Quote:
Originally Posted by powderjunkie
The analysis would have to go a lot deeper, but on the surface, if oil by rail facilitates more production you get:
- more royalties
- more labour hours --> more income taxes (and perhaps less EI/other social services demanded)
So the 'lose money over time' scenario you may still more/less break even...especially on the royalty side once prices rebounded?
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Rail capacity existed before, during, and after the contract ended. So it doesn't really affect any of those things except to the extent Alberta producers couldn't economically bid for that capacity, and when differentials are high that isn't an issue, its more that when differentials are low and there is enough pipeline egress they don't want rail. So keeping them wouldn't make any difference to royalties because the same amount of capacity exists either way, just now its privately owned vs publicly owned.
The price of the contract ended up being higher than the long term cost of rail capacity, because they locked in for a long time when prices were high.
As an analogy, the NDP locked into a long term fixed rate when interest rates were high.
Like I said before, if Muta wants to pick on the UCPs fiscal record I'm 100% there and ready to pile on. Keystone XL and the war room are both uncontestable fiscal disasters.
But the oil by rail contract was an NDP fiscal mistake not a UCP one, so trying to hang it on them isn't reasonable.