BUSINESS

The brewing fight over oil sands taxes

NICHOLAS KÖHLER October 8 2007
BUSINESS

The brewing fight over oil sands taxes

NICHOLAS KÖHLER October 8 2007

The brewing fight over oil sands taxes

NICHOLAS KÖHLER

Perhaps it was inevitable, given the number of Newfoundlanders flowing into Alberta in the last few years to work the oil sands. Still, it was a little odd to see many Albertans looking to Newfoundland and Labrador Premier Danny Williams for inspiration last week, with the release of Alberta’s oil sands royalty review report. Last month, Williams defended his Alberta counterpart Ed Stelmach during a Council of the Federation meeting in Moncton, where others intended to slam Alberta’s climate change stance. “We don’t want to slay the goose that lays the golden egg here,” he said, citing Alberta as Canada’s delicate economic heart. But now Alberta is focused on another aspect of Williams’s legacy—and this time it’s not good news for Stelmach.

Last year, Williams stared down a consortium of oil companies when they refused to budge on negotiations over the Hebron Ben Nevis oil project. Williams won that game of chicken, just weeks away from an election, kick-starting Hebron and securing an equity position and a healthy royalty take. Stelmach, who will also soon face an election but whose popularity is somewhat weaker than Williams’s, has a similar opportunity to appear resolute with a demand for higher royalties from the oil sands.

The report says Alberta’s current royalty scheme, adopted a decade ago when oil was US$20 a barrel, no longer makes sense at US$80 a barrel and calls for a $2-billion hike in industry dues. Oil patch execs are numb with fury and energy stocks sagged in response. But the report’s wide popularity lends it an almost irresistible political momentum. For better or worse, Williams’s stony gaze when confronting Big Oil is now populist Alberta’s gold standard—and many Albertans will accept nothing less from Stelmach. That complicates the question of whether Stelmach will adopt the report’s recommendations and demand the industry pony up, or go easy on his big business supporters. Whose goose is cooked: Stelmach’s—or the oil industry’s? M