Alberta Loses $13 Billion to Flawed Royalty Formula
A flawed royalty formula has cost the Alberta government $13 billion in oil and gas revenue over the last five years, in what a former senior advisor to Alberta Energy is describing as a major blunder.
”Announcing a royalty increase and delivering a royalty decrease is difficult to explain to voters,” Jim Roy, a private royalty expert who now advises governments around the world, told The Tyee. ”The Tories chose to pretend the big blunder did not happen. Nobody talks much about the government gifting the petroleum industry $13 billion.”
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Nikiforuk reports that “Alberta’s hydrocarbon income has become a significant election issue as the Tory government has posted a $5-billion deficit and raised taxes and cut services for ordinary Albertans.”
When Alberta conducted a “controversial royalty review” in 2007, he writes, then-Premier Ed Stelmach said a new calculation method would increase the province’s share by $2 billion per year. Instead, “Alberta’s ‘fair share’ plummeted due to bad forecasting and major flaws in how the province collects natural gas and bitumen royalties, Roy said.”