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On properties of royalty and tax regimes in Alberta's oil sands

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  • Plourde, André

Abstract

Simulation models that include royalty and tax provisions are used to examine the distribution between developers and governments of net returns from the development of Alberta's oil sands deposits. A specific focus is to assess the effects on the level and distribution of net revenues associated with a number of changes in assumed revenue and expenditure conditions. Developers 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 suggest 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 conditions borne by that party. Some differences across production technologies are noted. The role of the federal government as a fiscal player in oil sands development has shrunk over time. In contrast, under the current regime, 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 royalty and tax regime in 1997.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:8:p:4652-4662
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    References listed on IDEAS

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    1. 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.
    2. 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 272-287, June.
    3. 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.
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    Cited by:

    1. Patrick Gonzalez, 2013. "Taxing a Natural Resource with a Minimum Revenue Requirement," Cahiers de recherche CREATE 2013-6, CREATE.

    More about this item

    Keywords

    Oil sands Fiscal systems Risk incidence;

    JEL classification:

    • 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

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