Reboot Alberta

Monday, June 08, 2009

Lougheed Confirms Albertans Own the Oilsands But Says We Better Start Acting Like Owners.

With all the turmoil going on in the world - and in my province of Alberta in particular, to read the top Editorial from this morning's Globe and Mail was a gift of clarity and common sense.

Former Alberta Premier, Peter Lougheed cuts through the fog and frustration and states the fundamental truth for Albertans. That is that the citizens of Alberta are owners of the oilsands - not the energy industry. The energy industry companies who are developing the resource are welcome as tenants but only as tenants. This issue of Albertans needing to act like owners of the oilsands was the key message coming from the Royalty Review Panel Report last year as well.

The old-boys back-channel industry model of dealing with and influencing government is over and that will be confirmed this November when the Lobbyist Act finally get Proclaimed into law. The government has to rethink its mindset around oilsands too. It has pandered and capitulated to the industry demands on royalties and taxes and subsidies for generations but as the proxy holders for citizens, the government has to remember whose best interests they are supposed represent.

Shareholder interests can no long trump the interests of Albertans. If certain energy companies wants to leave, the resource is not going away. Others will come to replace them. We know there is lots of international interest to invest in Alberta's oilsands. the big selling features are that we have a know and enormous proven oilsands resource. We have a stable government with the rule of law, a strong investment climate and reasonable accountability controls and no corruption. We have the best proximity of any oil supplier to the largest energy market on the planet and an international treaty with that customer to provide some certainty in the marketplace.

The energy industry is in turmoil too, given the recession, restricted access to capital, volatile commodity prices and issues around cost control and royalties. I haven't even begun to talk about the new environmental standards they will face in the immediate future as we get into a post-Kyoto world soon to be emerging out of the Copenhagen Climate Change meetings come December.

Lougheed says Albertans, as owners, need to insist on a more "orderly development" as we come out of this recession. That means one project at a time to reduce costs, contain inflation and allow for adaptations for environmental and social impacts of oilsands development. Lougheed also says oilsands upgrading has to happen in Alberta, something we at Cambridge Strategies have been advocating as well.

Lougheed says Albertans also need to expand our oilsands markets into Asia and not just depend on the US market. This is another issue we at Cambridge Strategies have been pushing and actively working on. You can review the Cambridge Strategies work in our Economic Outlook 2009. We also have called for the GOA to invest in a merchantile upgrader in our recent Budget Analysis.

Lougheed laments that previous calls for a more sustainable and focused development of the oilsands "...have mostly fallen on deaf ears." The Editorial goes further to the heart of the matter stating: "There has been an unwillingness of the Alberta government, and not enough pressure from the public, to exercise greater restraint."

The old-boys of the energy sector have effectively convinced themselves that the new Royalty Regime is the NEP of the 21st century. They have vilified the Alberta government in the process. Both the industry and the government seems to have forgotten who really call the shots here, the Alberta citizenry as the owners of the resource. The attitude in the pubic is that both industry and government have forgotten their place and have lost their way in the need to create a responsible, reasonable and sustainable oilsands development approach.

The close of the Editorial is what was the most encouraging comment for a Monday morning. It goes to the governance of Alberta and to the roles and responsiblity of Albertans as owners of our natrual resources. Will Albertans take back the power of politicla governance and exercie their proper proprietray ownership obligations in the oilsands? Lougheed is hoepful and so am I.

7 comments:

  1. Anonymous4:16 pm

    Who is Louheed? Oh yeah , he was that guy that ruled Alberta through the last boom time and left a mess for Getty to clean up.

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  2. Anonymous6:44 pm

    The Tories use the oilsands as a carrot to get $$$$$ for elections. Disgusting politics and they will never change.

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  3. Lougheed seems to be a man of vision and wisdom. I admit that I haven't studied him very long (his time at the helm preceded my interest in politics) but his comments and his legacy speak of an approach that would have led to a sustainable industry, differing dramatically from what we have today.

    What he is ultimately getting at, though, is power distribution in this province (and in this country too). In my opinion, the Alberta PCs have systematically removed power from the people and put it in the hands of industry. Bill 50 is an attempt to continue this trend. Lougheed envisions a society where the people have input into the decisions that affect them and where this input is held in high regard. Not unlike a revolution, the people must take this power back. This is called a movement. Alberta is riddled with interest groups, but the movement lacks momentum. Ultimately, I think it's because the people are distracted and not paying attention to the things that actually matter. Normally politicians and the media would conspire to make a smokescreen to distract the people, but Albertans seem quite content to complacently ignore the goings on around them.

    I hope Lougheed continues to speak his mind and continutes to influence whatever is left of his legacy.

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  4. The Tories have (quietly, of course) reversed themselves 110% on royalties since the last election. This after all their "Our Fair Share" demagoguery. If they ended up backtracking once in the face of economic reality what is going to be different this time? Energy policy seems to change pretty much weekly, which is the opposite of "stable".

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  5. Anonymous8:22 am

    I am looking forward to your review after studying his legacy. What I will say for him is hind sight is 20 -20 and while he ruled created much of this "corporate politics". If he would like to be revered then perhaps start with thongs I should have done differently when I had the power.

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  6. Good Morning Brian. I agree with your perspective. The Royalty Review Panel already suggested a compromise on royalities but the Stelmach government did a further compromise, and then proceeded to further change the royalty rates three more times. these changes were all in favour of the energy sector and done without any serious analysis or disclosure.

    The Calgary energy sector is used to having quiet diplomacy back channel access to the highest levels of political and policy decision making especially in the Klein days. Klein even critized Stelmach for even embarking on a royality review saying the owers were "getting their pound of flesh already." That shows the governing philosophy of the Klein days that implies the oil industry is the de facto owner of the resource.

    The energy sector believes those back doors of "quiet diplomacy" doors have shut in the Stelmach days. But given the recent actions on royalities - I am not so sure the preferential treatment is not still alive and well.

    Royalites are rents - pure and simple. In a non-renewable resource they are a one time revenue source for the owners, the citizens of Alberta. The Auditor General estimated that the Alberta governmenr had forfieted about $2B
    of royalites due to lax enforcement of collections. Our government's response was to refuse his budget request so that he could not look into the royalty collection matter any further.

    Our goverment is supposed to represent our interests in this relationship with our energy sector tenants. So far they seem to be more in support of the private interests of the energy sector Boardrooms, not the living rooms of the Province.

    Some more enlightened energy sector tenants are coming to realize they need a social license to operate and are starting ot make moves and maybe even amends for past attitudes and transgressions.

    One can only hope that they will be enabled by strong government enforcement and regulation on behalf of Albertans greater interests about social end eviironmental concerns as well as sustainable and responsible economic growth.

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  7. Anonymous11:46 am

    I wish the PC's weren't going so far to the left. The only alternative left is the Wildrose Alliance. Mark Dyrholm has some great ideas.

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