Quote:
Originally Posted by Cowboy89
It's completely unnecissary in an environment where commodity prices rise and fall. Just as in 1980, it's not prudent to create a system where the underlying assumption is that prices would continuously reach new heights without falling. Higher taxes on production limit the highs and ultimately create lower lows. We're about to see a lower low than would have otherwise happened without the royalty review.
No, in decade's time we won't be celebrating this move's brilliance because the amount of opportunity cost lost in the mean time. The province will lose more money as a result of this than it will gain all the while our oil and gas companies do not contribute as much to our local economy. The combined value of this lost opportunity will not be less than the present value of producing the commodity in ten years time. Assuming such is speculation on oil and gas prices and not smart to center the whole province's energy policy on said speculation.
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I was looking at it from a much more basic view, in that if the rate of production slows resources are left in the ground. It's a finite resource so as global supply diminishes, the resources become more attractive. It's not about the price of oil tomorrow, it's about money being invested in our communites 10 years from now and not tomorrow. That very thing has happend with offshore oil, has happend with Oil sands, coal, and other minerals like Nickel.
I'm not arguing that the Roalty review board was genuis or that it was all some bigger plan. I think they bungled the whole thing but that in the end, 10 -15 -20 years down the road, alberta will have a booming oil sector with a better share for the province. Alberta will still have oil, a heritage fund, oil field construction and healthy industry. The people involved will long be forgotten.
As horrible as the NEP was for the people living through it then, I beleive it delayed the boom long enough that lots of Kids from the 60's and 70's got to benifit from the most recent boom... Perhaps the children of the 90's and 00's will benifit from the slowdown caused by the roalty review.
My argument is that the end effect of the royalty review will be a severe reduction in the "boom", a moderate production pace, and investment in the future that otherwise would have happend this year. I don't think that oppertunity losses realised today won't be equally or more valuable realised in the future...