Premier Stelmach Rejects Expert Advice, Shortchanging Albertans by Billions

Oct. 26, 2007

Alberta Premier Ed Stelmach's decision on royalties will cost Albertans billions of dollars for every oilsands project, according to new modelling undertaken by the Pembina Institute.

"Yesterday, the Premier rejected every one of the Royalty Review Panel's expert recommendations on oilsands royalties and taxes - without providing any analysis to justify his decision," says Chris Severson-Baker, Director of the Pembina Institute's Energy Watch program. "It's hard to believe, but there's only one estimate of future royalties in the entire New Royalty Framework report - and it's for one year and one set of price assumptions. Albertans deserve more information and true transparency to understand the basis for Premier Stelmach's proposal."

The Institute's modelling shows that at oil prices of $60 per barrel, the Premier's proposal would only increase Albertans' share of oilsands revenues by two per cent. By contrast, the Royalty Review Panel's expert recommendations would increase Albertans' share by 22 per cent. The difference between these options amounts to $4.8 billion in revenues over the life of a typical in situ project and $11.6 billion over the life of a typical mining project. (See the backgrounder below for more details on this calculation.)

At oil prices of $80 per barrel, the Premier's proposal would generate eight to nine per cent in additional revenue, compared to 24 to 26 per cent under the expert recommendations. The differences in this case amount to $6.9 billion for a typical in situ project and $7.3 billion for a typical mining project.

With more than a dozen oilsands projects in operation and as many more in the approvals process, the cumulative losses to Albertans caused by the New Royalty Framework proposals could be in the hundreds of billions. The revenues will instead end up in investors' pockets as windfall profits.

"Premier Stelmach had the right idea when he appointed an independent, transparent expert panel to consult with Albertans," adds Severson-Baker. "But what's the use in soliciting expert advice, if the end result is a giveaway to industry?"

"The outcome of the royalty review sets a distressing precedent for overdue decisions on environmental impacts in the oilsands," says Jaisel Vadgama, Senior Policy Analyst. "Having rejected his own experts' advice without apparent justification, it's hard to see how the Premier plans to make meaningful progress on any of these critical and complex environmental issues."

For more information, contact:

Chris Severson-Baker
Cel: 403-899-7423
Tel: 403-269-3344 ext. 101

Jaisel Vadgama (english / français)
Cel: 403-807-6566

To read the media backgrounder click here.

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