Reboot Alberta

Wednesday, October 17, 2007

More False Assumptions Over Alberta's Royalty Review Report.

Interesting piece in the National Post suggesting the Canadian oil and gas stocks are not “surging” as they apparently are in the US. The blaming is being put on the “Our Fair Share” Royalty Review, in part.. It also mentions that the loonies’ rapid rise (more correctly put – the US dollars significant decline) in value being up 20% in 2007 already and breaking parity with the US may have something to do with this.

The Canadian energy sector stock prices have been at or near record price levels before and after the royalty review report. Interesting today that Suncor is trading today over $103.00 – over the record high of $100.00 it enjoyed just before the Royalty Review came out.

People are entitled to their own opinions – they are not entitled to their own facts. In fairness, things are moving pretty quickly in the world these days and everything is so interlinked it is difficult to isolate causes and effects.


That said, it is at best a stretch to blame some minor stock volatility on a review report that has not been commented on by the government yet. Just more scaremongering and political positioning as I see it.

11 comments:

  1. Anonymous3:56 pm

    "People are entitled to their own opinions – they are not entitled to their own facts"

    The people who oppose the royalty changes are saying the same thing.

    -Jason

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  2. Anonymous8:01 pm

    So sad that a former Dion supporter doesn't have the guts to analyze Dion's forgotten principles and weakness in SUPPORTING the current government! C'mon Ken, at least fight back a little - after all, the LPC isn't!

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  3. Anonymous9:18 am

    Morning Eric. I am not a former Dion supporter...but a current and proud one. As for the Throne Speech I have thoughts and little time to express them.

    As a regular reader of this Blog you will have noticed my focus is on the issues of Alberta's energy policy and royalties in particular.

    I watched the speech on TV and, as a former Red Tory, I have little to quibble with it. It is moderate to the extreme considering its source.

    Harper is trying to not be scary and moving to the middle fast. I even noticed he wore a Liberal Red tie as he sat next to the GG. Nice symbolism for the remake of our kinder, gentler Republican Prime Minister.

    I will have more to say on specifics later but for now a shallow Throne Speech does not trump issues around Alberta's energy policy...that will impact the whole nation more than an interim Throne Speech that is mostly rehash.

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  4. Anonymous10:06 am

    I would still like to know how anybody thinks that $2B is better off in the hands of government. I would think that direct investment in the economy does us the best good.

    That said the $2B is as big a myth as most of the recommendations in that report.

    Keep trying Ken, eventually you'll get it.

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  5. Anon at 10:06

    Don't fixate on $2B - that is arithmetic. The focus needs to be on the formula as to how we calculate royalties (that is the Hunter's focus) and then the proper political culture to have our government actually take the collection of them seriously (that is the Auditor General Dunn's focus).

    As for the money - this is once in a life time revenues from non-renewable resources and they have to be seen in a long term context.

    Government can use funds to provide roads, schools, hospitals, post-secondary facilities and even some serious environmental incentives for new technology and adaptations would be nice - just to name a few.

    Responding to the infrastructure demands in high growth communities like Ft Mc, Calgary and Edmonton would be a great government use of such additional funds.

    Paying a liveable wage to service sector staff in the disability sector, long term care facilities and day cares would be a positive use for some of the funds too.

    The big problem for the libertarian POV is you see virtually no role for good government. I, and most other Albertans, on the other hand, see a positive active - and yes a limited role- for good government.

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  6. Anonymous11:38 am

    Ken, did you actually say "don't focus on $2 billion, it is only arithmetic." One of the most important policy decisions facing an Alberta government in decades, and the $2 billion is just arithmetic. Have you taken leave of your senses? Have you asked Chairman Hunter to quantify what he means by moderate impact on activity. What does that mean? What is the impact of the recommendations on GDP, corporate profits, personal income and employment, etc. When the Oil Sands Task Force prepared there report they hired Informetrica to model the recommendations. Why has the Panel seems fit not to provide such information. Are they hiding it, or more likely, did they not bother to do it?

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  7. Anonymous12:11 pm

    Revenue from exploration rights slump. Damn it, the facts and the arithmetic keep getting in the way, right Ken.

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  8. Don't worry the Panel made sure all that modeling was done and done carefully and independently by energy experts, all of whom have consulted to government and industry in the past.

    I know you don't like the new normal of good responsible govenment taking a long term view on royalties. You believe they should only be thinking about sustainabilty in terms that measure immediate energy industry cashflow.

    The Stelmach government is not an extension of Ralph Klein's and he is going to prove he is no Harry Strom either.

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  9. Anonymous12:43 pm

    I fixate on $2B because it really isn't $2B. It is much higher in the first year and considerably lower in the years following. The panel makes the stupid assumption that companies will maintain their investment levels at a higher royalty rate, which we now know is false.

    Now, the arithmetic is how you get to the conclusions - garbage in, garbage out simple as that. The panel did not ensure they had the right numbers, their modelling is fundamentally flawed. Look at Tristone and First Energy - gov't could have hired them for an accurate analysis.


    It would have been nice for either the panel or the AG to actually figure out how the business works before they put billions of dollars of investment at risk. There are too many assumptions made that don't bear out in reality.

    A long-term view means that everyone is working into the future because the activity is what keeps our economy moving. Leaving it in the ground does nothing for anybody.

    And, I'm pretty sure the government has had the money over the last few years to tackle infrastructure and social demands - they just didn't get it done.

    The more I see gov't do (and screw up), the more I become convinced of the libertarian way.

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  10. Anonymous12:58 pm

    Ken:

    Maybe you can make that modeling public, since as an owner of the resource, I have not seen it.

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  11. Anonymous12:58 pm

    Who are these energy experts?

    ReplyDelete

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