WormTurnsVille
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Update: See comments for a grown-up discusion about what really went, and is going, down...
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...(G)lobal capital markets are changing rapidly and investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products. This does not yet exist here today and, unfortunately, the growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved. In that context, it is now evident that there is no constructive path forward for the project...
Gosh.
One can only wonder who, exactly, Mr. Lindsay was pointing at there?
If you get my drift.
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Interestingly, but perhaps not surprisingly, the letter in its entirety spreads the blame around to everyone except, perhaps, Don Getty's chin strap...
Tip O' The Toque to Jen Gerson and Sandy Garossino for bringing this matter up during the latest edition of Canadaland's 'Oppo'....However, just to be clear, I did have a problem with some of the other stuff in their podcast which I'll comment on later.
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11 comments:
As has been mentioned of a part of the Teck letter by a couple of folks on the teevee
“The promise of Canada’s potential will not be realized until governments can reach agreement around how climate policy considerations will be addressed”
“Until governments” which doesn’t just mean the current federal govt.
What I can’t get my head around is the timing of this letter. Why would they pull the plug on the project a couple of days before the final decision by the Feds. ?
Is it because they genuinely believe in the contents of their letter? or don’t want to get an approval then be stuck with explaining to their investors that Western Canada select ( western oil) is trading about $36.00 a barrel.
Alberta Govt. stats.
https://economicdashboard.alberta.ca/OilPrice
This is a CEO that made a disastrous mistake to bet on oil sands (with a $97 barrel oil price forecast!). Breakeven for the project probably required something like $75 oil (it is $56 today). So, rather than admit such a bonehead move, he chose to pretend it was about the need for a climate change plan and certainty. No doubt both are needed, but its just a smokescreen to hide a $1 billion mistake.
Keith and Glen--
Went back and re-read Mr. Lindsay's letter.
Most interesting the complete lack of acknowledgement of the financial levers at play here.
I wonder if another reason for burying the sunk costs from all sight is the realization that admitting these things are not financially viable in the longterm means that everyone will have to admit that this particular heavily tarred and feathered sparkle pony is gone for good.
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Ross & Glen,
National Post reporter John Ivison has stated more that once in the various political gab fests there are about 19 approved projects in Alberta that are on hold going nowhere.
Summer of 2019 there were many reports in the business and other press outlets of major league investors in the oil sands pulling the plug and flogging off their holdings to mostly Canadian companies.
https://theenergymix.com/2019/08/16/koch-brothers-abandon-alberta-tar-sands-oil-sands/
I also have been snooping around the Alberta press.
Opinion from the Calgary Sun, and some of the comments are worth reading, not what you would expect from the common held vision of Trudeau hating Albertans.
https://calgarysun.com/opinion/columnists/bell-kenney-lets-trudeau-off-the-hook-on-teck
In the Throne speech from the Alberta Leg. yesterday, Kenney ( via the Lt. Governor) said; “ Kenney's govt. is prepared to support companies and invest directly in the resource industry if that’s what it takes to boost Alberta’s wellspring industry.”
Or in simple terms; at the present Western Canada Select prices the oil sands are a financial lemon unless we give the companies enough direct or indirect tax payer funds to make it worth their while.
It is hard not to be a little depressed about the state of discourse in Alberta (and of course elsewhere!). Notley clearly tried to support the oil industry while diversifying the economy. Kenney and the "people" would have none of that and doubled down on fossil fuels. Blaming the challenges in the oil patch on Notley and Trudeau. As a former practitioner I suppose I understand the need for polarizing rhetoric and political "contrast". But it would be so refreshing to see some kind of thoughtful, adult discussion. you know like raising income taxes and establishing a sales tax and using declining carbon royalties to diversify or save rather than spend. wishful thinking I know.
Dirty and expensive when what market exists is demanding clean and cheap. Bye Bye...
Meanwhile on the LNG front from the Financial Times:
“The consultancy McKinsey predicts that only one in 10 proposed export terminals will ever be built.”
“Companies are already cutting processing fees, burning cash and letting construction deadlines slip.”
https://www.ft.com/content/a4955606-36ec-11ea-a6d3-9a26f8c3cba4
And from the folks building the plant here in Kitimat (which requires completion of the pipeline currently causing a bit of a dust up):
“In the short-term, supply growth is expected to slow down as the last of the new LNG projects under construction will be completed by 2021, restoring equilibrium.”
https://www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-outlook-2020.html#iframe=L3dlYmFwcHMvTE5HX291dGxvb2sv
Ninety miles an hour down a dead-end road.
Glen--
Wishful thinking, indeed, but a conversation worth having nonetheless.
Regarding income taxes...Do you think the progressive case could be made (clear) if it was demonstrated that a great many of those least able to deal with a significant increase would not have to fully shoulder the additional burden?
As for diversification...How to make that one work...One big megaproject or a ton of little ones or maybe even a mix? Maybe another way to go at that one would be to look around and see who has done it best?
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Thanks, as always, for weighing in Lew.
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with the price of oil, as it currently sits, there is no way the latest pipe dream was going to be economically viable. If Jason wants to buy all that junk, fine. If the voters in Alberta think that's a good idea, fine. Just don't ask the rest of us to bail them out. The price of oil won't be going up for a very long time, if ever.
When Trudeau bought the pipeline and they started talking about the Indigenous people buying it off the government I was convinced it was going to be a money looser. governments don't sell things which are going to make money to the Indigenous People, they sell it to their political friends and supporters and the various bands don't fall under that category.
Teck is trying to throw it all at the wall, to see who they can stick with the blame. that tar mine wasn't ever going to be good for the environment and it was never going to make money.
If Kenny really wants to improve things in Alberta, he might consider a 2% sales tax and use the money to clean up the existing orphaned wells. it will provide jobs for some, while they turn the economy in Alberta around. it can be done. he's just to narrowly focused or perhaps too stupid and blind.
RossK, I have come to believe that the cost of a modern welfare state requires a pretty big consumption tax. The VAT in Sweden and Denmark is 25% and it is 20% in most of Europe. 24% in Finland. A much more progressive income tax is good and required (Sweden's high marginal tax rate is about 56% I'm told. Finland is 60%. BC of course today is now 54%)but insufficient to fund what we should be funding (childcare, education, healthcare, etc. The problem/challenge with income tax is that you are only taxing 'wage earners'. All seriously wealthy people are not wage earners. So, high marginal taxes "punish" the managerial class and not the truly wealthy. Elizabeth Warren has proposed a wealth tax. But that is much tougher politically and has largely been abandoned elsewhere. I personally favour a tax on financial transactions.A tiny tax on stock market trades would generate billions and worth looking at.
Anyway, the really big problem is that government's since Reagan and Thatcher have been cutting taxes and reducing services. And people have been voting for this approach. Then everyone wonders why public services are diminished. In the case of Alberta, bragging about having zero sales tax and low income taxes but the highest paid public service and good public services while living off diminishing revenue from fossil fuel. I totally understand that everyone wants someone else to pay higher taxes. But the truth is we need a sense of shared values where everyone pays more.
e.a.f.--
Me thinks the good Mr. Kenney's plan, given that he doesn't have a public insurance pool to plunder, is to bleed the public sector pension fund to a point of incapacitation.
Personally, I'm of the opinion that a sales tax in that will never come from a rightside leaning party in Alberta, at least in the forseeable ethically oilable future.
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Glen--
Well, given what I do, which I guess is at least somewhat 'managerial', I am one of those who will pay more under then new income tax regime. And I'm happy to do so.
Regardless, I see your point re: how a progressive income tax will fall short.
While I agree with your position on the VAT in principle I think it would only be politically palatable would be if it is directly linked to real and rapidly implemented Scandinavian-type levelling programs that will keep folks on the lower half of the ladder from being convinced that they should keep voting against their own best interests.
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