15 March 2010

The oil industry whips Stelmach into shape

When Peter Lougheed was premier of Alberta, the government defended the province's interests against all comers, against the feds and the oil industry alike. Indeed, at times the industry found Lougheed more difficult than Ottawa did. When Lougheed left, so did the will to challenge the corporate sector. Under Don Getty, then Ralph Klein, Alberta essentially ceded the boss's job to the oil and gas industry.

Then Ed Stelmach arrived on the scene, talking tough. Having apparently read Our Fair Share, the Alberta Royalty Review Panel report which baldly stated, "Albertans do not receive their fair share from energy development. The royalty rates and formulas have not kept pace with changes in the resource base and world energy markets," he promised to bring in a new royalty regime. This he did in 2009, significantly increasing Albertans' share of their resource.

The industry didn't like it and they proceeded to punish Ed and his Conservatives. They began to shift their very generous political spending to the Wildrose Alliance Party, until then a non-entity. They reached into their deep pockets to propel the charismatic Danielle Smith to the leadership and overnight created a strong rival to the Conservatives. When the energy minister, Ron Liepert, gave a breakfast speech in Calgary about “the Future of Alberta Energy,” for the first time in history not a single oil and gas company paid for one of the $850 tables.

Ed got the message. Last week he announced that royalties would be dramatically reduced. He has recognized who is the boss in his province, and it ain't him.

But, despite his genuflection, he isn't out of the woods yet. Albertans aren't entirely thrilled with his new policy. An Environics survey conducted for The Calgary Herald found that a solid majority of Albertans believe royalty rates should either remain as they are or be increased. Only about a quarter think they should be lowered. And then there's the revitalized Wildrose Alliance. The industry now has two conservative parties it can play off against each other.

Ed has learned his lesson but he may have to continue paying penance for some time.

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