Panelists with dark pasts and grudges against oil and gas? Panelists changing their minds? Consultants defining policy for the province; insisting the Premier follow his whims? Left wing economic think tanks seriously proposing nationalizing the oil industry?
WHAT IS NEEDED is an open public inquiry into the review panel: Who are they? Who appointed them? Who said what? Who wrote what? What undue pressure was put on panelists to get them to cow-tow to Bill Hunter?
I want something like the Iran-Contra hearings, but this time it'd be nice to get to the truth!
Royalty review panel attacked from within
'Dumb resource management,' economist says
Graham Thomson, The Edmonton Journal
Published: Saturday, October 20
Economist Judith Dwarkin has managed to do in four pages what the energy industry has been trying to do for four weeks.
She has shaken the credibility of Alberta's royalty review panel. She did it quickly and succinctly in a mini-report she wrote for her employer, an energy consulting firm called the Ross Smith Energy Group (RSEG).
Her four-page report accuses the panel of making "overly aggressive recommendations" and encouraging "dumb resource management." Yet, Dwarkin insists she didn't mean to debase the royalty panel's work. In fact, she even wrote a letter to the panel on Friday apologizing for the trouble she's caused.
If Judith Dwarkin seems conflicted, it's because she herself is a panel member. That's why her four-page mini- report is creating such a stink.
Dwarkin signed the 104-page royalty review panel report released by the government on Sept. 18 and she stood by its controversial recommendations that include a 20-per-cent hike in royalty rates worth about $2 billion a year to the province.
However, this week she co-authored the RSEG report that criticizes her own panel's work. It's entitled Looking for Rent in All the Wrong Places and despite its humourous heading there's nothing funny about the document that says the review panel "lacked the requisite industry expertise" in one area and used a "flawed estimation" in another.
Dwarkin and three of her colleagues at RSEG said the panel's recommendation to increase natural gas royalties was "too high" and characterized a recommendation to shift the royalty burden from low-rate gas wells to high-rate ones as "dumb resource management." For Evan Chrapko, a fellow member of the six-person review panel, Dwarkin's report hit like a slap in the face. What's particularly puzzling to Chrapko is that Dwarkin did not let her panel colleagues know she had written the RSEG report. Not only that, the RSEG document was released on Thursday, the very day Dwarkin was with three panel members meeting with Premier Ed Stelmach to defend the panel's recommendations.
"It's very, very bizarre all the way around," said Chrapko, who is mystified how Dwarkin could put her name on two conflicting reports.
See THOMSON / A12 For her part, Dwarkin has strongly denied she is undermining, either on purpose or by accident, the credibility of the royalty review panel.
And she rejects out of hand any suggestion she helped write the RSEG report under pressure from energy companies eager to discredit the panel's recommendations.
"What I certainly did not do is speak out against the panel report," Dwarkin said in a telephone interview.
"I don't disagree with anything of substance in the panel report. What I did was contribute my personal views to a report that my employer put out and this report suggests a refinement on the panel's product. That's a critical point." However, it's a point sure to be missed, either by accident or on purpose, by those critical of the review panel's recommendations. Even though the RSEG's document focuses on just one aspect of the panel's report -- natural gas royalties -- it is loaded with such strongly worded language the energy industry will happily use it as a club to beat up the credibility of the royalty review.
t could also prove useful to Premier Ed Stelmach who is looking ways to compromise on the panel's tough, accept-them-or-else recommendations.
In a pleading letter to her fellow panel members on Friday, Dwarkin apologized for the strong language used in the RSEG report and for not giving them an advance copy. She said she had tried to tone down the RSEG report but was overruled by her company.
"I was horrified when I got back to my office late on Wednesday afternoon and saw that the final report had gone out with this stuff in it. If it's of any comfort to you -- and I understand it probably isn't -- please know that I wrestled several other unfair criticisms out of the report before that." Despite her attempts at damage control, Dwarkin has managed to make the complicated debate over royalties even more confusing.
It's an issue that seems to get more muddled every day.
A few days ago I wrote about the practice of "astroturfing," of organizations putting together fake grassroots movements to sway public opinion. I mentioned it in relation to a rally of 500 oilfield workers at the legislature on Wednesday. A murky group called Grassroots Oilworkers of Alberta took credit on its web site for helping organize the event. However, rally organizers say the protestors are legitimately worried about their jobs and Grassroots Oilworkers of Alberta had nothing to do with the protest. A representative for the Grassroots Oilworkers has since apologized for what he characterized as a mistake made on his web page.
What's still not clear is who is behind Grassroots Oilworkers, an organization trying to portray itself as a populist movement of workers concerned their jobs will be cut if energy companies have to pay higher royalty rates.
What's also not clear is just how much damage Judith Dwarkin's four-page report will do to the review panel's 104-page document and its recommendations.
The good news for the panel is most people looking at Dwarkin's conflicting messages might just conclude the one with damaged credibility isn't the panel but Dwarkin herself and the RSEG report.
gthomson@thejournal.canwest.com
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