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Alberta jacks up oil and gas royalties

CALGARY, Alta. - Oil industry fears that Alberta would hike up royalties were realized last month when Premier Ed Stelmach announced it would increase its piece of the pie by $1.4 billion (about 20%) ...


CALGARY, Alta. – Oil industry fears that Alberta would hike up royalties were realized last month when Premier Ed Stelmach announced it would increase its piece of the pie by $1.4 billion (about 20%) beginning in 2009. That’s about 25% less than recommended by a government panel. Trucking companies serving Alberta’s oilpatch have voiced concern about the royalty revision in recent weeks. Mullen Transportation has laid off employees and TransForce announced that if the province went through with its threat, it “will take the appropriate action possibly including layoffs.”

A proposed tax on oilsands production was not adopted by the province and about half the panel’s other recommendations were also dismissed. However, Stelmach said it was important Albertans benefit from the province’s resources.

“I made a commitment and I delivered. Future generations of Albertans will receive a fair share from the development of their resources. I offer stability and predictability to those in the oil and gas industry, and the time to adjust to royalty changes. And I can also assure investors that Alberta will remain an internationally competitive and stable place to do business,” said Stelmach. The province said the increased royalties are required to upgrade infrastructure such as highways.

Alberta Motor Transport Association executive director, Mayne Root, told Truck West the association has discussed the royalty revision but has not developed a formal position on the issue.

“It’s anticipated there will be some business issues with it in terms of contracts and those sorts of things, especially in certain sectors but it does have the possibility of getting our employment situation back under control,” said Root, referring to the industry’s driver shortage. “Most carriers have been and continue to struggle with finding qualified mechanics, drivers, etc. so there’s an up side and a down side.”

Dave MacInnis, president of the Canadian Energy Pipeline Association, said “The report was based on the fact that Albertans aren’t getting their fair share. I think the (government) panel got it wrong. But Albertans are using the review to get answers to some questions; such as, ‘What was done with successive years of surpluses?’ ‘Why is our infrastructure crumbling?’ And ‘What is being done to protect future investments?’ They want to know there is a plan in place.”


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