If you have been following the paper you have witnessed the jockeying in Alberta over a recent report on royalty rates. Issued by an an independent panel of experts, this report revealed that Alberta is missing out on billions of oil royalties and should be able to raise rates without effecting the industry. The industry is crying bullshit, as many including mammoth industry giants Encana, threaten to curb spending in the Alberta economy by up to $1 billion dollars. Alberta's premier is now asking everyone to simply "calm down" as they work towards a resolution, a knee jerk reaction to the oil-foundation of the Albertan economy.
This reminds me allot about the football games I used to play in with my friends. These games were purely recreational, but you wouldn't be able to tell by the way we argued for every single yard. A couple individuals, specifically, were often on opposite teams and represented the crown and defense for every argument ever made (depending who had the ball). The trump card in all of this we the fact that one of these individuals owned the football. When the argument would get to a certain level, this individual would say that he was leaving the field if he didn't get the call. "Oh, and by the way, that's my football and I'm taking that too." There was a always a few on his team that supported his argument (usually the receiver) but many could care less and actually just wanted to continue playing (with the opposition obviously opposing the call). Never mind that it only took several calls to get everyone together on a rotary dial phone (we didn't have the luxury of MSN or email). Dial to fast or didn't complete a full circle and you have to start all over. The call lasted 1 minute, but making the call took 2 minutes with all the mistakes. Anyways, most the time, the opposition would simply allow the call so we could continue playing rather then send someone else home to get their football or quit the game altogether.
The oil companies are performing a similar maneuver in the face of an unfavorable call. If the oil companies collectively represent my friend with the football; a few of his supporters represent the special interest groups that support him; and the rest of the players represent Albertans, you might as well be playing this scene at our old elementary school. Oil companies are threatening to pull out of the game and take the only thing that would keep the province going, money. They obviously have a few supporters in form of special interest groups but rest of people affected, Albertans, stand to benefit collectively on a larger scale. Investment into health care, roads, schools just to name a few. Alberta already has the distinction of the only province with no net debt or provincial tax, but services otherwise are still suffering. Simply drive the roads and you will understand.
So what's the solution. Lets visit us in our younger days on the field again.
1) Someone else buys a football: Firstly, no one will pitch-in for the cost. Second, if another is readily available their is no incentive to buy another. Speaks to diversifying available resources and the economy.
2) Have a neutral party call the plays: There was no such thing as a neutral party. Everyone wanted to play so being assigned to one team or another and arguing for the opposition is effectively suicide. Besides, the argument would still be there given the stake of the game and lack of a paid official that both parties have paid to be there (hey we could barely afford a second football).
3) We quit playing football: This would often happen as we went through fazes where we abused one sport for awhile and then would switch to another. Much like the up and downs in the market but here the difference is our dependence on fossil fuels. Again, this also speaks to diversifying the economy.
In the end, the outcome in Alberta is going to be similar to the outcome at our football games. Someone will make a concession or realize asking the only individual with the game ball to pullout is like asking everyone to go home without the satisfaction of a win. Time, energy, and effort was wasted and in the end everyone leaves empty handed. Everyone that is, expect the individual with the ball, who realizes the next time he calls, you will still show up to play.
My 2 thoughts anyways....
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