Quote:
Originally Posted by GP_Matt
Also, because you brought up fair returns for oil companies I am curious what you would consider fair returns. Is 1% profit ideal, 10%, 25% or some other number.
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Well you could look at a non-differentiated rate of market returns over the entire economy and use that as your starting point then add a margin.
This type of practice is done all the time for natural monopolies and utilities. We aren't talking about something crazy.
The bottom line from the Plourde report on the royalty review was that an overwhelming amount of resource rents were flowing to private instead of public. Now that foreign investment from private firms has flooded oil production you can't even make the argument that these rents are flowing back to shareholders. I can't buy shares in Sinopec. So really we're basically giving away the value of resource owned by all Albertans for some idea of what we deem to be teh socially optimal rate of production.
SO I'll ask you then, what's the optimal rate of production to maximize the value of the resource to Albertans?