Alberta budget news

[Fire]

Originally Posted by Azure

The flat tax isn't the problem. The percentage is though.

Yes, it should be lower.

[bizaro86]

Originally Posted by Jacks

You can save the eye rolling, I was asking a serious question. Do you have any data to back up what you are saying?

On one side we have the opposition and some media saying the price differential is almost the same. On the other side we have the PC's (and you) saying it is drastically different.

Baytex's website lists historical pricing:
http://www.baytex.ab.ca/files/pdf/Op...ary%202013.pdf
Year & % difference from WTI
2005 - 36.3%
2006 - 32.5%
2007 - 30.8%
2008 - 22.4%
2009 - 16.1%
2010 - 17.9%
2011 - 18.1%
2012 - 22.2%

Q1 2012 Heavy Oil Pricing Update - April 2012
http://www.baytex.ab.ca/files/pdf/Op...g%20Update.pdf
WTI - $102.93/bbl
WCS Benchmark - $81.51/bbl
Differencial $21.42 = 20.7%

Q4 2012 Heavy Oil Pricing Update - January 2013
http://www.baytex.ab.ca/files/pdf/Op...g%20Update.pdf
WTI - 88.18/bbl
WCS Benchmark $70.07/bbl
Differencial $18.11 = 20.5%

Are those numbers wrong?

No, but they're out of date, or at least misleading. There was a huge decreasing in WCS pricing during Q4. For example, Cenovus posts the WCS price monthly on their website here: http://www.cenovus.com/operations/do...y_Averages.pdf

The December price was 360.42 per m3, or $57.31 per barrel. That compares to a price of 551.19 per m3 or $87.64 per barrel in January 2012. That's a pretty big difference. It's also a huge differential, since WTI is $90+.

Also, a Q4 average isn't a good number going forward because the price dropped nearly 30% in Q4

[CaptainCrunch]

Originally Posted by Dion

If Redford is serious then maybe she should start by have her MLA's give back that raise they voted for themselves. That way she wouldn't look like a hypocrite by asking doctors to forgo a raise.

Maybe she should hack back on public servant salaries which are significantly higher then anywhere else in this country and par down the bloated bureaucracy, but that would piss off her union buddies so the most apparent ways to balance the day to day budget will never happen.

[theg69]

More of an informative post than anything else.

As a doctor, we recognize that we do make fairly decent money here in Alberta. That being said, we did do post-secondary education for at least 10 years minimum (I guess 8 if you were smart and entered medicine after Year 2), accumulated student loan to the tune of 20 grand per year during medical school (not including undergrad). So, we feel we should be compensated fairly.

First point - doctors are not looking for a fee increase, we are fighting a wage cut. The propaganda that has been out saying that they were imposing a wage "raise" were false. They are trying to cut the retention benefit and business cost program (which results in an average of 10-15% paycut). This is tough to swallow especially in light of the pay raise the MLAs gave themselves.

Second point - they compare our salaries to the rest of the country. Point missed - most professions in Alberta make at least 20% more than the rest of the country - call it the Alberta incentive. Say if you were an engineer, accountant, etc - people move here because the pay is better. So its a little misleading the stuff they are feeding people.

Third point - before the election, the PC government promised to re-open negotiations in good faith after the election if they were elected. They subsequently tried to force an imposition on us. So the example is if the owners in the NHL did the same thing to the players during the negotiation - they would write up a contract and force the players to take it without any concessions. How fair is that? The AMA proposed mediation and arbitration, in which the government promptly rejected.

Fourth point - I don't know how much people know about Family care centers and clinics but this is the brainchild of Allison Redford. From our perspective, this is a waste of money. We already have Primary Care Networks in place that do much of the same thing but what the government is doing is opening these FCCs and forcing some of these PCNs to close down - so called reinventing the wheel. There was also no consultation with doctors who are supposed to work at these FCCs and the whole goal is to take away control from us. Would you like your care dictated by the government?

I just wanted to express our angle and our frustrations with what Allison Redford and Fred Horne are doing. In a sense, we feel like we are not an equal negotiating partner and I believe if what she wants comes to fruition, there will be a lot of angry doctors. I think that a health care system that relies on angry and disenchanted doctors will not give the public the care it needs and in the long run cost everyone more money. The government is much too short-sighted to see that.

/end rant

[Jacks]

Originally Posted by bizaro86

No, but they're out of date, or at least misleading. There was a huge decreasing in WCS pricing during Q4. For example, Cenovus posts the WCS price monthly on their website here: http://www.cenovus.com/operations/do...y_Averages.pdf

The December price was 360.42 per m3, or $57.31 per barrel. That compares to a price of 551.19 per m3 or $87.64 per barrel in January 2012. That's a pretty big difference. It's also a huge differential, since WTI is $90+.

Also, a Q4 average isn't a good number going forward because the price dropped nearly 30% in Q4

According to that the major price drop consisted of one month last year, we are talking about long term pricing. Even with the price drop in December the price has been that low (and lower) off and on over the last few years. I don't see how short term fluxuations in the price of oil are anything we didn't know before the election. If anything we should be looking at quarterly numbers since short term pricing can have big fluxuations.

[bizaro86]

Originally Posted by Jacks

According to that the major price drop consisted of one month last year, we are talking about long term pricing. Even with the price drop in December the price has been that low (and lower) off and on over the last few years. I don't see how short term fluxuations in the price of oil are anything we didn't know before the election. If anything we should be looking at quarterly numbers since short term pricing can have big fluxuations.

The price hasn't changed so far this year compared to december. It seems to me it makes sense to budget off the current price, especially when it's looking like this years WCS price will be lower than last years.

It's not like there was 1 random month where the price dropped, it dropped at the end of the year and so far it's stayed down. A blip where March was low and the rest of the year high would be different.

[Jacks]

I guess we'll have to see where the price goes in the next few months. So far we have December and (from what you are saying) January. What I'm saying though is that a short term drop in oil pricing is nothing new around here and so far we have 2 months worth of drop. By contrast we are looking at a multibillion dollar deficit and talks of all kinds of new taxes when the price was much higher only a couple of months ago.

I don't know who to believe since the Baytex numbers are more recent and show a different picture. They show the January WCS benchmark at $70/bbl.

[Plett25]

Originally Posted by bizaro86

No, but they're out of date, or at least misleading. There was a huge decreasing in WCS pricing during Q4. For example, Cenovus posts the WCS price monthly on their website here: http://www.cenovus.com/operations/do...y_Averages.pdf

The December price was 360.42 per m3, or $57.31 per barrel. That compares to a price of 551.19 per m3 or $87.64 per barrel in January 2012. That's a pretty big difference. It's also a huge differential, since WTI is $90+.

Also, a Q4 average isn't a good number going forward because the price dropped nearly 30% in Q4

Anybody know what's causing this drop?

I'd guess it has to do with pipeline capacity and ND production from the Bakken formation. But I have no idea what I'm talking about.

[Tinordi]

Originally Posted by Plett25

Anybody know what's causing this drop?

I'd guess it has to do with pipeline capacity and ND production from the Bakken formation. But I have no idea what I'm talking about.

That's it. Over-supply of oil to Cushing Oklahoma depressing prices. There's also relatively slack demand for oil in North America due to economic conditions.

[Plett25]

bizaro86's post is the only thing I've read that makes sense of the $6 billion forecast deficit.

So wouldn't a hypothetical Premier Danielle Smith be in exactly the same position Redford is in?

[Tinordi]

Carbon tax also gets two bird with one stone.

You address revenue shortfalls and you also provide yourself with cover from future punitive policy decisions such as not approving KXL, fuel quality directives in Europe and British Columbia, and possible further segregation of oil sands crude in the U.S.

Not to mention all the other benefits such as weaning yourself off of fossil fuel oriented development in the long-term.

[Tinordi]

Originally Posted by Plett25

bizaro86's post is the only thing I've read that makes sense of the $6 billion forecast deficit.

So wouldn't a hypothetical Premier Danielle Smith be in exactly the same position Redford is in?

Yes.

Once again, this is the result of artificially low tax rates subsidized by using volatile non-renewable resource revenues for general revenue. Not any mismanagement by any one political party. Using oil and gas revenues for general revenues is just part of the stupid Alberta body politic.

[Slava]

Originally Posted by Plett25

bizaro86's post is the only thing I've read that makes sense of the $6 billion forecast deficit.

So wouldn't a hypothetical Premier Danielle Smith be in exactly the same position Redford is in?

No. Its called magic.

Also, prepare for the Wildrosers here to crucify you. They don't like when you ask what they could do differently or talk about their policies. (for the most part)

[Plett25]

[darklord700]

Originally Posted by Plett25

So wouldn't a hypothetical Premier Danielle Smith be in exactly the same position Redford is in?

For starter, WR didn't spend $200 millions of taxpayer's money to buy teacher union's vote like Redford did.

[Slava]

Originally Posted by darklord700

For starter, WR didn't spend $200 millions of taxpayer's money to buy teacher union's vote like Redford did.

For starters they said they would save $2B in the carbon capture even though $1.5B was already spent. Its a complete joke.

We'll see though. Word is that the provincial government will put out a webpage where people can go in and figure this out on their own and see where they would cut to balance the books. I would love to see the one that Danielle Smith fills out...it might be the one indication of where they would cut (which was seemingly unavailable during the election campaign).

[Senator Clay Davis]

Originally Posted by darklord700

For starter, WR didn't spend $200 millions of taxpayer's money to buy teacher union's vote like Redford did.

Because the Wildrose and their rebate bribes weren't trying to buy votes? Amazingly in politics all parties engage in questionable behavior to obtain votes. No one is immune from doing it.

[Tinordi]

Good article:

http://www.irpp.org/po/archive/may11/emery.pdf

Unfortunately, a heavy reliance on resource exploitation carries with it the problem of wide swings in economic activity. With a large fraction of economic activity directly or indirectly tied to the energy sector, Alberta’s economy tends to vary with the price of fossil fuels. Booms and busts in economic activity are therefore as common in
Alberta as booms and busts in energy prices. In such economies, economists emphasize the need for governments to guard against allowing the volatility of the private economy to cause volatility in government spending. Thus a fall in energy prices should not be allowed to force cuts to spending on health and education nor should a boom in
energy prices be allowed to fund an unsustainable expansion in these programs. The solution to this problem is to redirect the revenues gained from the sale of resources away from the government’s budget and toward saving.

This is the solution to the problem of energy price volatility that has been successfully employed by energy-rich Norway. It is also the solution that has been long advocated by economists in Alberta and frequently urged upon the provincial government. The Alberta government has not heeded the advice of economists. The provincial government in Alberta saved less than 10 percent of the $130 billion of natural resource revenue collected between 1970 and 2004.

To the extent that resource royalties have been used to reduce income taxes and allow Alberta to finance high levels of public spending without the need of a provincial sales tax (Alberta is the only Canadian province without a sales tax) it would appear that the main role for resource rents in Alberta has been to augment private and public consumption.

[bizaro86]

Originally Posted by Plett25

bizaro86's post is the only thing I've read that makes sense of the $6 billion forecast deficit.

So wouldn't a hypothetical Premier Danielle Smith be in exactly the same position Redford is in?

I voted Wild Rose last time around, but they'd have less revenue to work with also. No magic allowed. The province has to find a way to manage resource revenue with expenditures without having wild swings. I'd be in favour of putting 100% of resource revenue in the Heritage Trust fund or some other pot, and using the money from there to smooth revenues over time, so every year we spend the average of the last 10 years revenue or something like that.

As for the differentials, this document provides some good explanation. They're mainly related to our lack of pipeline access.

http://alberta.ca/albertacode/images...ude-Prices.pdf

As for Jack's question about Baytex's information:

The WTI-WCS differential is publicly traded for future time periods, so you can look up the current market for the differential anytime. It's found here:
http://www.cmegroup.com/trading/ener...es_globex.html

The current value for the front month differential is $33.00 per barrel, about what the differential was in December. The difference is mainly that WTI oil prices have come up ~$10 since then. So WCS has gone up because WTI has gone up, but the differential hasn't closed. The difference between the prices is still costing AB huge money.

[Jacks]

Originally Posted by Slava

No. Its called magic.

Also, prepare for the Wildrosers here to crucify you. They don't like when you ask what they could do differently or talk about their policies. (for the most part)

You assume that WR voters would be giving their party a pass in the same situation. If Smith had broken most of her promises, drove spending out of control and was posting huge deficits I would be just as pissed off.