CanPol - Alberta edition

[Flubber]

Can you elaborate?

Its pretty simple really

If general taxes are lower in Alberta than Elbonia then if royalty rates were exactly equal, the overall government take would be lower in Alberta than Elbonia.

If this occurrs I don't think you can complain about the oil industry since the lessened take is completely due to the effect of the lower taxation that everyone in Alberta enjoys. (and theroretically was a conscious decision of government)

Thats my beef with looking at total take-- Its informative and interesting in some ways but when such a large part of it is the general tax rates of states that provided a cradle to grave welfare state versus the tax rates of places which barely fund basic education, the differences are largely due to general taxation and not much anything to do with the oil industry.

Don't get me wrong, total take is important when assessing project economics but you also need to consider

1. what the government might provide for that take
2. Equities across industries in a jurisdiction and
3. The nature of the oil industry in the place-- I will maintain with my last breath that oilsands are fundamentally different than shallow gas which can be on production days after the drilling of a well

[notyoueither]

And if this was true, the GoA could've easily taken them to court. Which they never did. They instead chose to be ethically questionable and nullify the agreement -- which itself was illegal. The only reason Syncrude and Suncor didn't take them to court is because then the GoA would stall any future development of their projects for years. The GoA screwed them, and you know it.

They didn't need to.

The original agreements accomplished what was intended. The projects were the pilots for heavy oil and they paid off. Hurrah!

Note, the projects paid off. The intent of the original terms were fulfilled. What was not intended back in 1970 was that Suncor would do 10bln in expansion on the eve of beginning to pay 25% royalties in the sunset of the then current royalty regime.

Stelmach ***** slapped them for trying to game the system. Renegotiate or we'll find other taxes. Get over it.

[Asher]

And if this was true, the GoA could've easily taken them to court. Which they never did. They instead chose to be ethically questionable and nullify the agreement -- which itself was illegal. The only reason Syncrude and Suncor didn't take them to court is because then the GoA would stall any future development of their projects for years. The GoA screwed them, and you know it.

They didn't need to.

The original agreements accomplished what was intended. The projects were the pilots for heavy oil and they paid off. Hurrah!

Note, the projects paid off. The intent of the original terms were fulfilled. What was not intended back in 1970 was that Suncor would do 10bln in expansion on the eve of beginning to pay 25% royalties in the sunset of the then current royalty regime.

Stelmach ***** slapped them for trying to game the system. Renegotiate or we'll find other taxes. Get over it.

The constant theme here is the incompetence of the government. "What was not intended......that was not a realistic price back then..."

There's a reason you have armies of lawyers. A contract is a ****ing contract. You can't back out of a contract because you failed to consider something years ago when you signed it.

Get ****ing real.

Your "get over it" comment pretty much sums up why your opinion on this issue is a joke. We're talking about hundreds of billions of dollars worth of investment and countless people's jobs, and you treat it like it's a ****ing game and the province can do whatever they want, whenever they want...even if it's illegal.

Suncor and Syncrude were NOT gaming the system, and YOU (nor anyone else) have ever even come close to demonstrating they have. To continually to claim it in this thread after being called out on it is incredibly dishonest of you.

And these are public companies. It's not like they can hide all of the relevant data.

[notyoueither]

Its pretty simple really

If general taxes are lower in Alberta than Elbonia then if royalty rates were exactly equal, the overall government take would be lower in Alberta than Elbonia.

If this occurrs I don't think you can complain about the oil industry since the lessened take is completely due to the effect of the lower taxation that everyone in Alberta enjoys. (and theroretcically was a conscious decision of government)

Thats my beef with looking at total take-- Its informative and interesting in some ways but when such a large part of it is the general tax rates of states that provided a cradle to grave welfare state versus the tax rates of places which barely fund basic education, the differences are largely due to general taxation and not much anything to do with the oil industry.

Don't get me wrong, total take is important when assessing project economics but you also need to consider

1. what the government might provide for that take
2. Equities across industries in a jurisdiction and
3. The nature of the oil industry in the place-- I will maintain with my last breath that oilsands are fundamentally different than shallow gas which can be on production days after the drilling of a well

Which oil producing states provide cradle to grave welfare? Nigeria? Russia? Saudi?

I am baffled by your line of argument considering that the blns of barrels of Alberta oil will be extracted by one of the most coddeled populations on the planet, certainly among those living on large reserves of petroleum.

I think the focus on government take makes sense, since as Asher likes to point out, the industry has banks of computers that factor in every cost when making investment decisions. Do they care if the cash is an expense for the president's concubines or for local schools?

[Asher]

The cost of doing business in those third-world countries is far different than wealthy nations. While you may pay more tax in the West, you need to pay far more in terms of security, bribes ( ), ex-pat salaries/benefits for living in dangerous areas, etc. Not to mention other issues like transit to refineries, etc.

[Asher]

The amount of unsubstantiated rhetoric masquerading as fact in this thread is unbelievable, nye.

You simply decide companies were "gaming the system" so it's okay for the government to break the law to "*****slap" them to grab a bigger piece of the pie.

Starting to sound Chavez-esque, isn't it?

[notyoueither]

The constant theme here is the incompetence of the government. "What was not intended......that was not a realistic price back then..."

There's a reason you have armies of lawyers. A contract is a ****ing contract. You can't back out of a contract because you failed to consider something years ago when you signed it.

Get ****ing real.

Your "get over it" comment pretty much sums up why your opinion on this issue is a joke. We're talking about hundreds of billions of dollars worth of investment and countless people's jobs, and you treat it like it's a ****ing game and the province can do whatever they want, whenever they want...even if it's illegal.

Suncor and Syncrude were NOT gaming the system, and YOU (nor anyone else) have ever even come close to demonstrating they have. To continually to claim it in this thread after being called out on it is incredibly dishonest of you.

And these are public companies. It's not like they can hide all of the relevant data.

Yes. They were gaming the system.

They never did get to paying 25%, despite plant from the 70's being more than paid for. They would get close, and then build more.

The GoA did not need a court. They gave the two a choice. Renegotiate or face a government pissed off.

This is a little different than the picture you paint.

[notyoueither]

The amount of unsubstantiated rhetoric masquerading as fact in this thread is unbelievable, nye.

You simply decide companies were "gaming the system" so it's okay for the government to break the law to "*****slap" them to grab a bigger piece of the pie.

Starting to sound Chavez-esque, isn't it?

This is the post of the thread! Well done, sir!

Glad to see your sense of self-parody is alive and well.

[notyoueither]

The cost of doing business in those third-world countries is far different than wealthy nations. While you may pay more tax in the West, you need to pay far more in terms of security, bribes ( ), ex-pat salaries/benefits for living in dangerous areas, etc. Not to mention other issues like transit to refineries, etc.

You have a curious sense of cradle to grave welfare.

[Asher]

Yes. They were gaming the system.

They never did get to paying 25%, despite plant from the 70's being more than paid for. They would get close, and then build more.

If this is a simple fact, why are you unable to cite it?

And why are you moving the goalposts again? It doesn't matter if the plant from the 1970s was paid for, the companies were using the money they made to expand and enhance their systems. Do you seriously think they're still using 1970 technology in these operations?

The contract clearly specified lifetime project costs. It wasn't until 2008 that they were projected to start paying out at 25% because of technology upgrades, expansions, etc -- the price you pay for being the pioneer in the field.

That's the contract. It's as simple as that. You cannot change the terms of the contract at a later date 'cause you decide you didn't like what you agreed to.

The GoA did not need a court. They gave the two a choice. Renegotiate or face a government pissed off.

This is a little different than the picture you paint.

It's not. You're just trying to spin it differently.

The GoA and the companies had a legal contract. The GoA broke it.

The GoA broke the law and pissed off some of the largest players in Alberta's oil industry while simultaneously massively increasing the royalties for everyone. And you are seriously saying none of this would impact the viability of future investments in the province. That makes no sense at all.

I cannot believe you are this stupid. I don't know what else to say. I am very serious this time when I say I'm done in this thread.

You are casting a Ben spell on me and dragging me back by posting such aggravatingly stupid comments, but I will cease reading this thread now to resist.

[notyoueither]

Actually, nobody broke anything.

Do you have a clue? What does renegotiate mean to you?

You may speculate all you want about why the companies would have renegotiated, but no contract was broken.

Talk about spin.

[notyoueither]

..and 'broke the law'?



Why is there no court case?

[Flubber]

Which oil producing states provide cradle to grave welfare? Nigeria? Russia? Saudi?

Again you are being obtuse. The point is that taxes of general application are just that so if total take in jurisdiction A IS 2% less than in Jurisdiction B but oil royalties and fees etc are 2% higher then any "break " they are getting is due to the fact that their jurisdiction has chosen to have generally lower taxes and the oil company should share in that like anyone else.

Cradle to grave? the closest now would be Norway.

But NYE my comments and approach about services from government is rational. If a US juruisdiction has low taxes generally but you ahve to health insure all your workers, you have to consider that. If in an African state you have to hire mercenaries to protect your folks thats relevant too.

I am baffled by your line of argument considering that the blns of barrels of Alberta oil will be extracted by one of the most coddeled populations on the planet, certainly among those living on large reserves of petroleum.
?

I don't understand what you are saying. What UI am saying is that if the Alberta government chooses to tax businesses at a certain tax rate that is better than other provinces, Oil companies should share in that "advantage". THats all. If lower general taxes means that "total take" is lower than elsewhere, so be it

I think the focus on government take makes sense, since as Asher likes to point out, the industry has banks of computers that factor in every cost when making investment decisions. Do they care if the cash is an expense for the president's concubines or for local schools?

I just finished saying that I saw the importance of total take .

[Flubber]

DP

[notyoueither]

But NYE my comments and approach about services from government is rational. If a US juruisdiction has low taxes generally but you ahve to health insure all your workers, you have to consider that. If in an African state you have to hire mercenaries to protect your folks thats relevant too.

Right, and US states have simlar takes to Alberta, and then they pay for health insurance... Nigeria's take is off the charts, and then they pay for mercenaries...

The point?

I don't understand what you are saying. What UI am saying is that if the Alberta government chooses to tax businesses at a certain tax rate that is better than other provinces, Oil companies should share in that "advantage". THats all. If lower general taxes means that "total take" is lower than elsewhere, so be it

The comparisons that matter are not to other provinces in Canada. BC does not have a billion barrels of oil. I doubt SK does either.

I'm not sure what to make of what you are saying. Yes, Alberta has low corporate taxes. So what? What does that have to do with the royalty we should charge for the resources that we own?

The point of comparing take would be to see where we should set the royalty bar to get as much as possible for what we own while remaining a competitive seller, including our other taxes. If we have lower taxes, we should charge higher royalties.

In the sphere of oil we compete with Saudi, Venezuala, Nigeria, Russia, Gulf of Mexico, Mexico, etc. We should set our royalties to maximise the return for the owners while remaining competitive with these other sources of oil. That is what the government has tried to do.

They ****ed it up as it applies to gas, but gas was ****ed up before the royalty changes kicked in. I am unsure how to apportion blame there.