The federal government’s pre-midnight awakening to the downsides of other governments taking control of our energy resources is a crazy way to protect Canadian interests.
The feds’ jolt-face response to Malaysia’s state-owned Petronas’ bid for Progress Energy Resources of Calgary is hugely unnerving for industry investors – a reason to believe that Canada isn’t a welcome country for foreign investors.
The waves of uncertainty washing over the energy sector while the feds try to define “net benefit” to Canada threaten to sweep away the money we need to develop our energy reserves.
The answer to this arbitrary ad-hoc decision-making is a national energy security policy that all Canadians have bought into. Almost every other country in the world with oil reserves has a much more nationalistic approach to developing its resources. According to economist Robyn Allan, “more than 80% of global oil reserves are controlled by state-owned oil companies, and there’s good reason for that. Canada is the only major oil-exporting country in the world without a national oil company. Of the remaining global oil resources open for private sector investment, Canada has the majority. That’s why national oil companies from China, Korea and Norway, and now maybe Kuwait and India, are coming here to buy up our resources – it’s the last big game in town.”
Allan’s quote comes from Mitch Anderson’s outstanding series in The Tyee about what Canada could learn from how Norway developed its offshore oil resources. Anderson notes that Norway has 40% less petroleum than Canada and a population the size of B.C., but has amassed a $600 billion oil revenue endowment (about the equivalent of Canada’s national debt), and it has no public debt, full employment, a higher per capita GDP than Canada, free tuition, universal day care and a national consensus around oil industry development.
How did Norway do it? It hung onto 70% to 80% of its oil export revenue through corporate taxes and a special oil tax. Alberta’s 2010 royalties, by comparison, amounted to 10% of oil industry revenue. The other key part of Norway’s strategy was having its citizens own almost two-thirds of all oil production through a state-owned company, Statoil (an investor in Canada’s oilsands).
Anderson tracked down Rolf Wiborg, an Alberta-educated Norwegian with decades of experience in the private sector who is now a principal engineer with the Norwegian Petroleum Directorate and has years of experience negotiating with international oil companies.
He had some frank words for Canada: “People claim the companies would leave if you take over part of the resource. Not if Canadian governments are taking the biggest risk with them. Not only that, the companies will very quickly understand that they have a partner in the voting public, which controls the bureaucracy and politicians.
“I know one place in the world, one nation that could have successfully followed the Norwegian model, and still could do it, and that’s Canada. But Canada has two things stopping it: the provinces, because you need a system of equally distributing wealth, and also the mindset that someone with a title or money knows better than you how to run your own affairs.
“You can’t export the Norwegian system without exporting the thinking that goes with it. You have to give up this idea that someone else has the right to tell you what to do with your resources or how your society should run. It’s bullshit. You want to come to our country and produce our resources? Then you play by our rules. You sign here or you leave.”
It was the late Peter Lougheed who urged Albertans to “think like an owner.” It’s high time for the federal government to clarify exactly what owners’ prerogative means. And exercise it.
