Just Where Is That Alberta Oil Money Going?
Friday, September 14, 2012 @ 3:44 AM
The reason why there is a burning desire by the province of Alberta to get the Enbridge pipeline constructed through the province of BC can easily be found in the budget for that province.
Alberta faces a 3 billion dollar deficit. That comes from a province that has had vast sums of money coming from the Oil royalties.
The province has enjoyed billions of dollars in foreign investment in the tar sands and no doubt the provincial taxpayers are asking what was in it for us?
The Enbridge pipeline is intended to move 500,000 barrels of tar sands oil through the system for shipment to a Chinese refinery where it will be refined and the by products will be sold on the open market, including Canada.
The Chinese have invested in their own tar sands development but find it more expedient to refine the tar sands product in their own country.
So where does that leave the Province of Alberta and for that matter BC? Indeed we will get the benefit of the line being constructed through this province , and indeed we will get the benefit of the 100 or so people who will be employed after it is in operation, but what else?
Alberta, who stands to get all the royalties from the removal of the tar sands, should have placed a proviso into any agreement that the product must be refined in Alberta. That at the very least would have ensured that there was employment and an investment of around 13 billion dollars in Alberta.
Instead the Finance Minister is faced with a 3 billion dollar deficit in a province that supposedly was awash in oil money. That may be the case but just how much of that pie are the people of Alberta receiving?
I’m Meisner and that’s one man’s opinion.
Comments
Just need to give it time Ben. That no PST, low royalty and low tax environment of Alberta is busy creating jobs, and we all know that when big corporations are happy, that euphoria of theirs will spread to the rest of the general population, just like how their ever increasing increasing wealth also trickles down to the common man and woman.
That deficit is just accounting mumbo jumbo, you don’t need to worry about it. Just keep the big oil players happy and they’ll take care of everything ;)
I agree…..
The Province was pretty happy when the royalty money came rolling in, but when the price of Natural Gas etc is down you aren’t going to get as much. For Provincial budgets’s that tend to forecast close to what prices have been doing in the past rather than a very conservative approach you end up getting a deficit.
In BC, dare I say it, the NDP appears to be gathering support. But why? Well, I guess all you have to do is look at how business is carrying their fair share???? The fact is they aren’t. When the royalties aren’t coming in, are the corporations suggesting a corporate tax increase to help with the deficit? Not likely…….
Corporations right now seem to be getting a lot of the upside and really not much of the downside. If the Liberals want to have a chance they should do a moderate increase to corporate taxes and then they might get some votes back. Afterall, Corporations don’t vote!!!
And corporations don’t ‘make’ money either ~ unless they’re banking corporations. They can only ‘get’ money from those who have some. Including the money they pay out in taxes. So it is ridiculous to pretend that any government can cure its financial problems by taxing corporations. All you’re doing is taxing the public that buys the products sold by those corporations. Who already collectively have insufficient money to do so at the prices they are being charged to fully cover the financial ‘costs of production’ as currently computed and carried forward into those prices.
The problems with government finance are never going to be solved by ‘shifting’ taxes from one segment of the community to another. The fundamental issue is that there is a correctable, yet ever growing, disconnect between ‘money’ itself and the overall processes of ‘production’ and ‘consumption’ that money is supposed to be an accurate REFLECTION of.
Until there is a proper nexus established and maintained between ‘money’ and these processes all taxation will continue to increase and what is physically possible will continue to become less and less financially so.
I don’t support the Northern Gateway project as it stands right now, but I think there is a part of the story that is not being told.
BC sells oil too and quite a bit of it. Sure, we don’t come close to Alberta, but the royalties are close to $1 billion a year for BC just from oil.
They could be a lot higher–possibly three times higher, but we are forced to sell our oil to the States and they don’t want to pay world prices. That’s a problem–a big problem for BC.
You might think that the BC oil will never go down the Gateway pipeline and you are right. But it doesn’t matter–we don’t need to send even one drop down the pipeline to get world prices for our oil. We only need to have the pipeline. Having an option to sell to someone else means the States will pay market prices for all Canadian oil including BC oil.
So let’s not say that BC will get ‘nothing’ from the proposed pipeline. We could stand to gain a considerable amount.
I know that gas is always going up in price. The Conservative government hasn’t done any thing about building a refinery in this country. Gas corperations are allowed to charge what the traffic will bare on the world market but only after our domestic needs are secure. We could start producing our own gas and the government should put a lid on gas prices the Canadians pay. Canadians are tired of big oil gouging us when there is no need for it. It is greed plain and simple.
I know we’re getting a little off-topic here… But it is not the job of the government to build refineries. There hasn’t been one built in Canada since 1984.
No, I don’t have all the answers, I just think it’s misguided to believe that it’s the government’s job to build refineries and regulate profits in different industries, as I have been reading over the past while.
Norways’ oil fund had reached $570 billion in 2011. Albertas’ Heritage is now just over $17 billion. Alberta is run by corporations, for corporations.
Enbridge eventually plans to ship 850,000 barrels along Northern Gateway. 500,000 barrels is just step one.
Albertaâs financial woes are an indicator of the realities involved with high outputs of natural resources mostly in raw form.
It is one of the most productive areas of natural resource extraction in the world per capita and has been for a long time.
It is a fairly diversified economy with enormous surpluses of almost everything it produces, especially energy, in raw form.
It is an exporting powerhouse from agriculture to forestry to coal, electricity and natural gas and conventional oil and since the 70s the gradual increase of the oil sands to recently, the rapid increase of exploiting the oilsands.
Alberta has been producing and exporting a huge amount of everything for a long time and it is running a deficit of 3 billion?
There is something going wrong here if all that output isnât generating enough to sustain the costs of government for a relatively small population that has the most profitable businesses, highest proportion of working people that earn the highest wages but have the highest personal debts in Canada.
A basic rule in business is that if you are producing lots of something (especially when they are non renewable natural resources) and you are losing money, then increasing the output of that might just being going further behind rather than improving something.
It might be that by the time they have racked up a huge provincial debt that they will be running out of the resources that seemingly made them poor??
Alberta and for that matter Canadas financial woes are the result of low productivity PERIOD. Why is it that we cant make lumber cheaper than other countries? Its because we dont invest. This is, by the way, the same reason we dont refine here. Its a great idea that every socialist has but then someone mentions money and the look at the Government. I have worked for the Government and if you think they can do better than you at spending you are either nieve or dumb. Meanwhile this same person is always complaining about taxes and not making the (rather obvious) link.
One factor in Alberta is Albertas massive infrastucture investment. Infrastructure investment has always lead revenues. Compare this to BC where we cant even get a road paved or a potholl filled and we are still in a deficit. Edmonton, Calgary and oil sands regions infrastructure spending is massive. Go driving in Alberta with a 5 year old GPS and you will be confused, meanwhile in BC there might be like 10 new roads in the whold Province. Not a big dea.
It doesnt matter if the corporate tax rate is 0% or 100% in the end the Corp doesnt pay taxes. When taxes on Corporations increase there is 2 groups that can pay, buyers of the product and employees. Let me explain.
The BC Government increases taxes on Canfor by 5%. Lets say for simplicity sake Canfor has 2 mills. One mill produces a slighly better product and they are able to pass the tax on to consumers (thats you and me people). This mill continues to run and the socialists are happy that Corps are paying their fair share (while apparently not noticing they are really the ones paying).
The other mill is less efficient. It is no longer profitable and is forced to close. People are unemployed. The social safety net is stressed further. Did this tax increase benefit anyone? Maybe the NDP who got more votes from a bunch of people that dont understand this basic reality.
Did Canfor benefit? NO
Did mill #1 benefit? NO
Did mill #2 benefit? Clearly NO
Did the consumer benefit? NO
Did the Government benefit? I cant imagine, the slight increase in tax revenue is likely more than offset from the lost jobs
Did the NDP benefit? YES, and isnt political affiliation more important than anything?
And just what is the price of gas to consumers in Norway? Higher or lower than here?
Gas in Norway is about $2.30 /litre . Of course they do not have the vast distances we have to travel, so it is probably not that big a deal. Their GDP is also about $17,000 greater per person than ours, so they can afford it anyway.
BC exports 80% of what it produces, therefore any taxes on Corporations would be included in the sale price of the product produced and exported. Only a small portion of overall production, is actually consumed in BC.
Therefore the argument that BC Corporation taxes would just be downloaded on BC Consumers in the price of the product would only be true, if we purchased and consumed all the production. Which we dont.
Soooooooo. The argument is bogus. Corporations, especially those who export the majority of what they produce should be paying taxes. Its just that simple.
Thank you Palopu, that is exactly the point. People need to stop thinking that Canadians support the major corporations in Canada. We don’t. Worldwide export markets do. I’m pretty sure that Germany could care less if Mercedes Benz has to increase the price of their cars to Canadian consumers to offset high German taxes . . .
Nice try, but it is not that simple. Whether we like it or not, corporations are competing on the world market, and if their taxes (and other costs) are too high, they will move or shut own their operation entirely.
You haven’t looked at corporate tax rates for OECD countries lately have you JohnnyBelt? Please do so and then find me some examples of big corporations that have fled those high tax jurisdictions (Germany, France, Australia, Japan, US, etc.) for Canada.
I’ll start the list with one example from the US, which has one of the highest corporate tax rates of them all. You’ll recall that all three auto makers moved their assets and operations to Canada. Oh wait, that didn’t happen? Huh. Imagine that.
So how do you explain corporations that don’t leave when their taxes are higher than they would be elsewhere? Maybe the CEO just likes the Chow Mein offered in their current locale more than in the other potential locations? Or, do you think it has more to do with stuff like access to resources, skilled labour, CHEAP labour (as in so cheap that you couldn’t put a roof over your head on the salary), lax environmental regulations (to the point that workers have to wear masks during their daily commute) and other factors like those?
Right, Johnnyboy. Lets just move all that coal or oil or wood or what ever resource you want to China where wages are low, workers health is a dirty word, govt are more corrupt than here when it comes to payola….oh wait,,,,thats exactly what our govt is allowing to happen. Ship everything to China where it can be processed under slave labour conditions and buy it back at top prices. No wonder mills are closing, no refineries are being built. But its all good because we can all put our hopes and dreams on Enbridge and thier windfall bonanza for all BC citizens.
Where is all the money going? In the end, it goes into corporate shareholders pockets, insipid CEO salaries & as paybacks to their “friends in all the right places”, for the first two.
Because being wealthier than the rest of us is just not good enough anymore…these folks must be the master of their own time, space and dimension.
Their collective formula is rather simple, although they truly believe, and would like the rest of us to believe – that they are just the most smartest & strategic minded, more deserving:
At all times, keep the cost of goods low (buy raw materials from any country that will let them i.e. Canada), ship it all to a country with no rights for workers, to keep the ole’ overhead down (i.e. China, Mexico). Support and invest in all of the right places (politicians, think tanks, media – whoever will take the cheque and pave the way) and using a combination of the aforementioned, instill fear into governments/decision makers resulting in loop holes and tax breaks, lax environmental regulations (any regulation).
The real smart ones realize it is best to lord over us those commodities that we need to live such as shelter, food, medicine, water…(air)and of course this includes oil.
But here’s the kicker, don’t piss off all of the people, all of the time, all at once, cause that could be bad. Instead, pick ’em off, the old “divide and conquer” and encourage the “fall guys”…you know, those damn teachers with their big pensions and union workers.
Best yet, when it all collapses, the same people they have been metaphorically raping, will be the ones to bail ’em out.
Wake up folks!
I knew the know-it-alls would be around after that last post. Thanks all.
This is a shot in the dark, but I’m guessing NMG works in the public sector in some capacity.
JB … ah, the JB reaction … out omes the ad hominem if nothing else works …
“know-it-all” …. LOL
That does nothing to the debate. If you can’t wow them with facts, why don’t we wow them with name calling …. right JB? ;-)
I can always count on good old gus to jump in and take an opportunity when he see it. Good show!
Sorry, I guess some of the name-calling I have been subjected to rubbed off. I apologize to all persons who might be offended in any way by my past, present, and future posts.
But really, though, I predicted exactly the kinds of posts I would get in response to the one above. Maybe they predicted I would post what I did… who knows.
Same old responses, same old debates, everybody talking, nobody listening… it’s like watching a US political debate around here sometimes.
“Why is it that we cant make lumber cheaper than other countries? Its because we dont invest.”
Ah, but we can. We have invested in some of the most efficient plants in the world. Why do you think the USA was concerned enough about aour lumber prices? Why do you think the WTA told them time and time again that they had no case of subsidizing?
We cannot sell lumber because, other than China, everyone else had their traditional suppliers and no one else could use the type of crap wood we were producing. No one else buyilds stick framed buildings other than the USA and Canada.
“Same old responses, same old debates, everybody talking, nobody listening”
And you expect what else on this site?
The site is not functionally set up for real debate among people. There is no ability to respond to someone’s post directly.
The set up for this site is like a free for all. A bunch of people standing in a room sized so that every comment is heard by everyone else and if someone responds they are heard by all.
A real room full of people gathers people in small groups of two to let’s say 4 or 5 who stay together because there is good discussion going on which can be made up of all being supportive of each other, or all having some different views but are respectful of what each is saying and can get a good debate going. Eventually one or two wonder off to join another group. It is a real social event. I have never been in any like that where discussions end up in name calling. They are typically civil, social, and fun events with the main objective of âkeeping the ball up in the airâ â a verbal hacky sack game.
There are blog formats that allow threaded posts. Those are the serious debating blogs as far as I am concerned. For some reason or other, typical news blogs are more like “letters to the editor” formats.
http://www.bulletinboards.com/ThreadHelp.cfm
The world is run for and by big business
gus: “The set up for this site is like a free for all. A bunch of people standing in a room sized so that every comment is heard by everyone else and if someone responds they are heard by all.”
Contrary to what you might think, we don’t need you to explain -everything-. I have been around awhile and I am very aware of how the site works. I was just putting some thoughts out there.
Why do you always take things personally, JB? And then, on top of that, you include yourself with the collective “we”. Rathe pretentioujs, isn’t it?
Give others an opportunity to speak for themselves.
Don’t assume everything is centred around you.
I was merely picking up your complaiint (yes, you were making an actual complaint) about everyone talking and no one listening and making a suggestion of how another type of blog format would tend to address that complaint.
So quit complaining and people will not make suggestions of how to improve the situation you are complaining about.
Come on JB, work it through and you too could join the conversation in a meaningful way … LOL.
Then again, that is not what you are really all about, is it now, JB?
“The world is run for and by big business”
Not much different than when the world was run for and by the land barons.
Corporations are the aristocrats of the 20th century.
I wonder how long they will last into the 21st century.
From the headlined article:
“Instead the Finance Minister is faced with a 3 billion dollar deficit in a province that supposedly was awash in oil money.”
http://www.theglobeandmail.com/news/national/alberta-budget-update-projects-2–to-3-billion-deficit/article4509683/?cmpid=rss1
There are many who have since written about Albertaâs current problem. As many know, this is at least the second time that they have had a problem with relying on an income that was not realized and they ended up overspending. I suspect that is the difference between Alberta and Norway. It has nothing much to do with productivity. It has to do with simple greed and spending beyond oneâs limit.
From the linked page:
âWhen the Progressive Conservative government delivered its budget in advance of Aprilâs provincial election, the projected deficit of $886-million for fiscal 2013 was based on an average private sector oil forecast of $99.38 (U.S.) per WTI barrel.
âBut during the first quarter, private sector analysts downgraded their original estimates to an average of $93.62 a barrel.
â¦â¦..
âMy concern is that to guarantee world prices for the crude, we do need to tap the faster growing markets in Asia,â Ms. Mohr said.â
So why does it not come to Ms. Mohrâs realization that they are hooked on a drug called oil.
It goes on:
âThe Fraser Institute, a public policy think-tank, recently issued a report titled âAlbertaâs 2012 Fiscal Time Bomb,â which projected a higher-than-expected deficit due to the governmentâs âunrealistic resource revenueâ and economic growth forecasts.
âLeader author Mark Milke said the province has banked on âoverly optimistic oil and gas pricesâ and continues to spend beyond its means.
âThey must restrain and pare per-capita program spending sooner rather than later,â he concluded, âIf they find such direct action unpalatable, they could hold program spending to a rate of growth below that of government revenues generally.â
Herbster wrote: “Albertas’ Heritage is now just over $17 billion.”
Actually, at the end of August it was at $15.9 billion and sinking. The increase in the Canadian dollar is not helping. Neither did the return on investments during the economic downturn.
Money is going into the fund, but money is also going out to spend on nice to haves such as 4 lane highways to nowhere, no sales tax, rebates to taxpayers, money to cities to keep their proery taxeslower, etc.
They might not be buying on credit, but they are also not saving very much for a rainy day such as Norway appears to be.
http://www.finance.alberta.ca/business/ahstf/history.html
gus: “Why do you always take things personally, JB? And then, on top of that, you include yourself with the collective “we”. Rathe pretentioujs, isn’t it?
Give others an opportunity to speak for themselves.”
I’m sure people would love an opportunity to speak for themselves if you didn’t take it upon yourself to dominate almost every thread with your long-winded posts.
gus: “Come on JB, work it through and you too could join the conversation in a meaningful way … LOL.”
Another sactimonius statement from the master… lol.
Why don’t both the Norwegian and Alberta governments either pay out their ‘rainy day’ money to their respective citizens, and let them save or spend the money as they see fit, or do like Alaska has done, where a “Permanent Fund” has been set up, and the returns on the investment of oil royalties paid into the Fund are paid out each year to every Alaskan citizen as dividends? When any government is able to get its hands on money from resource royalties directly, instead of having to go to its citizenry for taxes, citizens have just lost the one sanction they had over politicians.
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