Income trusts, climate change and the end of Alberta oil
I have to laugh at the latest stock market tumble. And why did it fall? Well, it seems investors don’t like to pay taxes. With the federal Finance Minister Jim Flaherty’s announcement he was going to cut the tax advantages of income trusts yesterday, markets tumbled today.
Telus and Bell were the biggest companies going that route, but they might not now. With no advantage in being an income trust, why switch? Apparently it will take four years for that to fully realize.
The loss of tax revenue to federal and provincial governments from income trusts would be in the order of $1 billion a year. Honestly, are investors that stupid that they thought the feds would let them get away with it forever?
Who likes to pay taxes? Nobody. But, if we want to keep this country running, someone’s got to pay. That money from Telus, and eventually Bell, would be made up by individual taxpayers. Frankly, I don’t think they’d go for it either.
Is this change in policy a signal that Harper might be diverging, however slight, from the Bush doctrine of cutting taxes for all your wealthy friends? Don’t be so hopeful. Harper might have had an attack of conscience, or come to the realization he’s still in a minority and he actually has to get PEOPLE to vote for him.
Which leads me to something I heard on The Current this morning. A B.C. producer (I believe) of end-matched lumber who was exempt from duties under the illegal U.S. softwood tariffs, is now paying them under the new softwood “deal.” It’s weird how our federal government panders to business on one hand and knifes them in the kidneys on the other. I think our government has a split personality.
Climate change
I have been remiss in not commenting on the climate change “initiative” from our new Conservative government. So… greenhouse gases cut in half by 2050? You have to be kidding! Our businesses can’t sustain that kind of rapid change! Harper, you’re going to destroy business in this country! Our businesspeople are such meatheads, and so unproductive, they can’t figure it out in that length of time! Give your head a shake!
Yeah right. For you idiots out there who can’t figure it out, that was sarcasm. Harper will be dead by 2050, so why would he give a shit what happens after that? Best way to change things is to light a fire under someone’s ass. Do that to the business community and they’ll figure it out.
Does our government really believe all our businesses will just shut down overnight if they force them to do something? Not bloody likely. The smart business people will get it figured out and quick. The dumb ones will do what the dumb ones always do: wait to the last minute when it will cost them way more, and even then, won’t do it properly.
It’s like taking your kids to the dentist. It’s good for them but they’ll fight, kicking and screaming all they way, but after, they feel better. Everybody should just fucking grow up and do what’s right. Hell, even the British think climate change is a big problem now. WTF? The Brits? I think George “Dubya” Bush might even believe it too. Hmmm.
Stephen “Hurry Up” Harper doesn’t seem to want to rock the business boat on this issue though. Read: Alberta votes. I think all of Alberta’s oil and gas will be gone by then and it will only be oil sands left. Maybe some coal. He’ll be long gone. Big business gets its way. Harper gets some campaign contributions and a cushy oil exec job after he’s PM and everyone’s happy. Oh, except for the fucking desert from the Rockies to Manitoba. Oops!
This country needs some leaders with vision and not talking heads who’ll prostitute themselves for the biggest campaign contributions. The current crop doesn’t qualify.
Alberta Oil: 10 years and it's almost done
It’s not really easy to find figures on just how much conventional (read: easy to extract) oil there is left in Alberta. I did manage to find the figure of 1.741 billion barrels in reserve at the end of 2004. In fact, from 1999 to 2004, the average rate of decline in conventional oil reserves was 3.89 per cent for Alberta. From the figures, the annual reduction varies, in part I suspect due to additional discoveries.
So how many years of conventional oil does Alberta have left? I found it fascinating to see the production decline in Alberta since 1998. Daily production has declined from 858,000 barrels per day in 1998 to 571,000 barrels per day in 2005, or an average decline in production of 6 per cent annually. Just for argument’s sake, if we took that annual decline in production and calculated it into known reserves, ignoring the fact that as a well nears the end of its life and extracting all oil from that well is virtually impossible, what would the end date be for Alberta’s know reserves?
By my calculations, that would put the end of conventional oil in Alberta at 2015. Now, it might not be precise, not having all the up to date data and there may be some timing issues, but that might be a good date to shoot for. After that, it’s all oil sands, unless of course they find more oil. I’m guessing they won’t be finding much though.
It’s odd to think that Alberta’s boom might only go on for another nine years, at least in the bulk of the province. After that, it’s the Fort McMurray area that will continue to be busy.
I haven’t even done any calculations on the natural gas supply. That might be interesting to look at though. With reserves of 41.7 trillion cubic feet of gas at the end of 2004 and an average, and steady I might add, production of around 4.9 trillion cubic feet per year of natural gas, that would put the end of Alberta’s natural gas industry at around 2013. That is of course, barring any new discoveries, which I suspect are about as likely as new discoveries of conventional oil.
Now, I’m of course am not a petroleum expert, but I can do some rough calculations. If you think you can do better, let me know. Either way, that is not good for the long term prognosis of the Alberta economy. I’d be looking seriously at ranching, agriculture, tourism or forestry as an alternative about the middle of the next decade, or be somewhere else.
So, I guess 2050 doesn’t matter much to Stephen Harper because Alberta’s economy, for the most part, is going to be a basket case in less than 10 years. If you work in Fort McMurray, you’ll be doing okay, but I’m not sure if Fort McMurray can sustain the entire province.
I know Saskatchewan’s oil and gas industry is growing, as is B.C.’s. And here in B.C. we have offshore oil and gas, but nobody seems to know how much. I’ve heard there is oil and gas in the Cariboo region. Maybe I should be holding on to the property here? Will B.C. and Saskatchewan be the new Alberta in 10 years?
Telus and Bell were the biggest companies going that route, but they might not now. With no advantage in being an income trust, why switch? Apparently it will take four years for that to fully realize.
The loss of tax revenue to federal and provincial governments from income trusts would be in the order of $1 billion a year. Honestly, are investors that stupid that they thought the feds would let them get away with it forever?
Who likes to pay taxes? Nobody. But, if we want to keep this country running, someone’s got to pay. That money from Telus, and eventually Bell, would be made up by individual taxpayers. Frankly, I don’t think they’d go for it either.
Is this change in policy a signal that Harper might be diverging, however slight, from the Bush doctrine of cutting taxes for all your wealthy friends? Don’t be so hopeful. Harper might have had an attack of conscience, or come to the realization he’s still in a minority and he actually has to get PEOPLE to vote for him.
Which leads me to something I heard on The Current this morning. A B.C. producer (I believe) of end-matched lumber who was exempt from duties under the illegal U.S. softwood tariffs, is now paying them under the new softwood “deal.” It’s weird how our federal government panders to business on one hand and knifes them in the kidneys on the other. I think our government has a split personality.
Climate change
I have been remiss in not commenting on the climate change “initiative” from our new Conservative government. So… greenhouse gases cut in half by 2050? You have to be kidding! Our businesses can’t sustain that kind of rapid change! Harper, you’re going to destroy business in this country! Our businesspeople are such meatheads, and so unproductive, they can’t figure it out in that length of time! Give your head a shake!
Yeah right. For you idiots out there who can’t figure it out, that was sarcasm. Harper will be dead by 2050, so why would he give a shit what happens after that? Best way to change things is to light a fire under someone’s ass. Do that to the business community and they’ll figure it out.
Does our government really believe all our businesses will just shut down overnight if they force them to do something? Not bloody likely. The smart business people will get it figured out and quick. The dumb ones will do what the dumb ones always do: wait to the last minute when it will cost them way more, and even then, won’t do it properly.
It’s like taking your kids to the dentist. It’s good for them but they’ll fight, kicking and screaming all they way, but after, they feel better. Everybody should just fucking grow up and do what’s right. Hell, even the British think climate change is a big problem now. WTF? The Brits? I think George “Dubya” Bush might even believe it too. Hmmm.
Stephen “Hurry Up” Harper doesn’t seem to want to rock the business boat on this issue though. Read: Alberta votes. I think all of Alberta’s oil and gas will be gone by then and it will only be oil sands left. Maybe some coal. He’ll be long gone. Big business gets its way. Harper gets some campaign contributions and a cushy oil exec job after he’s PM and everyone’s happy. Oh, except for the fucking desert from the Rockies to Manitoba. Oops!
This country needs some leaders with vision and not talking heads who’ll prostitute themselves for the biggest campaign contributions. The current crop doesn’t qualify.
Alberta Oil: 10 years and it's almost done
It’s not really easy to find figures on just how much conventional (read: easy to extract) oil there is left in Alberta. I did manage to find the figure of 1.741 billion barrels in reserve at the end of 2004. In fact, from 1999 to 2004, the average rate of decline in conventional oil reserves was 3.89 per cent for Alberta. From the figures, the annual reduction varies, in part I suspect due to additional discoveries.
So how many years of conventional oil does Alberta have left? I found it fascinating to see the production decline in Alberta since 1998. Daily production has declined from 858,000 barrels per day in 1998 to 571,000 barrels per day in 2005, or an average decline in production of 6 per cent annually. Just for argument’s sake, if we took that annual decline in production and calculated it into known reserves, ignoring the fact that as a well nears the end of its life and extracting all oil from that well is virtually impossible, what would the end date be for Alberta’s know reserves?
By my calculations, that would put the end of conventional oil in Alberta at 2015. Now, it might not be precise, not having all the up to date data and there may be some timing issues, but that might be a good date to shoot for. After that, it’s all oil sands, unless of course they find more oil. I’m guessing they won’t be finding much though.
It’s odd to think that Alberta’s boom might only go on for another nine years, at least in the bulk of the province. After that, it’s the Fort McMurray area that will continue to be busy.
I haven’t even done any calculations on the natural gas supply. That might be interesting to look at though. With reserves of 41.7 trillion cubic feet of gas at the end of 2004 and an average, and steady I might add, production of around 4.9 trillion cubic feet per year of natural gas, that would put the end of Alberta’s natural gas industry at around 2013. That is of course, barring any new discoveries, which I suspect are about as likely as new discoveries of conventional oil.
Now, I’m of course am not a petroleum expert, but I can do some rough calculations. If you think you can do better, let me know. Either way, that is not good for the long term prognosis of the Alberta economy. I’d be looking seriously at ranching, agriculture, tourism or forestry as an alternative about the middle of the next decade, or be somewhere else.
So, I guess 2050 doesn’t matter much to Stephen Harper because Alberta’s economy, for the most part, is going to be a basket case in less than 10 years. If you work in Fort McMurray, you’ll be doing okay, but I’m not sure if Fort McMurray can sustain the entire province.
I know Saskatchewan’s oil and gas industry is growing, as is B.C.’s. And here in B.C. we have offshore oil and gas, but nobody seems to know how much. I’ve heard there is oil and gas in the Cariboo region. Maybe I should be holding on to the property here? Will B.C. and Saskatchewan be the new Alberta in 10 years?
posted by Alain Saffel at
4:08 PM
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