"We can't allow things that are inaccurate to stand." — The Word of Our Dan, February 19, 2008.

Thursday, August 23, 2007

Send in the economists

And where are the economists?
There ought to be economists.
Well, maybe next year.

Gerry Reid emerges long enough to do something that doesn't happen nearly often enough these days: he raises a good, tough, question:
Another factor that must be questioned is why an equity share is any better than an improved royalty regime. I am not aware of any information or economic analyses that backs up the premier’s position that we are better off under an equity position. Instead, the people of this province will put approximately $350 million forward in up-front costs to buy this equity stake and contribute to development costs. By taking this equity position, we don’t know what the potential and unknown liabilities the premier is exposing the taxpayers of this province to should problems arise in the future. To achieve this equity stake, we have sacrificed royalties that could have been even more lucrative and guaranteed to the province without risk.
So where's Wade Locke when you need him?

It would be interesting to see various projections for both provincial revenues, and return to the provincial economy — and, contrary to popular belief, these are not the same thing — under both the April 2006 proposals that spawned HissyFit 2006: Danny vs. Big Oil, and under the Press Release of Understanding released, at least by one of the parties, on Wednesday.

It would also be interesting to see those projections based on a whole range of oil price assumptions. It is just as big a mistake to assume that prices are going to remain consistently high for decades to come, as it is to assume that they are going to remain consistently low. After all, an assumption about the relative immutability of energy prices was the fundamental mistake in another energy megaproject, not that long ago.

Yeah, you know. That one.


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