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Originally Posted by Thunderball
Squandered insofar as they are paying 2007 dollars + labor premium for projects 10-15 years overdue.
I agree with you. People have no idea how adverse the effects could be by screwing with royalty rates. While EnCana might "send a message" by allocating $1 billion elsewhere, small and even midsize producers don't have the luxury of doing the same. This means job loss... not just "Bill and Marty from Accounting," but thousands of jobs. Say "Exploration Company A" can only produce 50% of their drilling program... that's 50% less need for in house staff. That's where it ends, right? Wrong. That's 50% less need for drilling rigs, service companies, surveyors... all the way down the line. That 50% will also be buying a lot less, so there's the hit to the service sector. Getting the "fair share" ends up damaging the two largest sectors of the Alberta economy.
As Cowboy89 points out... if Alberta is deemed politically unstable, the big companies will simply take their ball and go somewhere else until things change and Alberta is deemed a business friendly locale again. The oil and gas isn't going anywhere. They will take who they need with them to wherever they transfer operations to and fire the rest. They'll come back later when its lucrative again.
But there's a labor shortage... this is a good thing then, right? Yes and no. What a lot of people outside the oilpatch don't realize is that job cuts are already going on. Another mild winter along the eastern seaboard, and natural gas operators will be drilling substantially less... at current royalty rates. Let alone increased rates. Less drilling programs = less royalty tax. If this is not handled exactly right, this will actually cost billions rather than recoup them. While the economy needs to be cooled a little, tampering with natural market conditions could lead to a much rougher landing.
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Politically unstable?! Don't make me laugh. Am I the only one that's finding the mellowdrama coming from industry types to be laughable? Where were they in their concern when their industry lead to the countries highest inflation, or the increasing numbers of homeless people. The cherry picking of "moral fibre" is laughable.