Quote:
Originally Posted by Red
Problem is, this is Alberta and people have no trust in any government other that the PCs. A review doesn't have to be a bad thing. It's likely that nothing changes.
And really, the uncertainty is the reason for capital withdrawal? The $30 WTI has 10 fold the impact. Just trying to keep things in perspective. In no way am I suggesting that the delays are a good thing.Or that the NDP are not gonna mess up etc. But they are not the reason why there is capital withdrawal right now. These decisions are not being made on a whim...
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Quote:
Originally Posted by rubecube
Can you say with any certainty that the delayed decisions would have actually been invested into Alberta if there had been no royalty review, or would they have just decided a lot more quickly not to do it?
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Red.
Yes, in some cases, the uncertainty is the reason for the capital withdrawl.
Obviously $30 oil is the reason why so many companies are reducing their capital spending, no one is debating that, and no one is blaming that on the NDP (at least no one who is worth arguing about).
What that unceratintly has done, is make some companies reevaluate the risk of spending that limited capital in Alberta.
At a time when companies are being forced to limit their capital budgets, the NDP has done something (and dragged it out, no less), that has discouraged companies from commiting what limited capital they have available.
As I said before, when times are rough, what sense does it make to place unneeded uncertainlty on an already stained industry. Especially when it is the lifeblood of the province.
Rube,
Yes I can say with certainty that that is the case.
Companies that have options on where to spend their capital are looking at the uncertainty of the royalty review and deciding that for the time being their capital dollars are better spent elsewhere where they know for certain what they are getting into.
There are still projects that can fly at these low oil prices, but the margins are going to be razor thin, and when they are that thin, not knowing what a potentialy large cost of doing business is, makes those projects unattractive. Hence, the capital goes, and in some cases, already has gone elsewhere.