By Norman Farrell
Regular readers are aware that British Columbia’s natural gas industry provides surprisingly little return to the province by way of royalties for depleting non-renewable public assets. In the last two fiscal years, after accounting for drilling and road subsidies taken by or owed to producers, the province’s net gas royalty receipts averaged $2.5 million a month. That is less than 1/10 of 1% of BC government revenues.
Defenders of government policy suggest the industry is contributing much economic value to BC through jobs. Yet, government statistics show that only about 3,000 people are directly employed in oil and gas extraction. Education and manufacturing each provide more than 50 times as many jobs. Retailing, almost 100 times as many.
In 2013, Christy Clark’s government resisted calls from the motion picture and sound recording industry for subsidy increases, yet this non-polluting, non-depleting industry provides four times as many jobs as oil and gas extraction. It stimulates cultural and tourism activities and costs a fraction of the subsidies flowing to oil and gas production.
As Premier, Clark pays little attention to forestry, the traditional engine of our economy. The only part of the industry that remains busy is logging, a function that cannot be moved out of province.
Who and where are the real beneficiaries? In what jurisdiction, if any, is corporate income tax paid on profits of gas production and sales?
Were decisions to provide public funds and public assets fairly determined or were they improperly influenced by the flow of cash from industry to the holders of political power?
I think the answers are self-evident. British Columbia is governed by captives of industry.
NOTE: The chart below illustrates some of the hidden costs to BC taxpayers of subsidizing the natural gas industry. Feeling that they overpaid for leases that are yielding few profits with fallen gas prices, the industry has been granted a series of royalty deductions, now totalling some $5 Billion. Factoring in other ministry expenditures to the benefit of the industry, the natural gas sector has actually received $6.5-7 Billion in taxpayer subsidies since 2008.
Norman Farrell is a BC-based political blogger and publisher of Northern Insights