Quote:
Originally Posted by MarchHare
I think what Clay is trying to say is that provincial revenue from royalties should map easily to a Laffer curve. If the government sets the rate too high, they're disincentiving production and total revenues go down. On the other hand, if the rate is too low, Albertans are leaving money on the table from our one-time non-renewable resource. Are rates currently set at the level where the citizens of Alberta receive the maximum return from our resource? I honestly don't know, but that's certainly a discussion worth having.
|
It's an incredibly hard calculation to do with such variance in commodity prices, product delivery issues, environmental changes, etc.
However, probably the most simple way to analyze the effective royalty rate is to look at investment dollars flooding into the province. When Stelmach raised the royalty rates, we saw investment dollars go to BC and Saskatchewan overnight. When they reduced rates investment came back just as quickly.