNQ and SU. It's funny how easy it seemed to make money over the past few years, unlike this year. A bit of beginners luck I'd say.

Drew

[uNkNowN ElEmEnt]

While Alberta is usually the spot light in Canadian oil and gas, they aren't the only ones with that. The industry is slowly revitalizing Newfoundland and Labrador with their off shore oil and gas.

It did seem to take a bit longer for those to come on line because of all the wrangling between the Federal and Provincial governments wanting to ensure they got a big piece of the pie.

Might be interesting to explore. They say there has been an increase in 17,300 jobs as a direct result, 119.4 million barrels annually.

For that matter saskatchewan is second behind
Alberta with 418,000 barrels a day (Alberta is 720,000) and NEwfoundland is 148,800. So while everyone is focused on Alberta it might be a good idea to invest in something a wee bit lower but with less visibility. Stats as of 2001, so with Hibernia hotter than ever I expect the figures would be higher.

[Blacksmith]

Link

Edited for length. Please past links and not whole URL addresses. Thank you. MrBill.

[MrBill]

Drew, ultimately all of these assets belong to the Crown or the Alberta government. Resource re-nationalization, that is ripping up exsisting commercial agreements is not right, but it is perfectly legitimate to ask oil companies to pay more royalties, especially if they are relying on goverments to provide the necessary infrastructure. The only worthwhile development to undertake is sustainable development.

We do not want to rip the roofs off the beaver hutches winter and harvest all the beavers at once. That is short-termism at its very extreme. We need to have 25-, 50- and 100- year economic development plans in place. Ones that create jobs and safe guard the environment. Not one or the other.

So in any case from discussions that I have these recent overhauls to the royalty structure were completely necessary because the oil companies were cheating. The previous royalties were supposed to cover only capital investment. Not operating or other admin expenses.

That is usually the problem with tax incentives. They need to be monitored, and enforcement is also expensive, but necessary. Someone has to arbitrate and say this is a long-term capital expenditure while this is clearly not. Or you do away with all incentives and set on rate so that the royalties cover all the external costs to all stakeholders including those environmental costs.

As others have said if oil companies do not like it they can try their luck in Russia or Venezuela. As an Albertan and a Canadian I completely reject that oil companies will tell us what to do with our natural resources or else. But what we do need is clear rules so that Chinese, Indian, American and Canadian oil companies can all operate in Canada according to Canadian laws and on a level playing field. They are our resources, and depending on how we develop them, our future.

And as much as I hate to say this here, I really do not agree that income trusts should be taxed differently than public companies. That only breeds tax avoidance behavior in firms. The rates should have been harmonized. But then I would lower personal income tax as well! ; - )

[rockdoc123]

$this->bbcode_second_pass_quote('', 'S')o in any case from discussions that I have these recent overhauls to the royalty structure were completely necessary because the oil companies were cheating.

[MrBill]

rockdoc123 it is fine if you want to disagree with me or present your own arguments. Companies make predictions about future prices or costs all the time including levels of taxation, cost of construction, interest rates, foreign exchange risks, etc. Those are the costs of doing business.

Not only are many predictions usually wide of the mark - most of them are.

While I do not support re-writing or renegotiating argeements ex-ante governments can change levels of taxation as many Canadian citizens know. Oil companies were cheating. They were not only extending their CAPEX budgets, but were actively looking to see where they could add operating and admin expenses to their CAPEX budgets. That is cheating the ordinary taxpayer who already pays enough.

As many here have already said Alberta needs a breather in any case to let infrastructure development catch-up to oilfield construction. The oil market is not going away. Not now, not anytime soon. One cannot believe in post peak oil natural resource depletion and simultaneously hold the opinion that oil companies are going to walk away from long-term supply projects in N. Alberta.

I know that natural gas drilling for example was very low last year, so some rigs sat idle as well as the crews that run them. That is one consequence of rising costs due to rapid, over expansion, and not only in Alberta or Canada, but around the globe. But those costs are still tax deductible. Even if the royalty schemes are changed, costs are costs, and therefore they are deducted off the top of revenues before taxes are paid on profits. Sorry that is how it works.

And obviously $90 per barrel generates different levels of royalties and taxation than $30 per barrel. Not 3X, but more. The Alberta government is talking about raising royalties 20%, not 300%, so they are hardly clawing back all the price increase. But companies can and will still be elligible to write off 100% of their expenses and, of course, if there are any losses carry them forward.

What is the total taxpayer bill for infrastructure projects over the past 30-years in Fort McMurray not covered by Syncrude or other corporate taxes? Just because Alberta is open for business does not mean it is for sale. If the Chinese cannot live with that then they can pay backhanders in Venezuela. You can certainly guess that neither Chinese peasants nor Venezuelan taxpayers will be better off afterwards.

The development at any cost model is the problem. The only good old growth forest is a clear-cut forest argument. Otherwise there will be fewer jobs and fewer taxes. That line of argument is wrong. Alberta's oil and gas resources are limited. They need to be developed in a sustainable manner. That is conserved as well as developed without long-term costs to the environment that outweigh any short-term economic benefits.

The Climate Change Argument

This is the kind of straight forward analysis that I admire! The cost versus the risk of not doing something against the cost versus the risk of doing something. That is how we need to frame debates and not who is right or who is wrong. Please pass it along. Thanks.

p.s. do me a huge favor. Please compare Alberta's tax burden - corporate and individual - to that of BC, Saskatchewan, Norway and UK. Then come back and lecture me on which government is more accomodating to investment and job creation. I will, of course, then admit I am wrong once you do this. Thanks! ; - )

[MOCKBA]

$this->bbcode_second_pass_quote('MrBill', 'A')nd as much as I hate to say this here, I really do not agree that income trusts should be taxed differently than public companies. That only breeds tax avoidance behavior in firms.

[Starvid]

$this->bbcode_second_pass_quote('Denny', 'W')hat I do not understand is just where Alberta will put that extra $1.4 billion a year in royalty payments. I understand their provincial government surplus last year was almost $6 billion, so they do not really need it. That is a lot for a population of just over 3 millon people. Maybe they can lend some of that spare cash to Ontario, at low interest rates.