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Saturday, October 28, 2006

Where is the Smear?

There are anonymous calls on this Blog for an apology by “Allie” in comments she made in the previous posting. I have read the comments and am at a loss to find where Allie “smears” Mr. Stokes, the economist who did the Oberg platform review.

No one is questioning the reviewer’s qualifications, credibility or integrity that I can see. Mr. Stokes qualifications are not in doubt. I think he is eminently qualified to do the work he did for the Oberg campaign. He also clearly knows he is offering an opinion as a professional economist in the context of a political campaign.

Surely then an ordinary citizen can state a personal reservation about the political context of a candidate who seeks a professional opinion that costs out their political campaign promises without it being characterized as a smear on the profesional who undertook the work. Over the years I have written legal opinions that others have disagreed with but that can hardly be construed as a smear on me as a lawyer. It is merely another opinion.

What Allie said was: “I am personally not too impressed with the costing of Oberg's promises (nor would I be with anyone else's for that matter). While I find it an interesting tactic - and aimed at the general Albertan who never really cares to understand politics too deeply - I also do not necessarily have any reason to trust a report that a candidate has paid people to produce that is so favourable of his own campaign structure.”

Further to this... what are the real chances that even if the costings in the report are close to being accurate that those will be the way the costs unfold in an Oberg Government? Who is to say that Dr Oberg will even make those same choices he has outlined once he is presented with other priorities?”

Let’s look for a minute at the factual content of Mr. Stokes’ a one page evaluation letter which is posted on Dr. Oberg’s website. He outlines two scenarios in evaluating the Oberg platform and he says he is measuring the Oberg platform for “sustainability” over a 5 year time frame only.

One scenario is characterized as a low energy prices and low economic growth and the other scenario is a high energy price and high economic growth. The assumptions he uses are interesting. In the Low Energy Scenario we have oil prices assumed at $42/bbl, gas at $6.25/gigajoule and economic growth in Alberta at only 2%. In the High energy Scenario we have oil prices assumed at $65/bbl, gas at $7.10/gigajoule and economic growth in Alberta at only 3%.

When was the last time Alberta’s economic growth was only 2 or 3 percent and is it reasonable to presume that rate of economic growth for the next five years given $42 or $65 oil and about $100Billion of oil sands project investment alone in process? Also what are the assumptions that were used for our population growth and the calculations for the impact of the Oberg tax cuts on the government’s revenues for the next five years? No doubt these were considered in evaluating the Oberg platform sustainability. Have I missed them?

I know when the oil sands industry is doing a project feasibility analysis for investment purposes they use $25 and sometime $30 oil prices. Mr. Stokes’ letter emphasizes the point that energy prices are volatile. In fact oil prices have dropped about 23% since July 2006. Mr. Stokes is obviously free to use what ever assumptions he wishes but I wonder on what basis $42 or $65 per barrel was used for the Oberg platform validation. I also wonder what the sustainability of the Oberg platform would look like if the more prudent industry standard oil price assumption of $25 to $30 oil price was used.

I wonder further if Dr. Oberg is inclined to revisit his costing calculations and give us a bit more disclosure and detail as to the assumptions and the workings of the economic model that was used. It could go a long way to rehabilitating the public’s confidence in his candidacy.