Near the end of June 2012 the Fraser Institute released their latest survey of the oil and gas industry. They reported that 623 managers and executives from 529 oil and gas companies had ranked Manitoba and Saskatchewan near the top of 147 political jurisdictions as good places to invest. In contrast, New Brunswick and Quebec were given fairly low ratings.
A great deal of the reporting was of no surprise and the results were not that controversial. For example, the political turmoil, international wars, and civil wars naturally led corporation representatives to warn about investing in much of Africa and the Middle East. There was also the issue of government corruption, well known in many of the countries surveyed.
The level of taxes and royalties
More important for the Canadian public was the judgement that corporation officials had on the fiscal terms of investing in various jurisdictions: what is the level of royalties and taxes imposed on the oil and gas industry? Here Manitoba and Saskatchewan ranked very high, along with Oklahoma, Texas, North Dakota, Ohio and Louisiana, as political jurisdictions with the very lowest taxes on petroleum corporations. Those with the “worst” ratings included Venezuela, Libya, Russia, Iran, Algeria, Bolivia, Iraq, Uzbekistan, Kuwait and Ecuador. These countries have state-owned National Oil Corporations (NOCs) as well as high royalties and taxes.
Countries were given poor marks for keeping old Keynesian “trade barriers.” These included government currency controls and capital controls. One of the central objectives of the various “free trade” agreements was to allow corporations to move capital around and repatriate profits without any government interference.
Political jurisdictions were also judged on their general taxation regimes: did they have progressive income taxes, high corporate taxes, and capital taxes? Here, Manitoba was given very high marks while Venezuela was given the worst ranking. Oil corporations are in love with the Manitoba NDP government.
 | |
| U.S. billionaires David and Charles Koch gave $500,000 to the Fraser Institute |
Are there environmental regulations?
Another key issue surveyed concerned environmental regulations and their enforcement. Were there heavy fines on corporations for causing pollution? Was there a regime of stringent enforcement? Again, Manitoba was ranked high at number 5 and Saskatchewan at number 15. In western Canada our political regimes are very pro-business. Polluters do not pay.
In 2009 Alberta was given an astonishing low rating (92) because the provincial Conservative government was considering a new royalty regime. They quickly backed away from this, and in 2012 the oil executives in turn boosted their overall ranking to 21.
New Brunswick and Quebec received the lowest rankings in Canada because of “threats by anti-development activists.” In both provinces there is strong grass roots opposition to hydraulic fracking to extract natural gas from shale oil rock, fearing that this will pollute ground water sources. New York received the lowest rating of the U.S. states for the same reason.
Saskatchewan ranks high
The Regina Leader-Post noted that Manitoba was “on top” (5th overall) and that Saskatchewan had fallen to 13th place. At one time under Roy Romanow’s NDP government the province had ranked higher in the Fraser Institute survey.
But what should be of interest to the people of Saskatchewan is that the corporate representatives gave Saskatchewan the second highest rating (69%) on the question of whether the province had a fiscal regime that encouraged investment. Of 147 political jurisdictions, only Ireland (77%) was higher, and they have virtually no oil and gas industry. Thanks to the governments of Roy Romanow and Lorne Calvert, we are known for having the lowest royalties and taxes.
In an editorial on June 21, the Leader Post proclaimed that the people of Saskatchewan had learned their lesson. No longer would we have Crown corporations run by local people developing our uranium, oil and potash. This was best done by “private investors,” which of course means large transnational corporations. As they argued, “only ideological zealots of the far left” would threaten public ownership of resources, which would cut off foreign investment.
 |
| Crown Corporation privatized by Devine and Romanow governments |
A new investment climate
However, those countries which the Fraser Institute identifies as the worst places to invest also seem to have most of the undeveloped oil and gas reserves. Their newly elected governments have been raising royalties and taxes and expanding their control over their natural resources through state-owned oil and gas corporations.
But what happens if the large private transnational oil and gas corporations decide to pull out in protest? As we have seen in Venezuela, Bolivia and Ecuador, other oil corporations quickly rush to take their place. Many of these are also state-owned corporations. Most Canadians seem to be aware of the fact that the Chinese National Oil Companies, which remain state-owned, are investing everywhere they can. Even in the Alberta tar sands. Today, there are many alternatives to Exxon-Mobil and their like.
On top of this, those nasty governments in Venezuela, Bolivia and Ecuador are using their additional revenues from the oil and gas industry to support programs aimed at reducing poverty. What could be worse!
Currently, the industry and their supporters have directed their political and economic anger at the government of Argentina. This democratic government, with strong popular support, re-nationalized their largest oil company, YPF, once a state-owned corporation that had been privatized by a previous government. That was a very bad precedent. It might even give Canadians some ideas.
No comments:
Post a Comment