Tories giving away oil and gas at "bargain basement prices," says AFL

Deep cuts to health care, education and other services would have not been necessary if Klein had been a better steward of Alberta's petroleum resources

EDMONTON - Premier Ralph Klein owes Albertans an explanation about why his government has failed to collect appropriate levels of royalties from the province's booming oil and gas sector, says the president of Alberta's largest labour organization.

Audrey Cormack, president of the Alberta Federation of Labour, says the province could be collecting billions of dollars more each year in royalties, taxes and other fees - money that could be used to improve health care, education and other cash-strapped public services.

"Premier Klein likes to portray himself as a smooth operator and a tough bargainer," says Cormack. "But it looks like he's been a real push-over when it comes to negotiating royalty rates with big oil and gas companies. His government has been giving away our collectively-owned petroleum resources at bargain basement prices."

Cormack's comments were made in response to a study released yesterday by the Parkland Institute, a public policy think-tank at the University of Alberta. The study shows that the Klein government collects royalties at a much lower rate than other resource-rich jurisdictions and at a lower rate than previous Alberta governments.

"What this study shows is that deep budget cuts weren't the only option open to the government in the mid 90s," says Cormack. "It's clear now that the government's so-called debt problem could also have been solved with a more aggressive approach to the collection of resource revenues. If Albertans had known they were getting such a small return from their resources - especially when compared to the returns enjoyed by citizens living in other resource-rich jurisdictions - they probably would have been even more opposed to deep cuts to important public services like health care and education."

Cormack rejects the government's argument that low royalty rates are necessary to encourage new investment, especially in the oilsands. She points out that the government's royalty holidays are available to all tar sands projects, not just the new ones. She also dismisses the argument that lower royalties are justified by the higher costs of oilsands production. The Parkland study shows that - thanks to new technologies - the production costs are now lower in the oilsands than in conventional oil. The study also show that places like Norway and Alaska - where most of the oil is offshore - also faced higher production costs. Despite these higher costs, these jurisdictions still manage to collect significantly higher royalties than Alberta.

"It sounds like Klein and his ministers have been duped by the energy industry - they've bought the sales pitch hook line and sinker," says Cormack. "The truth is that the same companies that are involved in major oilsands projects here in Alberta - companies like Shell and Exxon - are also investing billions in Alaska and Norway. The governments in those jurisdictions have been much more aggressive in getting a bigger share of the pie for the public - but this has not driven away investment."

Cormack says the bottom line is that the Klein government has failed in its role as steward of Alberta's natural resources.

"The government is letting Albertans down," she says. "The Premier says Albertans will get their 'pound of flesh' when the new oilsands projects have been finished and paid for - maybe fifteen years from now. But it the meantime billions and billions of barrels of oil will be pumped out of the ground with very little return for the public. And once that oil is gone, it's gone for good. That means money that could have been used for health care, education and other services is also gone for good."

For more information call:

Audrey M. Cormack, President @ 499-6530(cell)/483-3021(wk)/428-9367(hm)

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