FACE TO FACE: Should the feds OK the Chinese takeover of an Alberta oil company?
CNOOC, a Chinese company, wants to buy Nexen, an Alberta oil company, for $15.1 billion.
I'm against it, and not because it's the godless communists.
It's because I don't want a foreign company to get what we give Canadian oil companies and I would prefer to continue being taken to the cleaners by our own corporations.
Before we blunder ahead selling oil companies to foreigners, we should examine Fort McMurray's boomtown sprawl, where Alberta allows oil companies to crudely extract Canadian oil and walk off with most of the revenues.
In Alberta, oil companies enjoy the lowest royalties in the world: 1% to 9% until they recoup their original capital investment, 100% of which the federal government allows them to write off each year.
Since 1986, Alberta oil companies made $260 billion in profits; Alberta's share during that period was $25 billion.
The people who actually own the oil got less than 10% of the profit from the resource that will be gone forever when it's gone.
CBC estimates Alberta missed its royalty goal by $69 billion since 1996. And still, the Alberta government recently cut royalties on oil and natural gas and gave Alberta oil companies $1.8 billion in new drilling incentives
So surprise, surprise, Alberta now faces a budget deficit for the third consecutive year; this year's estimated is $3 billion.
If, since 1996, Alberta got just 12% of oil profits instead of 10%, it would have a $2-billion budget surplus.
If, since 1996, Alberta got what Norway got from its oil companies, that province would have a $203-billion dollar budget surplus.
Norway's oil companies don't pay royalties. They pay a 78% profit tax, all of which goes into the nation's rainy day fund, for use after the oil runs out. The fund is at $400 billion and will double every five years. Norway uses only accrued interest for general budget support and doesn't touch the principal.
And guess what? Norwegian oil companies are still operating and making a profit.
Maybe instead of selling oil companies to foreigners, we should look to foreign countries to help us avoid allowing oil companies to squander our oil resources for a pittance.
Let's not sell Nexen to China - let's buy a Norwegian oil consultant.
Face to Face columnist Jim Nelson is a retired Tri-City teacher and principal who lives in Port Moody. He has contributed a number of columns on education-related issues to The Tri-City News.
