. . . . And keep your oily hands the hell out the pockets of other Canadians   
   for your oil subsidies, cleanups and expansions of pipelines.  We've had   
   enough of you whiners and deadbeats.  Get some new industries and bring in a   
   provincial sales tax.  You     
   'tough guys' can take it.  You're so much smarter than the rest of Canada.   
   ____________________________   
      
   CBC News · Posted: Aug 28, 2020   
      
   As oil money dries up, Alberta's financial woes laid bare   
      
   No longer can the province ignore its revenue crunch as oil and gas royalties   
   tumble further   
      
   Ever since Jason Kenney and the United Conservative Party took power in   
   Alberta, they have repeatedly argued the province has a spending problem.   
   That's where they have centred their fiscal focus.   
      
   Thursday's fiscal update, however, showed just how bad the revenue side of the   
   government's finances has become — the plight of the oilpatch is leaving a   
   giant hole in the budget.   
      
   Revenue from the oilpatch is expected to be $1.2 billion this year, down from   
   the $3.9 billion forecast and a far cry from better days in the sector, such   
   as 2014-15 when those revenues were $8.9 billion.   
      
   Revenues from the oil and gas sector haven't been this low since the early   
   1970s, according to government documents.   
      
   The oilsands are especially woeful. Bitumen royalties were expected to   
   generate more than $3 billion this year, but instead could now provide just   
   $686 million.   
      
   Many oilsands projects are generating little to no positive returns this year,   
   according to government documents, since many are unable to turn a profit.   
      
   Projected corporate income tax revenue has been cut in half.   
      
      
   Massive deficit   
      
   The oilpatch's struggles, in addition to the impacts of the pandemic, have   
   contributed toward an expected deficit of more than $24.2 billion.   
      
   That is equivalent to roughly 8.1 per cent of the province's GDP.  Not only is   
   that the largest in Canada and the widest shortfall on record for Alberta in   
   several   
   ^^^^^^^^^^^^^^^^^^   
   decades, but it would be the "largest deficit recorded by any province over   
   the past 35 years," according to Robert Kavcic, an economist with BMO Capital   
   Markets.   
      
   Kenney's government will need to figure out where it will find the money to   
   pay its bills.   
      
   "The challenge for Alberta will really show itself over the medium term, with   
   the energy sector likely to remain restrained and some fundamental issues   
   (like revenue sources) possibly needing to be addressed," said Kavcic in a   
   research note.   
      
   The government's fiscal update on Thursday provided little insight into what   
   choices they will make to help rectify the situation or when the province   
   could eventually return to a balanced budget.   
      
   Instead, Finance Minister Travis Toews explained how it will take a while to   
   return to pre-pandemic levels, when the economy was already sputtering.   
      
   "The road to recovery will be slow and fragmented.  Real GDP is not expected   
   to surpass 2019 levels until after 2022.  Unemployment is unlikely to fully   
   recover until after 2021," he said in a speech to the legislature.   
      
      
   Getting out of the red   
      
   On the same day, neighbouring Saskatchewan provided its own fiscal update and,   
   despite similar pressure from depressed oil and gas activity, the government   
   expects to have a balanced budget by 2024.   
      
   In Alberta, the plunge in oilpatch revenues is "significant" and creates a   
   "sizeable dent in the budget," according to Charles St-Arnaud, chief economist   
   with Alberta Central, the central banking facility for credit unions in the   
   province.   
      
   The worst of the province's economic hit is likely over, he said, but he would   
   still like to see a plan from the government or expectations for the years to   
   come.   
      
   "With growth coming next year and with the unemployment rate expected to lower   
   next year, should we expect revenues to gain back?" He said in an interview:   
   "With that, you could have probably gauged what to expect on the resource   
   revenue side."   
      
   The answer to the province's revenue shortfall isn't easy to find.     
   Introducing provincial sales tax is often suggested by economists, but there   
   is little political will by any past or present Alberta government to do it.    
   Moreover, a new sales tax    
   would only narrow the deficit, not solve it.   
      
   For now, Alberta remains an overwhelming petro-economy and as such, it faces   
   the same uncertain outlook as the oilpatch itself.   
      
      
   Addiction to royalties   
      
   Since the pandemic, the sector has struggled with too much oil production and   
   too little demand for fuels.  Oil prices have stabilized around $40 US for the   
   North American benchmark, West Texas Intermediate.  At that price, some   
   companies are able to    
   turn a small profit, but it is not enough to spur new drilling.   
      
   That oil price also remains fragile. Companies and countries around the globe   
   continue to limit how much oil they supply to keep the market from being awash   
   in crude and send the price spiralling down again.   
      
   The reliance on the oil and gas sector is nothing new, as the University of   
   Calgary's Ron Kneebone detailed in a 2013 research paper about Alberta's   
   finances. He compared it to a substance-abuse problem.   
      
   "The substance is fossil fuels, and the province has become hooked on the   
   revenues from oil and gas sales to fund its spending on health, education and   
   social services.  As we are so often told, the first step in beating an   
   addiction is admitting that a    
   compulsion has gotten out of control," he wrote.   
   ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^   
      
   Industry headwinds   
      
   The difference today is how bad Alberta's finances have become and the   
   industry's inability to help because of its own poor health.   
      
   The state of the oilpatch was reflected south of the border this week;   
   Exxon-Mobil is being kicked out of the Dow Jones Industrial Average.   
   [- - -]   
      
   The headwinds facing the sector can't be ignored, according to Barry Schwartz,   
   chief investment officer at Baskin Wealth Management.   
      
   "We've seen just the beginning of the electrification of the overall   
   transportation system around the globe.  And it's hard to imagine that fossil   
   fuels will be leading in terms of market capitalization and profitability   
   going forward, so I guess I    
   applaud the folks at the Dow," he said in an interview earlier this week.   
      
   "You can't just be married to a business or a business model forever.  You got   
   to be on top of things, and really recognize: that was then and this is now,"   
   said Schwartz. "It's hard to imagine this trend reversing."   
      
      
   [continued in next message]   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)