Quote:
Originally Posted by Mr.Coffee
This is nice in theory but not reality. If you really believe the above, why should any provincial government ever be allowed to unilaterally change royalties that apply to oil and gas leases (contracts)? Royalties are borne by their respective leases.
Don't forget, the PC's under Stelmach did the same thing (change royalties), but yeah I agree. It is kind of bull#### because companies purchase / lease land with a bonus payment for rights under terms and conditions that may unilaterally get changed in the future rendering said rights uneconomic (ie. Changing the rules after the money is paid on bonus).
Regardless I bet you won't get many Albertans agreeing that the government should never change royalties, so, your argument is kind of moot. Fact is, governments just do what they want, and businesses will always have to just deal with it. Also that's sort of how it works around the world too.
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Except no it's not.
Royalties are an ongoing tax, not a contract. Taxes get changed.
Contracts are specific, and just like as has been explained, when one side can unilaterally change the rules (i.e. do exactly what contracts are designed to avoid), it is not only reasonable, but common to add a clause like the one in question.