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Calgary & Alberta Economy

ByeByeBaby said:
Banff was smart enough to push through their Bear Street rebuild/pedestrianzation project this year, so it'll be open and lovely next supper. Hindsight is 20/20, and the City had a lot of balls in the air so I'm not going to blame them, but it would have been good to have moved up the 17th Ave construction to this year.
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It's too bad, lots of us were advocating for that right at the beginning back in March 2020 - I'm sure we can scroll back a few hundred pages and find some pretty solid suggestions.

I think it was a tough call - so much uncertainty, plus the local business voice is fairly amplified right now, for good and bad, based on facts and fiction. There's an over-estimation of the impact of fixing sidewalks (because of the more significant real impact of full, lengthy road closures and tax increases the previous years).

Simultaneously there was probably an under-estimate or at least an unexcepted impact of the COVID response. Time will tell as it's not clear what's happening yet - the narrative is one of disaster, but it's an unequal disaster given some places doing better (quietly, as to not disturb the narrative)

In hindsight we should have knocked out sidewalk repaving and finished 17th Ave in a month or two back in the spring.

Mind you, we should have regular sidewalk expansion and maintenance program on every street in the inner city at the same rate as road resurfacing so we don't have to wait 40 years for a complete street rebuild and just try to get lucky through creative scheduling during a pandemic.
 
JonnyCanuck said:
www.bnnbloomberg.ca

Video - BNN Bloomberg

Most recent Video News business news stories and video from BNN Bloomberg
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CEO of Encana seems to think the Liberals are starting to reverse their position on fossil fuels, and that they finally realize energy exports are needed more than ever. Maybe he is reading 'tea leaves' that I don't see.
I think not pointing to the energy industry as a solution to getting us out of debt, was a missed opportunity by the federal government. Right now Canadians are rightly worried about a lot of things .. jobs, income, health, personal debt. It would be relief to many that our kids and grand kids are not going to be forever saddled with a lifetime of government debt that is going to result in multiple tax increases over time. The strategy (if they had one) could be sold this way:
1. Increase our share of the global energy market, short to medium term. Use increased tax revenues to pay down debt
2. Continue to reduce carbon emissions to meet our commitments.
3. Slowly make the transition to renewable energy when and where it makes economic sense to do so. Remember Canadians, this will not be like turning one switch off and the other one on!
Surely that would resonate with the majority of Canadians ;)
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I see that you have fully adopted the conservative party messaging about federal debt levels.

Alberta's energy economy needs to change radically to provide any sort of future debt relief. In the last 2 weeks, many jurisdictions (France, Germany, Quebec, Japan) have announced actual scheduled dates in the 2030s for cessation of petrol car sales. The current energy economy is not sustainable and has no future beyond 30 years. Many large scale infrastructure projects might not pay themselves off in this horizon.
 
heightjunkie said:
I see that you have fully adopted the conservative party messaging about federal debt levels.

Alberta's energy economy needs to change radically to provide any sort of future debt relief. In the last 2 weeks, many jurisdictions (France, Germany, Quebec, Japan) have announced actual scheduled dates in the 2030s for cessation of petrol car sales. The current energy economy is not sustainable and has no future beyond 30 years. Many large scale infrastructure projects might not pay themselves off in this horizon.
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Au contraire. The demand for oil & gas is not going away this century, even if every car in the world was electric by the end of it. Will demand diminish gradually ..... sure.
What I am saying is that Canada/Alberta should sell every ounce of oil & gas we have, while there is demand. That is not a political stand. That is common business sense.
 
I think you're both right! We'll get 2 of 3, or maybe even all 3 of our current pipeline projects done (light is certainly looking to be at the end of the tunnel now!). For the oil sands big capital expenditures in production beyond maintenance will be sustainment imo - exploiting new mines or new wells to extend the productive life of expensive infrastructure. Because of being able to leverage that infrastructure, compared to other sources of production to replace depleted sources around the world over the decades, Alberta can still sell all we can produce even as the market shrinks over the century. Will it be ugly at points? Most definetly. But will it be profitable over the long term? Yes. for the most part we compete against producers that have to constantly invest capital to maintain production. For the oil sands, that math is different. We likely can't compete on an incremental megaproject basis versus a shale play to produce half a million barrels more. But, our existing production versus new production? Alberta wins!

Other areas to apply our particular advantages of favourable geology and long standing expertise:

Liquids production will probably surge to backfill the pipelines if excess capacity exists. The liquids export capacity at Prince Rupert will double in size, and perhaps double again now that the relationships there are proven - and liquids will turn out to be a much more stable (and growing) business.

Huge opportunity exists in two emerging areas, and their advantages combined could enable energy intensive manufacturing spinoffs. What two areas: geothermal and hydrogen production directly from the ground. Those two things combined we can supply the cheapest, most reliable, and greenest energy of anywhere in the world. With those things, we can also look at other businesses: hydrogen and synthetic fuels made from hydrogen export. Exporting raw hydrogen in volume will be somewhat hard - we can juice up the natural gas network to a point but the engineering standards required for pure hydrogen transportation are challenging to my knowledge. Ammonia production is another potential area - with cheap energy and cheap hydrogen, we could be the lowest cost producer in the world. With low cost ammonia, can also look at using it as a hydrogen storage and transport tech, and as a feedstock for heavy industry around the world.

With feedstock, and green energy, we can also try to attract other manufacturing that is really hard to implement in a green way without our particular advantages.
 
👍👍👍
Always look and plan to diversify but don't neglect your primary economic engine. It will continue to be primary for decades to come as long as everyone acknowledges and accepts that.
 
JonnyCanuck said:
👍👍👍
Always look and plan to diversify but don't neglect your primary economic engine. It will continue to be primary for decades to come as long as everyone acknowledges and accepts that.
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This has always been how I have looked at it, oil and gas won't be gone overnight but find a way to keep them going while you take the necessary steps for the next evolution.

As was famously said in an ad many years ago:

 
I'm not advocating for shuttering or ignoring anything, but cut the shit favoritism. Let's start actually investing money into the outcomes that have horizons long past 50 years. And most of all let's stop sacrificing investment to Education and Healthcare to prop up international investment. Low tax rates don't attract investment, high quality of life does through attracting and developing the best talent.
 
JonnyCanuck said:
👍👍👍
Always look and plan to diversify but don't neglect your primary economic engine. It will continue to be primary for decades to come as long as everyone acknowledges and accepts that.
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I disagree with your assessment. If traditional O & G is our primary economic engine 3 decades from now we are screwed. I believe you are making an emotional assessment of an industry based on history. What you are essentially asking is for everyone to join in a shared delusion that is not supported by macroeconomic realities. Darwink has it right in that enormous energy opportunity still exists for our province, but we need to leap at it.
 
heightjunkie said:
I disagree with your assessment. If traditional O & G is our primary economic engine 3 decades from now we are screwed. I believe you are making an emotional assessment of an industry based on history. What you are essentially asking is for everyone to join in a shared delusion that is not supported by macroeconomic realities. Darwink has it right in that enormous energy opportunity still exists for our province, but we need to leap at it.
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Your thesis does not align with actual trends, demographics, and forecasts. Simple population growth worldwide is enough to drive oil & gas demand even if wealthy countries switch entirely to EVs (ignoring the inherent infeasibility of that scenario).

Yes, I would agree that we need to start planning for a future without oil and gas, but the time horizon for that eventuality is much longer than you are suggesting.

You should watch this presentation:

https://twitter.com/x/status/1332026896805208065
 
heightjunkie said:
I'm not advocating for shuttering or ignoring anything, but cut the shit favoritism. Let's start actually investing money into the outcomes that have horizons long past 50 years. And most of all let's stop sacrificing investment to Education and Healthcare to prop up international investment. Low tax rates don't attract investment, high quality of life does through attracting and developing the best talent.
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First things first, at times we have all been guilty of equating the state of the provincial budget with the state of the economy. At times they are aligned, and at times not.

TBH though, corporate tax ain't returning with anywhere near the sort of revenue we used to enjoy for a long time, no matter what rate is chosen. And it isn't (mostly) from a reduction in corporate tax revenues. I think people massively over estimate what proportion of provincial revenues corporate taxes are. Whether at 8%, 10%, or 12% it matters little to the treasury (I've been told revenues would be maximized at 11% - at least around 2014-15). Corporate taxes have barely been more than 10% of provincial revenue over the past decade. The 4% discount though does change the math a lot for large capital investments like petrochemical projects (plus we usually discount on top of that too!).

If it is revenue we need (and I agree), we need a PST.

Back to corporate taxes: It is important to remember in discussions about corporate taxes is that corporations are not rich, it is that people who own corporations MAY be rich. And since we want corporations to generate employment and consume our resources, why should we tax them? Instead we can tax their owners (or on profits transferred out of Alberta, a withholding to represent transfers to owners).

1607098188874.png
 
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artvandelay said:
Your thesis does not align with actual trends, demographics, and forecasts. Simple population growth worldwide is enough to drive oil & gas demand even if wealthy countries switch entirely to EVs (ignoring the inherent infeasibility of that scenario).

Yes, I would agree that we need to start planning for a future without oil and gas, but the time horizon for that eventuality is much longer than you are suggesting.

You should watch this presentation:

https://twitter.com/x/status/1332026896805208065
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I have seen this presentation, but it does not align with the findings of the Canadian Energy Regulator, which only accounted for "green" initiatives against traditional O & G continuing at the same pace rather than accelerating. That estimate had peak production of the oilsands topping out in only 15 years, with paltry 2% growth year over year.


Here's the report.
And here's Andrew Leach's opinion based on that report: https://www.theglobeandmail.com/opi...l-pipeline-pipeline-might-be-nearing-its-end/

Edit: Yes it's an opinion, but it's the opinion of a very well respected Economist, who was the Enbridge sponsored professor of Energy Policy at the University of Alberta.
 
darwink said:
First things first, at times we have all been guilty of equating the state of the provincial budget with the state of the economy. At times they are aligned, and at times not.

TBH though, corporate tax ain't returning with anywhere near the sort of revenue we used to enjoy for a long time, no matter what rate is chosen. And it isn't (mostly) from a reduction in corporate tax revenues. I think people massively over estimate what proportion of provincial revenues corporate taxes are. Whether at 8%, 10%, or 12% it matters little to the treasury (I've been told revenues would be maximized at 11% - at least around 2014-15). Corporate taxes have barely been more than 10% of provincial revenue over the past decade. The 4% discount though does change the math a lot for large capital investments like petrochemical projects (plus we usually discount on top of that too!).

If it is revenue we need (and I agree), we need a PST.

Back to corporate taxes: It is important to remember in discussions about corporate taxes is that corporations are not rich, it is that people who own corporations MAY be rich. And since we want corporations to generate employment and consume our resources, why should we tax them? Instead we can tax their owners (or on profits transferred out of Alberta, a withholding to represent transfers to owners).

View attachment 286775
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The problem I have, and I am sure I am not unique in this, is the growing disparity in collections from corporate tax vs personal tax.
Example: in 2012, the corporate tax rate was at 10%. Corporate tax was responsible for (4,756/37,502*100) 12.7% of the total own source revenue, while personal income tax was responsible for (9,621/37,502*100) 25.6%. This year, Personal income tax will account for roughly 35.7% of own-source revenue, vs only 5% of revenue generated through corporate income tax.

That is an enormous disparity, and does make up a significant portion of the budget. A decrease in collection by 7.7% on the corporate side, with the entire offset plus additional offset for falling resource revenues falling to personal income tax to make up.

I waffle about the PST.
 
heightjunkie said:
The problem I have, and I am sure I am not unique in this, is the growing disparity in collections from corporate tax vs personal tax.
Example: in 2012, the corporate tax rate was at 10%. Corporate tax was responsible for (4,756/37,502*100) 12.7% of the total own source revenue, while personal income tax was responsible for (9,621/37,502*100) 25.6%. This year, Personal income tax will account for roughly 35.7% of own-source revenue, vs only 5% of revenue generated through corporate income tax.

That is an enormous disparity, and does make up a significant portion of the budget. A decrease in collection by 7.7% on the corporate side, with the entire offset plus additional offset for falling resource revenues falling to personal income tax to make up.

I waffle about the PST.
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Can’t collect blood from a stone. Corporate taxes are almost the worst for of taxes you could choose to raise revenue. They’re super volatile, they create among the biggest deadweight loss for the revenue raised (pure waste to the economy). The central principle s that there is only one tax payer.
 
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