Study
| EST. READ TIME 1 MIN.Drop in investor confidence following Alberta’s 2007 royalty review offers lessons for Notley government
The new Alberta government has pledged to institute a review of royalty payments in Alberta’s oil and gas sector during its first term in office. The last time this happened, under the Ed Stelmach government in 2007, there was an immediate plunge in the perception of Alberta as a place in which to invest in oil and gas exploration and development as reflected in the Fraser Institute’s annual Global Petroleum Survey—a survey of senior executives in the upstream petroleum sector.
Perceptions of investment attractiveness remained depressed from 2008-2010, when the government announced a reversal of many of the rate increases instituted after the review. Investor confidence did not fully return until 2011, after most of the rate increases triggered by the 2007 royalty review were reversed.
If the Alberta government chooses to proceed with its royalty review in the face of past experience, it is important for it to consider ways to reduce uncertainty, which is often a deterrent to investment in extractive industries. Ways to reduce uncertainty might include ensuring that the process is a highly transparent, with clearly defined dates, clearly defined and delimited goals, and clearly defined public and private consultation with all stakeholders included from the outset.
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Kenneth P. Green
Senior Fellow, Fraser InstituteKenneth P. Green is a Fraser Institute senior fellow and author of over 800 essays and articles on public policy,published by think tanks, major newspapers, and technical and trade journals in North America. Mr. Green holds a doctoral degree in environmental science and engineering from UCLA, a master’s degree in molecular genetics from San Diego State University, and a bachelors degree in general biology from UCLA.Mr. Green’s policy analysis has centered on evaluating the pros and cons of government management of environmental, health, and safety risk. More often than not, his research has shown that governments are poor managers of risk, promulgating policies that often do more harm than good both socially and individually, are wasteful of limited regulatory resources, often benefit special interests (in government and industry) at the expense of the general public, and are almost universally violative of individual rights and personal autonomy. Mr. Green has also focused on government’s misuse of probabilistic risk models in the defining and regulating of EHS risks, ranging from air pollution to chemical exposure, to climate change, and most recently, to biological threats such as COVID-19.Mr. Green's longer publications include two supplementary text books on environmental science issues, numerous studies of environment, health, and safety policies and regulations across North America, as well as a broad range of derivative articles and opinion columns. Mr. Green has appeared frequently in major media and has testified before legislative bodies in both the United States and Canada.… Read more