A couple of hours ago, Alberta's Premier Ed Stelmach went on live television to announce a new royalty regime for oil and gas developments. The new regime will put an extra $1.4 billion into Alberta coffers by 2010. This is about a 25% reduction from the recommendations of a panel set up to study the new royalty plan. A National Post editorial thinks that this is so significant that it will end Alberta's boom, and compares Alberta to "banana-republics" like Venezuela (Chavez) because it is not being friendly to big oil, in fact, starting a "new anti-oil industry" era.
I have to wonder about how many $billions oil companies have made already from the Alberta oilsands, and how much they will still profit even with Alberta's new royalty policy. It was not stated in the NP piece. Are oil companies really just scrapping by? From reading the National Post, one might think so. How much profit is enough?
When one hears references that the oil sector will hurt as a result, one should not necessarily view it as some poor sap of a business put out of business. Today, the Globe & Mail reported that Suncor's profits were down. It will earn a third quarter profit of $ 677 million, but that's down from $682 million from a year ago:(
Many already think that big oil, like banks, are the poster children for greed. Like banks, oil companies are regularly making record profits in quarterly reports, and will likely "survive" Alberta's new royalty rate. Despite being a rich province that has eliminated its debt a few years back, Alberta still has problems in health care, and it's share of social problems. An extra $1.4 billion could go a long way to alleviating problems and helping secure peoples' future and well being.
NP's Claudia Cattaneo says that the oil companies are responsible for "lining the pockets" of Alberta, but from an outside observer's point of view, it was quite reciprocal. Alberta has been very friendly with oil & gas companies, but it seems they will always have allies with Canada's "national" newspapers.