Getting Royally Screwed

Canada's newfound economic wealth owes much to the Alberta oilpatch. All of a sudden, in this newer atmosphere of stratospheric prices for oil in an energy-anxious world, the oil tar sands' extraction process isn't as costly and onerous as once thought. The extraction process is costly in other ways; its extravagent waste of water and gas, but it continues now apace. U.S. investors and oil conglomerates were delighted with this new source.

And the province of Alberta's coffers are bursting with oil revenue, leaving it the hands-down wealthiest province in the country, now leading Canada's resource-based economy into new heights of swaggering sufficiency. The province is operating its resource economy like a business, so why not look for efficiencies at the same time one looks to see whether the pay-back reflects the value and quality of the product?

Normal business practise.

So whoops, what's this? Conventional oil and gas royalties and taxes in the United States average out at 67%, but they stand at 50% in Alberta. Heavy oil royalties in Cold Lake, Alberta are 50%, compared with Norway's offshore royalties of 76% and California's heavy-oil royalties and taxes of 67.5% and Venezuela's of 72%.

Alberta, the new engine of the Canadian economy, is getting shafted. And we along with it. The traditional hewers of wood and carriers of water. Resource-based Canada, so heavily reliant on the natural goodies we've been blessed with, and so generously and reliably anxious to share those same resources with the world. At a price, mind.

But a bargain-basement price? An industry spokesperson, headquartered in the U.S., claims that Alberta is adequately recompensed. An increased percentage would drive away investment. Not bloody likely. If they want out and won't pay a fair percentage, others would be more than glad to fill the gap.

One industry elite has concluded that Canadian governments are revenue-grabbers. Er, just want what's due, chum. Dennis Gartman is scuttling back to the U.S., says he's exiting Canada.

One U.S. analyst speaks of the province as "Albertastan". Seems they're so accustomed to draining Canada of its resources, so used to seeing Canada roll over in gratitude at having all that messy oil taken off our hands, they just can't get used to a newly assertive demand for fair return.

Oil is a compelling asset. As a national resource in this energy-hungry world of highly competitive bidders. Walk away from it now, it will only increase in value. And the soreheads become sore losers.

Act in haste, repent at leisure. Ta-dum!