On delayed rectification

I'll largely echo David Climenhaga's take on Alberta's oil and gas royalty review (PDF). But it's well worth highlighting the difference between the two main interpretations of the review's recommendations - and what they mean for future resource policy.

By way of comparison, some of the media spin includes statements along the lines of the following:

The key points of the report are:

• Albertans are receiving their fair share.
• Oilsands royalties won't change.

Contrast that against Rachel Notley's message (which matches the actual comments from the review panel, and indeed from Brian Jean in gloating about the lack of changes):

“The fact of the matter is the environment has changed profoundly, even in the last 12 months, and so that is what is driving our decision-making at this point,” Ms. Notley told a news conference in Calgary yesterday morning. “It is not the time to reach out and make a big money grab. That just is not going to help Albertans over-all right now, and so I feel quite confident that this is the right direction to take.”

There's thus a stark contrast between the claim that Alberta's royalty structure is in fact sufficiently fair to stay in place indefinitely, and the view that a period of low prices isn't the time to alter it to improve its level of fairness.

Indeed, anybody looking to the report to confirm or refute the first point will find plenty of conflicting information. Yes, it suggests that Alberta's royalty rates are "comparable with other jurisdictions". But it also recommends annual reporting and further reconsideration as to whether royalties paid meet a number of goals, including "returns to Albertans" - meaning there's ample room for further review as circumstances change. And we'd expect the gap between costs and royalties to be much higher when prices and profits are up.

So the answer on an improved return for the public is best seen as a "not now" rather than a "not ever". And while that's still disappointing compared to the prospect of ensuring improved public benefits in the long term (which could be palatable if paired with supports to cover a short-term downturn), it doesn't close the door to a more fair system in the future.