Lots of Traffic!

[farmers_son]

farmers_son, you make some valid points but to compare us to Mexico is a stretch. I don't know if you have visited Mexico but it is crime ridden, people living in abject poverty, people entering the US illegally and many other negatives, that I don't think Alberta has !
I know we have people living in poverty, and many of them are in that state due to choices they have made. I am sure we don't have people swimming across any border to try and find work, and I know that we have crime but not the corruption that is evident in many parts of Mexico even though Fox has done some good and eradicated a lot of it.
The Premier is heading to New York to market our energy, and ring the closing bell at the Stock Exchange later this month. He is also meeting with the western Governors in Wyoming. I am interested in your comments on this !
I am sure you are correct about a fledgling party coming out of the woodwork and capitalizing on the support of those who are disgruntled with things, but do you honestly think that any such party would win any seats or many seats in the next election in AB?

[farmers_son]

The comparison I was making was that Mexico makes more from their energy than Alberta does.

I see energy royalties as an Achilles Heel for the Alberta Conservatives. The close relationship between this government and the oil sector could be a political liability. The
Alberta Tories were a marginal party before Lougheed became leader of the PCs and capitalized on the change in Socred leadership from Manning to Strom. It is not too great of a stretch in imagination to see that, like in 1971, a marginal opposition party could come out of the woodwork to gain a majority in this province if the people believe that the ruling Conservatives are giving away their heritage to the oil companies.

There is an increasing income spread between Albertans working in the oil patch and the rest of us. That breeds discontent. Health care and education are touted as the big issues in this province. But if another party grabs onto cheap royalties as an issue they might find that it gets them more votes. The Alberta government is annually giving away more money to the oil companies through cheap royalties than some provinces receive for their total revenue. That is an election issue if I have ever seen one.

The garish prosperity of the oil sector is an overall political liability for the ruling Conservatives. Throw in energy deregulation, high consumer electrical and heating costs and the Conservatives look vulnerable.

[cakadu]

If, for the sake of discussion, Albertans are all benefitting from the Alberta advantage and the oil revenues, then how do you explain the fact that we have had a record low minimum wage for years? It has only been a recent development that we have raised the minimum wage. How do you extoll the virtues of all the oil revenues to a single mom with 3 kids barely scraping by or worse yet going further into the red with every passing month?

I don't begrudge anyone who gets the money from the leases - if they want it they can have it. I just wonder about the true costs of that lease to producers and landowners.

What also concerns me is the fact that many producers are signing leases, particularly coalbed methane leases, and not being fully informed about them. Without the decision being made about how many coalbed methane holes can be dug per level per quarter, do some of these people that have signed leases know just how much of an effect signing that piece of paper will have on them? Many signing the leases are in desperate straights and short-term money to stay afloat for a little longer may "blind" them to what they are really doing. Maybe it is already a foregone conclusion about the drilling sites (particularly since drilling activity is rapidly gaining momentum with each passing month.)

Here's something to ponder and I don't have a ready answer for it myself, so I'm hoping that other opinions will help me to understand it a little better. How do you see getting more in royalties helping when we are relying on a non-renewable resource, doing more and more in the way of leaving a footprint that cannot be erased or not without having to spend huge amounts of money on it. Will we feel better because the government has more money to throw around due to increased royalties?

[cakadu]

Linda, firstly, if an oil company has drilling rights on a parcel of land and want to drill, the landowner really doesn't have much say in the matter with the exception of how they manage to negotiate the surface lease and right of entry etc.

As far as explaining the difference in income to a single mom with three kids goes, life isn't always fair and everyone is NOT going to have the same standard of living. I learned as a kid growing up with parents that were old enough to be my grandparents and did have much to give me except a whole whack of love and some excellent values, that there were lots of folks that had way more than we did, but we were rich in friends, family values and most importantly had our good health.
I live in a community where there are over 80 millionaires, and there are the single moms that are struggling to get by.
Likely as not the 'have' people in our community as in most others, do their fair share to help provide for those who aren't as fortunate but life is not about everyone having the exact same livelihood.
The Alberta advantage does allow for the single mom to upgrade her education, get assistance while doing so, get a deadbeat ex to pay support, get subsidized child care and many other things.
The issue of low return on our resources really cannot be tied to the fact that they are a non renewable resource. If the in fact are depleting at the rate some folks seem to think they are, then likely it is all the more reason that we should have a better return to the Province.
I don't know enough about coalbed methane to make any comments but I do know that there are farmers in this area that are totally opposed to the exploration that is proposed, and then there are others that can't wait for the checks to start rolling in.

[farmers_son]

Emrald1: Aren’t those things you mentioned, assistance for upgrading education, get a deadbeat ex to pay support, get subsidized child care and many other things available in other provinces besides Alberta? And in some provinces there is more help available.

Alberta is one of only three provinces to charge health care premiums, amounting to about $1000 per year for an Albertan family. That partly offsets the Alberta Advantage of no sales tax.

Is there an Alberta Advantage? Of course there is. And if you compare Alberta to other provinces that have no oil revenue, things look pretty good here. But if you compare Alberta to other major energy producing regions, we do not stand up so well. Albertans are not collecting a level of royalties comparable to that of the other major oil producing regions. By 2010 the oil sands are projected to account for 60% of Canada’s oil production. According to Syncrude, “at below $18 (Cdn.) a barrel, Syncrude's operating costs [in the oil sands] are comparable to finding and developing new sources of conventional crude oil." Yet the province only collects royalties at the rate of 1% of revenues on that oil.

One could argue that the Alberta Advantage should be more social programs or like I would prefer to see the Alberta economy diversify into more sustainable and long term opportunities including value adding for agriculture as well as the province's other major resource sectors, lumber and tourism. However when the province is only collecting 1% royalties it is clear the real Alberta Advantage is being an oil producer in this province and will never be much more than that.

[farmers_son]

farmers_son health care premiums are subsidized for low income families, and in my view the Province should NOT cover the costs of health care premiums for those that can afford to pay their own. Social programs are necessary for those that through no fault of their own fall through the cracks in society.
Perhaps we should poll all the folks that have moved here from other parts of Canada and ask if they feel there is an Alberta Advantage.
I don't think that the advantage will be so great in years to come due to the increasing population and demands for infrastructure, and people services, which will drain the provincial coffers.
One thing I will say is that people in some communities seem to think that all they need to do is demand and governments both municipal and provincial and even federal will just hand over the cash.
MLA's are constantly inundated with demands from special interest groups to inject funds into one project or another and of course the reasoning is that the province is awash with oil royalities !!!

[farmers_son]

I think you and I would both agree the province is not awash in oil royalties. However, that is the problem. They should be. By some estimates, Alberta is the fifth largest oil producing region in the world, some say seventh. Certainly one of the top ten.

Whether the royalties collected should pay Health Care premiums, pave highways in the cities or diversify the economy is up to the politicians to decide. And the oil companies are entitled to a profit. Still the province has a responsibility to collect fair and reasonable royalties for its oil and gas. And that is not happening.

[farmers_son]

I agree with you farmers_son. The government has taken the route of allowing resource development at a lower cost to ensure economic growth and employment but as you say it is not evenly distributed.