2010 Article Archives
Beware of higher interest rates
December 20, 2010
Many Albertans live in a fool’s paradise, in spite of warnings from Bank of Canada Governor, Mark Carney that the debt levels carried by Canadians are very high and that there is no guarantee that interest rates will remain very low forever. Older folks remember the carnage wrought by spiking interest rates in the 1980s when a lot of people walked away from their houses and gave the keys to the bank.
We have been conditioned, yes, conditioned, or more crudely put, brainwashed, into the belief of perpetual growth. People that graduate from universities with degrees in economics are the worst because they are leading the rest of us down the tunnel of ignorance to a dead end. Perhaps we shouldn’t blame them because they had blinders put on in elementary school and were led down the garden path all the way up to and including their graduation from university.
The problem is that we want to believe in perpetual growth and are literally groping for information that will support this fallacy and ignoring information that does not. This explains what happened in the real estate market prior to the 2008 crash. It was thought that property values would continue to increase generating perpetual profits for those that were buying and selling real estate. The big winners were not the people that were buying and selling, but the people that financed these transactions by way of interest bearing loans. And as the prices went higher and higher the interest rates went down, creating the illusion that repayments were manageable. What was conveniently forgotten was that good paying jobs were needed to make those payments; jobs that disappeared when the bubble burst in 2008.
Now the buzz in Alberta is that “the oilpatch will boom again”. There have been massive investments in oil properties by transnational corporations and sovereign wealth funds.
Our oil sands are the main target of these extractive enterprises because of the current relatively high price of oil.
We Albertans should know better than rely on this in planning our future. Boom and bust is the story in Alberta, going back a hundred years. We should remember that the price of energy depends on factors we have no control over, and it could plunge overnight.
This has already happened with natural gas because relatively shallow shale formations gas can now be recovered at low cost due to improved extraction technology. This has depressed the price of gas to the point where it is becoming uneconomical to produce it from deeper formations. The US is now becoming increasingly independent by supplying gas from local sources, leaving Alberta gas in the lurch. Oil is more of a world commodity than gas because of its ease of transportation, but the world economy is very shaky at this time with big financial troubles brewing in Europe.
So, Mark Carney, if you increase interest rates, you may have to print the money to make up the difference between old and new interest rates, because we, your humble subjects, will likely have problems in just paying our regular bills.
Helge Nome
Western energy ministers form alliance
December 18, 2010
Finally, Alberta, B.C. and Saskatchewan have formed an alliance to coordinate energy policies and find new markets for Canadian oil and gas. Working together to promote the export of oil and gas to Asian markets is an excellent goal. If we build a pipeline to a B.C. port, we will have access to the insatiable energy demand of China and Japan. No longer will we be primarily dependent on the Americans for our export market, diffusing their ability to manipulate our oil and gas industry.
This alliance should also give priority to harmonizing their royalty and tax regimes so that the oil and gas industry will not be able to play one province against another to achieve the lowest common denominator of resource income share for the citizens of these provinces. It is too bad that this alliance was not formed before the oil and gas industry used Danielle Smith, their Billion Dollar Baby, and her Wild bunch to coerce the Alberta government to lower its royalty rates. If the three provinces had worked together, BC and Saskatchewan could have agreed to increase their rates to Alberta’s level instead of Alberta reducing its rates to their level. The citizens of these three provinces could all have benefited from a larger share of their resource wealth.
If the Alberta government had not reduced its royalty take, it could have reduced its deficit by $2 billion. With the price of oil increasing to over $80/barrel, land (drilling- right) sales and drilling would have risen to current levels without the royalty reduction.
Len Skowronski
Socreds hold successful AGM in Innisfail
November 22, 2010
The Alberta Social Credit Party held a very successful Annual General Meeting at the Royal Canadian Legion in Innisfail this Saturday, November 20, 2010. The high energy in the meeting room was palpable, partly fuelled by new members from Edmonton. Charles Relland, past-President of the Alberta Party and Bob Whyte, past Edmonton Area Director for the Alberta Party were present and reported that they had established Social Credit constituency associations in Edmonton-Calder, Edmonton-Centre and Edmonton-Goldbar.
The leadership of Len Skowronski was affirmed by the members present. A new provincial board of directors was elected: President Gordon Barrett, First Vice-President Helge Nome, Second Vice-President Garnet Medicraft, Area Directors Myrna Kissick, Gordon Musgrove, Charles Relland, Tom Stad, Raj Sinha and Bob Whyte.
In his speech to the membership, Len Skowronski focused on the huge amount of wealth Albertans have in the oilsands and the responsibility of Albertans as owners and stewards of this wealth to assure that much more of it remains in Alberta rather than being shipped out to foreigners. He concluded, “If we Albertans take control of our credits such as the oil sands, we will no longer be in debt to the bankers. The resulting wealth will provide for our social needs: health care, education, seniors’ support, communication, transportation, energy, shelter, food, etc. That’s Social Credit!”
A very illuminating presentation on Alberta credit unions was given by guest speaker Paul Kennett, President and CEO of the Alberta Credit Union Deposit Corporation. Credit unions have a special place in the hearts of Socreds. During the Great Depression, the Canadian banks, headquartered in the east, ravaged rural Alberta by seizing farms and abandoning bank branches. In order to return some financial stability to Alberta, the Social Credit government established the Alberta Treasury Branch and enacted the Credit Union Act in 1938. By 1943, 151 credit unions were registered in Alberta.
A member expressed his concern that opinion polls and social media swarming were being used to sway the electorate during election campaigns. A motion was passed requesting a provincial public inquiry into this matter and revisions to the Alberta Elections Act and Local Authorities Election Act that would prevent undue influence by these activities.
Click here for Leader’s Report
Len Skowronski
Leader
Alberta Social Credit Party
Let’s train all the doctors we need
September 28, 2010
Since the College of Physicians and Surgeons of Alberta has increased the clinical assessment period for South African family physicians, Alberta may find that fewer are willing to come to Alberta. It’s a shame that a wealthy society like Alberta’s has to depend on South Africa to help cover its shortfall of doctors. Since we need more than 1000 additional doctors to serve current needs, increasing the number of graduates from 227 to 295 per year, as promised by the provincial government, is not enough. Considering the number of doctors retiring each year and the anticipated growth of Alberta’s population, it would take decades for Alberta to catch-up and provide all the doctors it needs.
A supply of qualified candidates is not the problem; hundreds of young Albertans who have the desire and aptitude to become doctors are turned-away every year. It may take awhile for our universities to ramp-up their medical faculties with the additional facilities, professors and intern mentors required to provide spaces for the candidates being rejected but we must begin this process immediately. In the meantime, scholarships should be given to these talented Albertans so that they can get their MDs at universities in Australia, New Zealand, U.K. and U.S.A. In return, they should be required to serve in Alberta for at least five years in regions that are particularly short of doctors.
This plan would give our youth more opportunities to become physicians and surgeons and provide every Albertan with a family doctor.
Len Skowronski
Cenovus Must Upgrade Bitumen in Alberta
September 24, 2010
It’s nice that a Canadian company, Cenovus Energy, has received approval to double the capacity of its Foster Creek thermal oilsands project to more than 200,000 barrels per day. What is not so nice, is that Cenovus will be shipping raw bitumen instead of synthetic crude oil to Conoco Phillips’ refineries in the USA.
Since bitumen sells, on average, for 60% of the price of crude oil, we lose $28 on every barrel of bitumen we export that could have been sold at the current base rate of $70/barrel. So when Foster Creek reaches its new approved capacity, Alberta’s economy will lose $5.6 million a day to the USA. Now this is the case at $70/barrel. The oil price reached $147/barrel and will undoubtedly reach this level again; analysts are predicting that it will go over $200. So our loss could be doubled or tripled.
Building and operating an upgrader plant to process the bitumen produced from Foster Creek would create thousands of construction, service and manufacturing jobs. This would include 12,000 man years of construction employment, 2,500 man years of engineering design work for Alberta based engineering firms, 1,000 permanent jobs in operations and 3,000 jobs in supply, services and maintenance contracts.
Also, Alberta would receive an additional $100 million per year in provincial corporate income taxes.
It is time to stop this leakage of our wealth! The Alberta government must require all new bitumen production to be upgraded to synthetic crude oil in Alberta.
Len Skowronski
The True Colors of the Wild RA
July 1, 2010
What are the true colours of the Wild RA? Definitely not green and blue. They stole these colors from the Alberta Social Credit Party. Perhaps brown and yellow are more appropriate.
Brown for the oil companies that recruited Danielle Smith to lead the Wild RA so that they could grab even more of Albertans’ wealth. Yet, she had the audacity to state at the party’s recent convention, "You don't sit on the world's largest oil reserves and get treated as a junior partner. Yet somehow, this government has managed to achieve that." Are we to believe she would stand-up to her oil and gas puppet-masters and take control of the development of the oilsands? I don’t think so. She didn’t supplement her criticism with any constructive suggestion as to how her party would manage oilsands development.
Yellow for the Wild RA’s cowardice. They are afraid to adopt policies that represent their true beliefs because this may chase away voters. This was confirmed by a convention delegate who supported a resolution on the right to bear firearms but concluded, "I'm just worried about how this may be received in the public and portrayed in the media, so I'm voting no." Danielle Smith reinforced this attitude when she stated, "You can't get any of your agenda implemented if you can't get elected."
So what is their real agenda? What are their true colours? They won’t tell us because this may scare us away. That in itself is a frightful thought!
Len Skowronski
Alberta Gives Up $1.5B in Royalties
May 30, 2010
Energy Minister Ron Liepert is giving away $1.5B in royalties over the next three years, hoping that the oil and gas industry will increase drilling and create more jobs. The annual royalty relief will increase to $1.2 billion in 2012-13 and will continue at this or a higher level in subsequent years, depending on the price of oil and gas.
We have not received any guarantee that additional money will be invested in Alberta in the near future, but he hopes it will. Is it worth giving up more of our wealth for possible immediate jobs for those who explore and drill for oil and gas? Opportunities for drilling are becoming scarce in this world. If we kept our royalty rates at the level set in 2007, the oil and gas companies would still eventually drill here because there would be nowhere else to go. The very same multinational companies that have lobbied for lower government take in Alberta are drilling wells in countries that have much higher takes and risk.
Mr. Liepert needs to be reminded that being Energy Minister does not mean that he is working for the energy companies but rather that he is working for Albertans to insure that they receive the maximum benefits from their energy resources. Perhaps it is not fair to place all the blame for this cowardly retreat on Liepert and his PC Party. Much of the blame must be shared by Danielle Smith and her Wild Bunch. She allowed herself and her party to be used by the oil and gas executives to coerce the Alberta PCs to backtrack on their promise to keep a better share of our oil and gas wealth for the benefit of all Albertans.
Len Skowronski
Royalty Appeasement of the Oil and Gas Masters
March 12, 2010
There are at least two questions that Albertans need answered regarding the government’s royalty give-away. First, is it worthwhile to sacrifice $785 million per year in royalty revenue so that the PCs can govern for another term and keep the Wild R. A. at bay? Maybe it’s a prudent investment, for if the Wild R. A. gained power, they would probably give away much more of Albertan’s wealth. But it is a capitulation to the multinational oil and gas companies that took over the fringe party and infused it with funds. Then they installed a pretty puppet who travelled throughout the province and convinced a considerable portion of the populace that all our ills were due to the increase in royalty rates. This scared the PC premier and cabinet who realized that they could lose their cushy jobs in the next election. So thus we have the royalty retreat.
Secondly, should Albertans forego $785 million per year in royalty revenue to create 13,000 jobs? This comes to over $60,000 per job. Wouldn’t it be better just to have a lottery among all the unemployed and low-income Albertans, giving 13,000 winners an income of $60,000 per year? At least this money would stay in Alberta instead of going to the multinational investors, many of whom are foreigners. Perhaps a better alternative would be to put this capital into an investment fund that would enable Alberta-owned oil and gas companies to develop our resources and keep the wealth in Alberta.
Len Skowronski
Energy Minister is a Loser in the Oil Game
March 4, 2010
A recent article in the Calgary Herald informed readers that more bitumen upgrading was leaving Alberta. Our provincial energy minister, Ron Liepert, was quoted as saying: "We have to play the hand we're dealt with internationally. We're literally at the whim of the international marketplace."
Who determines the hand we're dealt? Isn't it time we became the dealer and stacked the deck in our favour?
We Albertans, the owners of our oil sands, have the power to do so. It is the responsibility of our government to use this power on our behalf. We should take a lesson from the countries that formed OPEC and became major drivers of the international marketplace.
The Americans desperately need our oil. Of course, they would sooner upgrade bitumen in their refineries, adding thousands of jobs and billions of dollars to their economy. But why shouldn't the jobs and wealth be kept in Alberta? Less return on their investment is not a good reason.
What would happen if we said that no additional bitumen could be exported and that all new projects had to provide for upgrading to synthetic crude? Perhaps foreign investment would be curtailed for a while. Is this necessarily bad? I don't think so. For as the world supply of oil decreases and demand increases, we will find that oil companies and investors will be glad to come and develop our oil sands on our terms.
So Mr. Liepert, put on your poker face, call their bluff and draw the aces from Alberta's deck.
Len Skowronski
Alberta Budget 2010: We Should Have More Revenue
February 10, 2010
I attended the February 9th session of the Alberta Legislative Assembly to hear the reading of the budget. I appreciated the budget’s increased funding for health care and education, the sustained funding for social services and the trimming of fat from other departments. Also, given the current economic situation, it was probably the right time to use the Sustainability Fund to provide for the short-fall of revenues versus expenses. But if the development of our oil and gas resources was managed to benefit Albertans ahead of the multi-national companies, we would have had the required revenues.
Alberta has the natural resources and manpower to develop these resources. Our problem is that we have become dependent on the multi-national companies and banks to supply the capital for this development.
Because of the short-term planning of these establishments and their vindictive campaign to punish us for raising the royalty rates, they withheld their investment. This resulted in unemployed oil and gas workers and a financial downturn in the businesses that provided goods and services to these Albertans.
What we need is a crown corporation, similar to the Alberta Energy Corporation that the Klein regime privatized, to take up the slack left by the multinationals. This company could joint-venture with Alberta-owned oil and gas companies in drilling programs that would continue employing workers in this sector. Also, this company could lead the building of bitumen upgrading plants, taking advantage of the abundant supply of workers and low-cost materials. Funding for these projects would be loaned by the Alberta Treasury Branch.
If this approach had been taken by the Alberta government, the additional taxes gained as a result of this development would have more than compensated for the revenue shortfall estimated in the government’s budget.
Len Skowronski
Stelmach Could Learn from the United Arab Emirates
January 21, 2010
I hope that Premier Ed Stelmach's participation in the World Energy Future Summit in Abu Dhabi, United Arab Emirates (U. A.E.) will benefit Albertans. When he met with the U.A.E. energy minister, hopefully he learned how the U.A.E. has managed to keep a much larger portion of its oil and gas wealth than has Alberta. After meeting with representatives of the Abu Dhabi National Energy Company, he should now realize the advantage of having a state-owned company involved in all major oil and gas exploration and production projects.
He can now pass-on this wisdom to his newly appointed energy minister, who is working on the competitiveness review.
Before sitting in the Petroleum Club with the executives of the oil and gas industry, Energy Minister Ron Liepert should meet with his counterparts in B.C. and Saskatchewan, explaining and negotiating as follows:
The oil and gas companies are using the lower royalties in their provinces to blackmail Alberta to lower its royalty rates. Alberta is seeking to level the playing field between itself and its adjacent provinces. This could be done by Alberta lowering its royalty rates to those of B.C. and Saskatchewan or lower. Or B.C. and Saskatchewan could increase their rates to match Alberta's. Both cases would result in a shift of some drilling activity from B.C. and Saskatchewan to Alberta. In the first case, Albertans would lose and the oil and gas companies would gain. In the second case, the citizens of all three provinces would win.
Len Skowronski
Wild R. A. Leader Doesn’t Walk the Talk
January 6, 2010
Danielle Smith has been stumping the province proclaiming that she and her Wildrose Alliance Party will bring back democracy to Alberta so that voters will have their say on how the province is run. On her first opportunity to “walk the talk”, she has failed miserably.
The MLAs of Airdrie – Chestermere and Calgary – Fish Creek who switched to the Wild R. A. were elected on ballots that presented their names and party affiliation. Electors may have voted for the individual, the party (Progressive Conservative) or the individual – party package. It is wrong to assume that most voted for the individual regardless of the party.
It is only fair to the voters in these constituencies that they be given the chance to decide if they still want these individuals to represent them under the banner of the Wild R. A.
Rob Anderson and Heather Forsyth should resign immediately and by-elections should be called as soon as possible. This would also give members of the Wild R. A. in these ridings an opportunity to decide if they want these individuals to represent their party in the campaign.
A good leader would not only promote this democratic process but insist that it be followed.
Len Skowronski