OK, it looks like reality finally bit Special Ed Stelmach in the butt and he has realized what tax hikes and socialism do; they stunt and reduce business activity. The greedy “fair share” strategy and royalty hike that Stelmach and Knight pursued brought no increase to provincial revenues and simply managed to pluck the golden goose. On what is Stelmach’s 8th or so “tweaking” of the royalty regime, the engines of misinformation are working overtime to demonize the oilpatch again.
A Herald headline the other day demonstrates this rather well:
Stelmach announces bailout for junior, mid-cap energy companies.
Tax relief does not constitute a bailout!
You would think that with all of the real examples of bailouts that we are seeing lately that people would understand the difference. The “stimulus packages” that Harper and Obama are flogging on the backs of our grandchildren are bailouts. The cheques being handed to the auto sectors are bailouts. The cash that the CBC is demanding would be a bailout. The money Air Canada gets every time they mismanage themselves to the brink of bankruptcy is a bailout.
Where is the cheque coming to the big bad oil companies? Where has the oil industry even asked for a bailout? There are cheques going out, have no doubt of that. The cheques however are going from energy companies to the government.
Will every tax reduction in the future (should we see any) be defined as a bailout? When Harper reduced the GST, was he offering a bailout to the entire population of Canada? Are we all welfare bums in that sense that we have been bailed out?
Unsteady Eddie was already realizing that his new royalty scheme was idiocy even before oil prices and the market went into the toilet last fall. Land sale revenues (another cheque from energy companies to government) had plummeted in Alberta to the point that government was not gaining anything with their new “fair share” royalty program. Stelmach had made Alberta uncompetitive and it was very apparent as exploration and development boomed in Saskatchewan and BC while Alberta saw a reduction in activity despite $140 per barrel oil prices.
In light of the world economic situation, clearly Alberta would be seeing tough times right now whether Stelmach messed with our economy or not. The pain Alberta will feel through this recession will be far more acute due to the market mistrust that the Progressive Conservative gang led by the idiots Ed Stelmach and Mel Knight.
We are hearing of a credit crunch. Energy exploration and development are capital intensive ventures that require long-term planning and investment. When an energy company seeks credit, like everybody else it must demonstrate assets to the financial institution that may finance development. In energy that translates to proven reserves and speculation on their value when these reserves are developed. Now imagine how hard it is to get credit when the value of your reserves and cost of development changes by the month as Stelmach keeps trying to tinker with the rules. Would you like to invest in a jurisdiction known for tearing up agreements and increasing their take after the development dollars have been invested? Rest assured investors are asking these very questions.
Stelmach can reduce royalties to even below the levels we had prior to his initial messing around. The market mistrust in Alberta will not go away. It will take a change of government or at least a decade of some true and steady leadership before we see business confidence in Alberta again.
Some people claim that energy companies have not done enough to win over the hearts of the public thus they lack support at times like this. Just how far are they to go exactly? Have a look around. How many billions must these companies invest in communities before some appreciation is shown? How many more hundreds of millions in charitable initiatives and sponsorships must they invest?
I don’t think anything will help. Too many people like to simplistically imagine that all of these companies are headed by Scrooge McDuck types who are swimming in money taken from the public. People don’t look at the millions employed, the billions paid in income-taxes and billions spread from the community level to the entire nation. Many do not realize how deeply their pensions are invested in these companies or how many government services are provided thanks to revenue generated from these companies. I don’t know if perception will ever be changed.
One area that energy companies are working on in hopes of getting a better perception is pumping money at groups who have fully dedicated themselves to demonizing the entire industry and I have to admit I am stumped with this one.
The Pembina Institute is a leftist organization that is dedicated to misinformation and pretty much every effort possible to halt all energy development. In looking at their report, I am astounded and disgusted to see who is funding them:
There is only one donor listed over $50,000. That donor is ConocoPhilips. In the $10,000 to $20,000 category we find the Canadian Gas Association, Enmax, Nexen, The North American Oilsands Corporation, and Suncor Energy. Getting into the $1000 dollar range there is an even longer list of energy donors.
Why are you guys paying this group to kick you in the nuts? Have these investments made the releases from the Pembina any more rational or fair? Do you really expect these people to suddenly embrace you?
When we see anti-energy types howling that energy companies are being bailed out, I would suggest that the dollars wasted on the clowns at the Pembina would be much better spent on ads trying to inform the public on what a bailout actually is.
Giving more cash to the Pembina is an exercise in masochism at best.
Bailout 2008, a poem by David Jeffrey:
Like a bloodied warrior,
laying broken and torn.
Like a dying soldier, hopeless and forlorn.
But the blood, it be green,
the color of money.
And the soldier is an economy,
and it is anything but funny.
Broken are it’s people and shattered are their dreams.
Thanks to the ultra rich and their full proof schemes.
It is a tragedy with more pain to come.
Finance will be Hell, and their wills will be done.