Sunday, February 26, 2012

Alberta royalty explained.

I have said we are presently getting zero for royalty on our resources. The Conservatives are saying this is ridiculous!

Here it is on the tar sands; oil sands what ever you want to call them taken on a 100 dollar US Barrel oil.

Originally we were getting 25% royalty taken in US dollars on production on the completed plant.

Until the plant was paid for we collected only 1% US dollars (1.00 US per bbl).  The balance went to the companies to pay for the build of the plant.  (99.00  US per bbl)

Ralph Klein started the cuts to royalty with his famous Firestorm fishing trip.  Oil companies took him fishing and he came back with a deal that a plant add on would be paid for by Alberta Taxpayers the same as a new plant.

Following that there were no releases on what was paid leaving people to assume we were still on the original deal. It was a big secret! Then!

Then Auditor General Fred Dunn pointed out Alberta was only collecting 16% US on a barrel of oil (16.00 US per barrel  and their stated target at that time was 19% or 19.00 per bbl US.

In this time lapse we had lost 9% of our royalty .  Thereafter the Conservatives put out a "hate Fred Dunn" campaign saying he "had no business in reporting this"

The last election royalty was a big deal.  On the eve of the election the Conservatives pumped out a "New Royalty Framework"  .pdf  which is alive and well today.  They put ridiculous out of reach percentages on this paper along with one line which said "Taken in Canadian Dollars"

No part of this paper was ever applied nor was it ever intended to be applied except for the Canadian Dollar bit.  They put that part in immediately a loss to Alberta of 18% of our revenues!  After he was elected he was on TV saying he heard the complaints of the Gas industry and Conventional oil industry and would address them separately.  With that he changed all our resource takes to Canadian Dollars and our royalty is essentially the same for all!

It also served to upset oil types who knew no better into trashing the Conservatives while complaining about the high oil increases.  The press was alive in favor of royalty cuts fueled by the nonsense posts of uninformed people and a great many who were just playing the game!


Then,  with royalty at 16% Canadian the 100.00 barrel of oil would return 16.00 less 18% exchange left us with 13.20 per bbl.   


18%  is interesting as it is the Percentage used to explain the difference between the US and Canadian economies.


A year ago, Ron Liepert said our royalty will be only 6% immediately and will be that for the next 6 years at which time it will be reviewed.  (Which means in another 5 years or earlier it will be down to zero)


A 100 US barrel of oil  and a 90 cent Canadian dollars  gives us 5.40 per barrel Canadian.

When  the US and Canada normalize and we are back at a 85 cent Canadian dollar which is the norm, we will get 5.10 per barrel. (100 US to Can =85.00 X 6%=5.10)

We pay for their power lines, we pay for their roads, we pay for their water and using US standards we pay for their health care!
WE ARE IN THE HOLE and have been in the hole for some time!  How much can you and  your family afford to pay them?

With the stuff going on in the middle east we are poised to see 200.00 US or more per barrel. When that happens Albertans will be short some 320 thousand dollars per day in resource royalty!

BC and Saskatchewan and pretty much the rest of the world are taking 20% US dollars for their royalty where our deal was for 25% and this is where we should be at!

The bottom line: The Conservatives have been reducing Alberta's royalty from day 1 of  Ralph Klein's reign to the present time!  They will continue to do so!

You cannot vote the same way every time and reasonably expect a different outcome!

Support me on voting Alberta Liberal!

This article updated on:
http://albertathedetails.blogspot.com/2012/07/the-politics-and-finance-of-alberta-and.html
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