On Properties of Royalty and Tax Regimes in Alberta's Oil Sands
AbstractSimulation models of stylized oil sands projects that include detailed representations of different royalty and tax regimes are developed. These models are then used to examine the distribution between developers and governments of net returns associated with the development and production of Alberta’s oil sands deposits. A specific focus is to assess the estimated effects on the level and distribution of net revenues associated with a number of changes in assumed revenue and expenditure conditions. The results suggest that developers, and especially surface mine operators, typically bear a greater share of the consequences of variations in capital expenditures than they do of changes in operating expenditures, prices, and exchange rates. A comparison across royalty and tax regimes suggests, among other things, that there is a positive relationship between the level of net revenues estimated to accrue to either developers or governments and the share of the consequences of changes in revenue and expenditure conditions borne by that party. Some differences in royalty and tax treatment and the distribution of the consequences of changes in revenue and expenditure conditions are noted across production technologies. It is also clear that the role of the federal government as a fiscal player in oil sands development has shrunk over time. In contrast, under the regime currently in effect, the Government of Alberta captures a higher share of net returns and typically bears a greater proportion of the consequences of changes in conditions than at any time since the introduction of an explicit oil sands royalty and tax regime in 1997.
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Bibliographic InfoPaper provided by University of Alberta, Department of Economics in its series Working Papers with number 2010-6.
Length: 35 pages
Date of creation: 01 Feb 2010
Date of revision:
oil sands; fiscal systems; risk incidence;
Other versions of this item:
- Plourde, André, 2010. "On properties of royalty and tax regimes in Alberta's oil sands," Energy Policy, Elsevier, vol. 38(8), pages 4652-4662, August.
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-02-27 (All new papers)
- NEP-ENE-2010-02-27 (Energy Economics)
- NEP-PBE-2010-02-27 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frank. J. Atkins and Alan J. MacFadyen, 2008. "A Resource Whose Time Has Come? The Alberta oil Sands as an Economic Resource," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 77-98.
- Andre Plourde, 2009. "Oil Sands Royalties and Taxes in Alberta: An Assessment of Key Developments since the mid-1990s," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 111-140.
- Garnaut, Ross & Clunies Ross, Anthony, 1975. "Uncertainty, Risk Aversion and the Taxing of Natural Resource Projects," Economic Journal, Royal Economic Society, vol. 85(338), pages 272-87, June.
- Patrick Gonzalez, 2013. "Taxing a Natural Resource with a Minimum Revenue Requirement," Cahiers de recherche CREATE 2013-6, CREATE.
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