Monday, April 11, 2011

The case for a heritage fund

The Globe had an interesting piece on the collapse in B.C. gas exploration auctions. Oil and gas companies had been paying big prices for gas leases - $70 million a month, on average, last year. But the last three auctions have produce an average $6 million.
The action has moved on. The best properties had been claimed and natural gas prices are low.
Which has Energy Minister Rich Coleman thinking about selling the gas more cheaply by cutting royalty rates.
And me wondering again if a heritage fund for non-renewable resource sales would be more responsible and encourage better government decisions.

2 comments:

Bernard von Schulmann said...

I do not think it makes sense to create that sort of sovereign wealth fund till the debts are paid off.

Anonymous said...

Bernard's point is well taken, but not sure there are any royalties to put into either debt payment or sovereign wealth fund. Here's an interesting commentary on BC's royalty structure compared to other jurisdictions (and when the price for gas as forecast in the 2011 budget is taken into account suggests we are giving the gas away for nothing at this point).

http://www.albertaoilmagazine.com/2010/09/a-clone-of-light-oil-sands-royalties-fuels-a-drilling-surge/