By Ændrew Rininsland

Pop-quiz time! Who benefits from Alberta’s oil surplus? Is it, A, the oil companies, B, the provincial government, C, the average Albertan, or D, the average Canadian?
The answer is, of course, all of the above. However, with oil selling for over $80 a barrel and with them posting record profits year after year, the oil companies ain’t doing too shabby. Imperial Oil alone posted profits of $3 billion last year, without any sign of slowing down.

Thus the recent threats by Imperial in light of a royalty review panel report—which argues the province should receive an extra $2 billion annually in royalties from oil companies—are not only patronizing, but downright offensive.

In a Reuters article published Wed., Sep. 19, Imperial CEO Tim Hearn implies the combined cost of the high Canadian dollar, new carbon dioxide levies and raised royalties would cause a dramatic decline in the Albertan oil sector. Using scary words like “tipping point,” Hearn threatened that “there’s enough things working against us that if all this stays in place as is, there will be an effect in the industry.”

Oh, please.

Exactly how much of the revenue for Alberta’s energy surplus actually stays in Alberta? And why should Alberta grovel and plead for Big Oil’s continued patronage when they’re the ones clearly benefitting the most?

That’s not to say we should be entirely careless and underestimate the potential impact of increasing the royalty rates. Alberta has to remain competitive with OPEC in order for oil companies to want to come here, that’s unquestionable. But even that logic is a little bit laughable. Honestly, would you rather live in the middle east or Canada? Furthermore, even if the provincial government does go for the whole 20 per cent increase, Alberta’s royalty rates will still be some of the lowest in the world. And don’t try to tell me that all the oil companies will uproot and flee the country the second people start talking about increasing royalties. As a fellow editor commented to me recently, “They’re in the oil business. They’ll go where the oil is.” The oil companies have invested too much money and stand to make far too much money for them to vanish in a cloud of carbon monoxide like the conservatives are arguing.

Anybody who has studied the provincial Conservatives in even the shallowest capacity knows that Premier Ed “Steady Eddy” Stelmach will likely not raise royalties at all come Oct. when he makes the decision. If royalties are increased, it will likely be by just enough for Stelmach to seem like a populist without putting even the slightest dent in Big Oil’s beer budget. This isn’t necessarily is bad thing; the quality of life in Alberta will continue to improve at the same rate it always has if nothing is done. There’s no immediate negative consequence in deferring to the oil companies on this one, and that’s likely why nothing will be done: nobody wants to rock the boat. However, it’s worth considering the possibilities of even a slight increase.

For instance, the City of Calgary (and Edmonton too, for that matter) might not need to beg and plead for the barest provincial infrastructure funding every year. The fact Mayor Bronconnier was perpetually in a media pissing-match with Stelmach for the better part of the summer shows how sad this situation truly is. It’s ludicrous the provincial government figures it can send out $400 cheques as a political move demonstrating how rich Alberta is to the rest of Canada but think we should be grateful for basic infrastructure.

Being able to cheaply extract oil in a political environment as stable as Canada’s is an utter boon to Big Oil. Alberta’s resources are being exploited by huge corporations who are making sums of money incomprehensible to the average person. Albertans deserve more than the pittance they’re currently receiving.

It is their oil, after all.


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