Categories Alberta Politics Four decades of message consistency SPOILER ALERT: They didn’t leave. Post author By Dave Cournoyer Post date August 26, 2015 15 Comments on Four decades of message consistency “Most oil men say that the new tax will simply drive new industry out of the province to the expanding fields in the North.” – Ottawa Citizen on May 8, 1972 reporting on Peter Lougheed’s oil tax increase. ← Photo of the Day: Smoky skies over beautiful Jasper National Park → Let’s Review Oil Royalties and Start Acting Like Owners Again. 15 replies on “Four decades of message consistency” Are you advocating a new tax increase? Just think how many more jobs if we didn’t have the tax increases of Lougheed. This is why the Wildrose will win on September 3. You got it. BigOil investment in intimidating elected premiers & bamboozling Know-Nothing conservatives, & now WRPs, always paid off except for the attempt to strong-arm Lougheed. Someone should interview Stelmach again, and ask what he thinks about the Ted Morton-types in the PCs making him walk the plank at the behest of Calgary’s BigOil elites, and in particular, how he thinks it compares to the current WRP inquisition targetting the NDP on behalf of BigOil. Yes we know Dave, you’re a big tax and spend Liberal who loves all government largess. So according to the “raise taxes and they will go ” theory, places like Norway should not have a thriving energy industry?? Dave – thanks for the comment. If we Albertans want to maintain our high quality of life, tax increases like the recent corporate tax increases are a reality. I have no problem supporting this. -Dave The quote is without real context and that’s the problem. Everything boils down to the cost to produce. What is the cost of producing a barrel of oil? Obviously, that cost will change depending on the type of oil, the formation and any enhanced recovery techniques required. If the cost to produce is much lower than the price per barrel then a minor tax increase won’t impact overall production (except for those few wells with abnormally high production costs) The problem we have now is that the revenues are significantly lower, to the point where the price per barrel is either very close to the cost of production or less than the cost of production. At that point, a tax increase – even a small one – may have a significant impact on production (this assumes cashflow isn’t a corporate priority since producing oil at a loss still generates a cashflow). So before anyone posts pithy quotes about the economics of the industry the first step might be to understand the economics of the industry and Alberta’s complicated royalty system. Let’s not forget the difference between royalties and taxes. Royalties are what we charge oil companies for OUR resources. And unlike individuals, corporations pay taxes on profits, not income. Forget it, Darren, your thoughtful economic analysis is no match for arbitrary juxtaposition of cherry-picked quotes! This quote is a good reminder that the big oil industry will always use scare tactics to get what they want from Albertans. The NDP have a strong mandate to raise corporate taxes and review royalties: and it’s good to see a premier actually honouring her promises. The Wildrose would drop taxes and lay off tens of thousands of public workers. The NDP are protecting our jobs and our resources, just like Peter Lougheed did. Good job Rachel. The math is pretty clear. Cost of pulling AB Oil into a saleable product and the price it can achieve in current market conditions are virtually on par. What does that mean? The tax increase has caused already tight margins to hit red. Our oil sells at a fraction of Brent/WTI. If we had access to markets we’d have a better margin but folks out East would rather purchase oil shipped in from questionable sources than support us here. Perhaps taking the time to interview folks who run business in the industry to get a real picture of the current economic climate would be better than whatever assumptions follow the indicated quotes. P. Tom, What do you mean when you say “our jobs”. Who is the “our” you’re talking about? I work at one of those poor, over-taxed oil companies. We are fine. We will be fine if taxes go up. We will be fine if Royalties go up. Our margins are not impacted by the taxes, really. Most of us operate so sloppily that there are lots of ways for us to bring cost down to compensate, we are just to lazy to do it most of the time, on account of how easy it is to make stupid amounts of money. For the few operators that aren’t making any money, this doesn’t bother them any either. A tax increase on profits will not effect a profit that does not exist. Corporate taxes should be decreased as this has been proven to grow the economy. I also work at one of those poor, over-taxed oil companies. The cuts that were made only impacted middle and upper management who were grossly overpaid and overstaffed. They were still able to find jobs elsewhere after layoffs as far as I have heard. I was raised by a family of oil and gas workers and I voted NDP. There are still jobs out there for those willing to live within their means. We have a high quality of life in Alberta because we have low taxes, and for no other reason. The NDP are eroding this quality of life where people can keep more of their hard-earned dollars. What a novel concept. I have no problem supporting this. Leave a Reply to Philip Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Δ This site uses Akismet to reduce spam. Learn how your comment data is processed.