Dez

If oil profits are considered theft from the consumer, then the moral argument implies that the ill gotten profits should be returned to the consumer that it was taken from... it doesn't give the government the right to take the profits and spend it on whatever it wants. I am not saying that there aren't other moral arguments for the government to use oil profits to spend on health care or roads... you just can't use the theft argument. Again, why is cheap gas a social priority? You want to charge Canadians lower prices... but that's just wasted revenue that could be used for other important goals.

Sorry about the misquote, I am still learning the ropes. Geez, and here I thought I was anti-Quebec bashing by showing Westerners that they had something to be very thankful to Quebec for. No pleasing some people. If anything it's more a dig against rabid de-centralizers than Quebecers. I'm remembering that the exact distinction between who had jurisdiction over resources was not entirely clear in the BNA Act, but was enshrined as a provincial responsibility by Trudeau in the Constitution of 1982. I'll admit that I could be wrong here though, if you could provide any source I'd be more than happy to read up on it, as it has been a while since I've heard about this.

Hi August 1991; "Dez, that is exactly what the provincial governments do now - although it's a little more complicated than you imply. In fact, the Albertan government recently raised royalty rates and the change was met with some controversy." You'll notice that I implicitly mention this at the end of my post: "The government of Alberta had these considerations in mind when it lowered its royalty rates in the early 90s so that they could encourage more investment when the price of oil was tanking. Now that the price has shot back up again they are thinking of raising the rates in order to reap some of those benefits. Albertans are pretty smart." Cheers; Dez

Sorry planetx, most of your arguments for higher taxes on oil profits are pretty silly. "lets follow the lead of venezuela where gas is $.12 a gallon! and venezuela recently told big oil to get lost!" Ummm... let's leave aside that Venezuela is a basket case -- that's the only thing you can call an oil exporting country that is suffering economic decline when the price of oil is rising like crazy -- why on earth would we want to charge Canadians $0.12 a gallon? August 1991 is right... why would we sell it for cheaper at home when we could get a lot more for it abroad? Why wouldn't we want Canadians to pay full price for the cost of gas? Pretty dumb social policy: use all those oil profits and use it to subsidize the price of gas... why not use it to provide health care, or education, or something with some positive social benefit? "rice is cheap in china, but on the east coast the irvings import oil because they have no interests in the oil sands! what the heck?!" ??? What does this even mean? Let's leave alone the fact that the price of rice is rising all over the world... even in China. The reason the Irvings import oil from abroad is because.... they don't know the first thing about developing the oil sands, and even if they did, why would they want to build a big expensive pipeline to send it out East when they can import it cheaper from abroad? They are specializing in what they know best, and that is a good thing. "we are being gouged like there is not tomorrow! for decades big oil has been buying everything downstream from them…" Don't tell that to the government of Alberta... a huge part of their revenue comes from taxes on oil profits! Maybe you don't think it should only go to Albertans, but don't act like we're being duped. Oddly enough, the major reason that Alberta has a right to all the royalties of its oil is because successive governments in Quebec wanted to ensure that the big bad federal government could never lay their hands on their electric power resources. I hope that softens all the Quebec-haters out there a bit. "while saudi arabia is the second biggest producer of oil, oil revenue there means that there is no personal income tax! secondary education and books are free! free health care that is second to none!" Yeah... this is true if you ignore the fact that Saudi Arabia would be falling apart if it wasn't for high oil prices. Check this article out if you don't believe me: http://www.ccc.nps.navy.mil/si/2004/jan/looneyJan04.asp Saudi Arabia's GDP per capita has declined from more than U.S. $15,000 in 1980 to about U.S. $9,000 in 2003 (adjusted for inflation). There is high unemployment (20 to 30 percent by some measures), while up to 20-30 percent of the population falls below the poverty line. There is no hope for the youth of this country. Their economy is so regulated and corrupt that there is nothing for all their graduates to do. The entire system is held together by terror, welfare bribes, and a strict authoritarian culture. What a waste when you consider how much oil this country has. I do have some sympathy for you when you say this: "all the talk you hear in the media about lack of refineries, capacity etc… its all garbage! its all a big fog to hide how prices at the pumps rise so quickly. like that has nothing to do with oil company profits rising so quickly!" Back in 2000 when California was going through a series of blackouts you almost never heard about price fixing on the part of the energy companies. Now it has become common knowledge that Enron and Reliant Energy were gaming the system. Could something similar be happening today? Maybe... but I believe they had a parliamentary committee look into this a while back and found no evidence of price fixing. Not sure what happened to it though, and I definitely think it's something worth looking into at greater depth.

There are some reasonable arguments for taxing oil profits at a higher rate than other types of income. The economic argument is that oil provides a "rent" (a fancy way of saying that it can be sold for much more than the cost of its production), and can therefore be taxed at a certain level without reducing the incentive to invest in its production. A simple example would be if the government charged the oil companies a flat amount for producing a unit of output, say x dollars a barrel. As long as this amount was low enough for oil companies to make a small profit on the sale of that barrel, there would be no economic disincentive to invest. There is also a moral argument for taxing oil profits at a higher rate. When a small group of people own all of a resource, they in effect have a monopoly on it. Monopolies can charge a higher price than the cost of production, and thus are guilty of theft from the consumer. However, this only gives the government the right to take back the stolen rents and give them back to the consumer... it does not justify them taking the rents and using them to build roads, provide health care, or whatever else governments currently do. You'd need another moral argument for that. Of course, there are caveats to this line of thinking. In the real world it is hard to separate rents from profits... and unlike many people here, I think profits are a very good thing. Profits provide a signal to companies that they should increase the output of a certain resource as well as think up new technologies that increase the efficiency of that output. This means that the higher the rent tax, the lower the incentive to think up new kinds of technologies. The government of Alberta had these considerations in mind when it lowered its royalty rates in the early 90s so that they could encourage more investment when the price of oil was tanking. Now that the price has shot back up again they are thinking of raising the rates in order to reap some of those benefits. Albertans are pretty smart.

Economic Left/Right: 1.88 Social Libertarian/Authoritarian: -2.92 A moderate libertarian. Seems about right.