I wrote this column on our old Beacon Energy site a few days after the election of Rachel Notley and the NDP. Given Kevin O’Leary’s recent cringe-worthy comments about the Alberta Premier, which you can read in Paula Simon’s excellent Edmonton Journal column, I thought this one deserved a fresh reading.
Kevin O’Leary is completely off base and Albertans should Tweet him at @KevinOlearyCPC to express their displeasure
Social media is lighting up with news stories about Kevin O’Leary and his warnings to investors to stay away from Alberta now that the NDP are in charge.
Butt out, O’Leary, you’re not helping.
The issue is a campaign pledge by new NDP Premier Rachel Notley to hold a review of the provincial oil and gas royalties. You know, the oil and gas owned by the people of Alberta.
“It’s a horror movie unfolding,” O’Leary told a National Post reporter. “You never, ever tinker with royalty rates when you are at the low. You don’t do that.”
“If you are a fiduciary, you can’t put money in Alberta right now,” he added.
Last week I interviewed Gordon Sick, professor of finance at the Haskayne School of Business, hardly a bastion of socialist economic theory, about a royalty review. He said that since the last review in 2007, there is a new market-based method of valuing royalties. He thought using both the new and old methodologies would lead to some interesting insights and might – I emphasize might – identify value that should be captured for the resource owners.
Here is his common sense assessment of a review, which stands in stark contrast to the know-nothing bombast of reality TV star Kevin O’Leary: “I do agree with the NDP that it is worth having a look at what is going on. If nothing needs to be changed, then don’t change anything.”
Thus far, Notley has said only that she wants a review. If you were a landlord and owned some rental property, say, wouldn’t you reassess the value of the property and the rent on a regular basis? What business owner doesn’t want to receive fair value for their assets?
Kevin O’Leary, apparently.
Now, I understand why an energy CEO like Steve Laut, president of Canadian Natural Resources Ltd., would tell Post, “Clearly, this is not good for the industry…The oil and gas industry is a global industry, and capital will flow to areas with the greatest return.”
As Beacon Energy News reported today, CNRL and other producers are working frantically to get their operating costs under control. Laut and his management team posted a $252-million first-quarter loss and he says his company is prepared to lop another $300 million from its $2015 budget.
Notley needs to understand that those are big numbers and industry takes them very seriously. She has tried to calm the storm by reaching out to the Alberta oil and gas sector.
“I’m going to be making phone calls today to leaders within the energy industry to begin those conversations,” Notley told reporters at the legislature Wednesday. “They can count on us to work collaboratively with them.
“I’m hopeful that over the course of the next two weeks they will come to realize that things are going to be just A-OK over here in Alberta.”
Think about that. She wins a momentous victory Tuesday night and the very next morning is reassuring Big Oil that everything is going to be just A-OK. How Albertan of her.
And her actions put the lie to everything Kevin O’Leary is claiming in his outrageous statements.
Notley did not say she would raise rates, as the National Post claimed in its story, she said her government would hold a review of the royalty regime to make sure it was fair to Albertans. As Prof. Sick has already noted, that is a perfectly reasonable thing to do.
As far as I can tell, the only one riling up Alberta oil and gas executives is Kevin O’Leary.
So it’s time for Albertans to tell O’Leary to butt out of Alberta politics. His only contribution so far has been biased and inflammatory statements that misrepresent Notley’s campaign pledges.
Alberta has enough on its plate right now without Bay Street ignoramuses making things worse.