Lunatics Out of the Asylum

They've let the lunatics out of the asylum.

Parkland Institute calls for even higher royalties

Jason Markusoff, edmontonjournal.com

Published: 11:42 am

EDMONTON - The Stelmach government should tax energy companies' profits up to nearly 100 per cent and the government should take ownership of part of the oil sector, rather than adopt the tamer recommendations of the royalty review panel, an Edmonton-based think tank said today.

In stark contrast to the energy industry's complaints that the review's proposed hikes go way too far and would cripple the economy, The University of Alberta's Parkland Institute said Albertans deserve to capture at least 90 per cent of available economic rent on oilsands project.

The government's panel, led by retired forestry executive Bill Hunter, called for a 64-per-cent total government take.

"The job of government is not to consider with industry what a fair share for the people of Alberta would be, but to ensure that Albertans get the maximum value for the natural resources we are selling," says the group's report, entitled "Selling Albertans Short."

"It is the job of government to determine what the minimum return on investment is for Alberta's oil and gas to maintain the level of investment that is in the public interest. The balance should all go to Albertans."

Stelmach will reveal his decision on royalties next week. In recent speeches, he has positioned himself to find a "balance" between the desires of investors and energy firms for Alberta to remain globally competitive, and the public's right to a fair economic return.

The Hunter report called for a new "severance tax" on oilsands projects that would hit up to nine per cent when oil prices rise. Parkland urged the government to act more like Ecuador or Russia, and capture virtually all companies' windfall profits.

The left-leaning institute also noted that the nationalized oil companies in Norway, China, Korea and Japan have taken stakes in Alberta's oilpatch, and that a predecessor to energy giant EnCana was once partly province-owned.

"Public ownership is the best way to capture royalties, as 100 per cent goes to the owners, the people of Alberta," the report says.

The Hunter report called for royalty hikes that would still give Alberta one of the world's most attractive royalty regimes. But several industry and financial groups have called the report's math flawed, and said its recommendations would trigger massive job losses and scare off investors.

Harsher critics have likened an Alberta with dramatically higher royalties to Venezuela, which has seized ownership of its heavy-oil industry.

Parkland's analysis decries those protests, arguing that Alberta's vast oilsands reserves plus global energy demand will keep companies lining up at the province's doorstep.

jmarkusoff@thejournal.canwest.com