Could we convince Ed Stelmach to postpone the new Royalty plan

[GarthChapman]

Now is not the time to impose a large tax increase on an industry vital to our economic health (and maybe to the nation`s economic health). Now is the time to find ways to create an environment conducive to businesses spending and building and growing.

I propose a letter writing campaign to pressure Ed Stelmach to postpone for 2 years the new Royalty Structure. Even those who are firm supporters of this would surely agree in these now much worse economic times.

What do you say? Are we together on this? Anyone ready to draft the letter? Hopefully someone with a good knowledge of the industry`s key figures.

 

[GSI]

QUOTE (GarthChapman @ Nov 27 2008, 10:29 PM)
Now is not the time to impose a large tax increase on an industry vital to our economic health (and maybe to the nation's economic health). Now is the time to find ways to create an environment conducive to businesses spending and building and growing.



I propose a letter writing campaign to pressure Ed Stelmach to postpone for 2 years the new Royalty Structure. Even those who are firm supporters of this would surely agree in these now much worse economic times.



What do you say? Are we together on this? Anyone ready to draft the letter? Hopefully someone with a good knowledge of the industry's key figures.




Hi Garth,



I'm behind you in support of the letter. I'm not certain how to go about drafting it, but I'm certain once drafted we can petition within our circles and the REIN group to get signatures backing it. Possibly draft the letter and distribute for all to sign and forward individually?



Good idea.



Todd-

 

[Allie]

It`s a fantastic idea. I, too would participate.

 

[ZanderRobertson]

Fantastic idea. I agree wholeheartedly but have never done this before. Would it be more effective with one letter signed or sent from many different people, or would it be more effective with numerous unique voices sending different letters?

There are some regular posters on myreinspace who seem to have a pretty good grasp on the key figures. YOU know who you are!

QUOTE (GarthChapman @ Nov 27 2008, 10:29 PM) Now is not the time to impose a large tax increase on an industry vital to our economic health (and maybe to the nation`s economic health). Now is the time to find ways to create an environment conducive to businesses spending and building and growing.

I propose a letter writing campaign to pressure Ed Stelmach to postpone for 2 years the new Royalty Structure. Even those who are firm supporters of this would surely agree in these now much worse economic times.

What do you say? Are we together on this? Anyone ready to draft the letter? Hopefully someone with a good knowledge of the industry`s key figures.

 

[wealthyboomer]

How much does the new royalty tax impose on the oil companies?
Will they no longer be able to make a profit?

Globally, some 80% of oil is produced by state-owned enterprises. As one of the world’s few jurisdictions with conventional reserves open to private companies, Alberta is strongly positioned to request higher payments from these companies.

Why wouldn`t it be sensible to seek a better return on the depletion of the province’s nonrenewable resources?

In any case, more oil production may not be desirable since it entails faster depletion of a nonrenewable resource and additional greenhouse-gas emissions.

BTW: As far as letter writing, each person writing a letter has a greater impact on politicians, as they give a certain grade to each letter. That being one letter represents `x` amount of voters/population.

 

[Jack]

QUOTE As one of the world’s few jurisdictions with conventional reserves open to private companies, Alberta is strongly positioned to request higher payments from these companies.

Are they really? What happens if the left-wing countries like Venezuela remove their heads from their sphincters and realize that they`re missing out on boatloads by not opening up their doors to private enterprise? Suddenly, Alberta`s scarcity power goes down, down, down, especially given the fact that it costs firms about twice as much plus to extract oil from here. Right now, firms are willing to pay lots more to extract from a country with a "stable" government like ours, but who knows how long that`ll last?

Back to the topic at hand - it`s too late. A year ago, that would`ve been a smart thing to do, but the damage has been done. Ed`s already tried to pull back a little, which was pretty much met with laughter from the industry. Nice try, Ed, but you screwed up, and I`m sure that you`ll get more than a few thank-you cards from British Columbia & Saskatchewan.

 

[JimWhitelaw]

QUOTE (wealthyboomer @ Nov 28 2008, 01:12 AM)
How much does the new royalty tax impose on the oil companies?

Will they no longer be able to make a profit?
This is an important point. We keep hearing about this evil new royalty plan, but what is the change exactly? How does it differ from the old one? Asking to postpone the implementation suggests the change itself is OK but not well timed. Is that the case?

 

[ZanderRobertson]

I disagree, let's do it anyway. Garth what's the next step?






QUOTE (Jack @ Nov 28 2008, 07:11 AM)
Are they really? What happens if the left-wing countries like Venezuela remove their heads from their sphincters and realize that they're missing out on boatloads by not opening up their doors to private enterprise? Suddenly, Alberta's scarcity power goes down, down, down, especially given the fact that it costs firms about twice as much plus to extract oil from here. Right now, firms are willing to pay lots more to extract from a country with a "stable" government like ours, but who knows how long that'll last?



Back to the topic at hand - it's too late. A year ago, that would've been a smart thing to do, but the damage has been done. Ed's already tried to pull back a little, which was pretty much met with laughter from the industry. Nice try, Ed, but you screwed up, and I'm sure that you'll get more than a few thank-you cards from British Columbia & Saskatchewan.

 

[VicChung]

QUOTE (ZanderRobertson @ Nov 28 2008, 05:19 PM)
I disagree, let's do it anyway. Garth what's the next step?




I am in as well. I disagree with Jack. It is never too late. Alberta is a great place to invest. Companies might change their minds or might be encouraged to increase investment. If the royalties are postponed, it will be very positive news.

 

[GarthChapman]

QUOTE (wealthyboomer @ Nov 28 2008, 01:12 AM)
BTW: As far as letter writing, each person writing a letter has a greater impact on politicians, as they give a certain grade to each letter. That being one letter represents 'x' amount of voters/population.




I think you're right in that. So maybe we each should write our own letter.



Consider writing the same letter to the Premier, The Energy Minister, and your own MLA.



You could kick it off by indicating you believe that with what is going on in the economy right now it would be wise to postpone the Royalty changes for 2 years to give the industry some impetus to invest here again and to reconsider delayed investments and to re-consider investment funds moved to other jurisdictions. It has been proven time after time that reducing taxes spurs corporate investment and thereby increase government tax revenues - and that is just what we need.



If anyone would care to post their letter I'm sure that would help those searching for the right words.





Does anyone have the website url where the MLA's are listed by electoral district?

 

[ZanderRobertson]

Here's what I found:
I think you're right in that. So maybe we each should write our own letter.



Consider writing the same letter to the Premier, The Energy Minister, and your own MLA.



You could kick it off by indicating you believe that with what is going on in the economy right now it would be wise to postpone the Royalty changes for 2 years to give the industry some impetus to invest here again and to reconsider delayed investments and to re-consider investment funds moved to other jurisdictions. It has been proven time after time that reducing taxes spurs corporate investment and thereby increase government tax revenues - and that is just what we need.



If anyone would care to post their letter I'm sure that would help those searching for the right words.





Does anyone have the website url where the MLA's are listed by electoral district?

 

[wealthyboomer]

The goal of increasing production in the short term has several unfortunate consequences for our province. Over the long run, the price of oil will increase as oil supplies dwindle. If we sell more oil today, then we will have less oil to sell at higher prices tomorrow.
Total government revenues from oil will be higher over the long term if we conserve much of our oil supply and sell it in the future.

Increasing the amount of oil produced (and burned) also increases global warming. The costs of adapting to global warming will fall mostly on individuals in our province. A shift to renewable energy sources will not decrease the demand for oil, but will shift the patterns of its use. Less oil will be burnt, and more will be used in the chemical industry, such as for the production of plastics.

So how should we use our oil resources for the benefit of all Alberta`s citizens? Increase royalty rates, develop a long-term royalty investment plan, and conserve oil for future use when prices will be higher and less of the oil will be burned.

 

[GarthChapman]

QUOTE (wealthyboomer @ Nov 29 2008, 12:24 AM)
The goal of increasing production in the short term has several unfortunate consequences for our province. Over the long run, the price of oil will increase as oil supplies dwindle. If we sell more oil today, then we will have less oil to sell at higher prices tomorrow.



Total government revenues from oil will be higher over the long term if we conserve much of our oil supply and sell it in the future.



Increasing the amount of oil produced (and burned) also increases global warming. The costs of adapting to global warming will fall mostly on individuals in our province. A shift to renewable energy sources will not decrease the demand for oil, but will shift the patterns of its use. Less oil will be burnt, and more will be used in the chemical industry, such as for the production of plastics.



So how should we use our oil resources for the benefit of all Alberta's citizens? Increase royalty rates, develop a long-term royalty investment plan, and conserve oil for future use when prices will be higher and less of the oil will be burned.




Both the current economic conditions and the new Royalty plan are having the effect of slowing down exploration and therefore also future production. The economic conditions alone will slow things down more than enough without adding the drag of the new Royalty regime to the mix. Let's not deliberately make things become worse than they already will be.



Your goals of less production now and more later will be met without adding the higher taxes into the mox - and thereby risking a more drastic slowdown than most Albertans would readily accept.



I am not suggesting we argue against the new Royalty plan - that is another discussion entirely. I am suggesting we delay its implementation until after we have come out the other side of tough economic times.

 

[Jack]

QUOTE I am in as well. I disagree with Jack. It is never too late.

Really? Guess what - the 2009 capital plans & budgets are already locked down. These big companies aren`t nimble enough to just up and decide to explore/produce/invest/drill one morning after hearing some favourable news. The `09 plans have been made, they`ve been disclosed to the public, and they`re not going to be deviating from them.

 

[mcgregok]

Maybe Mr. Stelmak could spend the massive Heritage fund they are hoarding. I can`t understand why a goverment should have a massive saving accout. Alberta business could use the cash to expand. As far as the oil companues go, they have left before then come back a few years later in droves.

 

[ZanderRobertson]

last year the capital plans included building massive refineries for some. anyways, apathy gets us nowhere.




QUOTE (Jack @ Nov 29 2008, 09:22 AM)
Really? Guess what - the 2009 capital plans & budgets are already locked down. These big companies aren't nimble enough to just up and decide to explore/produce/invest/drill one morning after hearing some favourable news. The '09 plans have been made, they've been disclosed to the public, and they're not going to be deviating from them.

 

[wealthyboomer]

QUOTE (GarthChapman @ Nov 29 2008, 09:13 AM)
Both the current economic conditions and the new Royalty plan are having the effect of slowing down exploration and therefore also future production. The economic conditions alone will slow things down more than enough without adding the drag of the new Royalty regime to the mix. Let's not deliberately make things become worse than they already will be.



Your goals of less production now and more later will be met without adding the higher taxes into the mox - and thereby risking a more drastic slowdown than most Albertans would readily accept.



I am not suggesting we argue against the new Royalty plan - that is another discussion entirely. I am suggesting we delay its implementation until after we have come out the other side of tough economic times.


If postponing the royalties generate more development than higher royalties do, and not just more profitable development for the resource companies, then this is an argument to delay the new royalties program. But this does not end that calculation. This additional development must be balanced against the other development that would come from [public spending financed by] higher royalties .

 

[Dan_Eisenhauer]

I am not knowledgeable enough about the oil and gas industry to comment on whether the Royalty changes are good or bad for the industry and/or Alberta. I do know that the Albertan economy was super heated and needed to cool down. Wages, prices, etc were going through the roof. Employers could not find enough employees. It needs some breathing room.

It is my feeling and understanding that the new Royalty regime does just that... it temporarily made oil companies review their projects. Some were "cancelled" (Time will tell how long they remain "cancelled".) Some were postponed. But, IMHO, most, if not all, of those "cancelled" projects will be back again when the economy and the demand for oil products grows.

My impression is that any down turn in the oil patch is probably a result of a sagging economy more than it is with Royalties. It is just a matter of time before we begin to see an upturn in the industry in Alberta.

As I said, I am just an outsider looking in. I would love to hear what a really knowledgeable oilman/woman has to say on this subject.

 

[mcgregok]

QUOTE (Dan_Eisenhauer @ Nov 29 2008, 05:17 PM) I am not knowledgeable enough about the oil and gas industry to comment on whether the Royalty changes are good or bad for the industry and/or Alberta. I do know that the Albertan economy was super heated and needed to cool down. Wages, prices, etc were going through the roof. Employers could not find enough employees. It needs some breathing room.

It is my feeling and understanding that the new Royalty regime does just that... it temporarily made oil companies review their projects. Some were "cancelled" (Time will tell how long they remain "cancelled".) Some were postponed. But, IMHO, most, if not all, of those "cancelled" projects will be back again when the economy and the demand for oil products grows.

My impression is that any down turn in the oil patch is probably a result of a sagging economy more than it is with Royalties. It is just a matter of time before we begin to see an upturn in the industry in Alberta.

As I said, I am just an outsider looking in. I would love to hear what a really knowledgeable oilman/woman has to say on this subject.

I think its more that the rules were changed after the game started. When you make a deal for companies investing in Alberta the goverment should honer it.

 

[Dan_Eisenhauer]

When you are reliant any government you should expect the rules to change at a moment`s notice. That is just fact, and not a comment on whether it is right or wrong.