A ‘Royal’ headache for the Alberta Government—Alberta Royalty Review

As I have taken a sort-of “sabbatical” from writing my blog, it felt fitting that my first re-entry would be about the Royalties Review in Alberta.
On September 18, the Alberta Royalty Review, an independent review board set up by the Government in February of 2007 to review Alberta’s formula in charging royalties, released their report. Their report alleged that Albertans were not receiving their fair-share of revenues from the oil-sands, conventional oil and natural gas.
The title of the report, “Our Fair Share,” sums the conclusion that the Alberta Royalty Review panel came to, which calls for an increase in royalities charged to oil companies. The report was released to Government and then to the public for their input.
Well, Albertans have had a chance to review the report and to hear varying opinons in the media and they approve of the report’s conclusion. In a poll conducted by the Calgary Herald and the Edmonton Journal shows that 88% of Albertans believe what the report is saying, that Albertan’s are not getting their fair share.
To no surprise, the oil companies are not impressed with the report. The Canadian Association of Petroleum Producers (CAPP) President Pierre Alvarez spoke at the Calgary Chamber of Commerce on October 2 stating that if there is an increase the royalties the oil companies will leave. Their arguement is that it is difficult and expensive to extract oil from the oil sands and increasing the royalties would make it less cost-efficient causing companies to look for oil elsewhere.
What makes this issue a ‘royal’ headache for the Government is that the Alberta Auditory General has accused the Government of hiding information in the past that proved Albertans were not getting their share of the oil royalties which is in the billions. The unfortunate thing for Premier Stelmach is that he inherited this problem from Klien, but it is up to him to deal with it appropriately. Stelmach is taking the blame and disregarding comments made by Alberta Liberal Leader Kevin Taft's call for the firing of individuals who knew that Alberta was not charging enought in royalities.
All is not lost for Stelmach and the PC’s however. They have the oppertunity to take action and raise the percentage of royalties charged to oil companies which, if the percentage is substantial enough, could ease the PC's sliding approval ratings with Albertans. But if Stelmach is seen as too soft with how much to increase the royalties, the ammunition against him will be reloaded and primed for the next election.
The Government is expected to make a formal response to the report by mid-October, however, in the meantime, the Government has, and will be, facing strong criticism by both oil producers and their stakeholders as well as Albertans that feel the oil and gas companies have too much control over Alberta's natural resources. With a possible Provincial Election looming in the spring, the PC’s better get onside with the electorate or see themselves shut out of seats.