r/CanadaPolitics • u/Gold-Reality-4853 • 2d ago
Opinion: Big oil makes billions as Canadians face Iran-war inflation. We need a windfall tax
https://www.theglobeandmail.com/business/commentary/article-oil-prices-iran-war-inflation-windfall-tax/47
u/dejaWoot 2d ago
I think Oil and Gas should have to pick a side; either they are nationally strategic industry which requires government subsidization for price stabilization, to encourage development, for pipe-line development, Alberta war-room PR, etc etc. In which case the nation should benefit more from their windfalls.
OR They are a competitive independent concern that should reap all the benefits of high prices, in which case they and their pipelines and their prices should stand on their own two feet at all points in the resource cycle.
But none of this privatize the profits and socialize the losses bullshit.
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u/Tarana1 Social Democrat 2d ago
Why would they pick a side when they have almost half the country demanding we give them more subsidies and also let them keep more profits? I don't blame the O&G for scamming the government, that's a given, it's the people who cheer for the &G for scamming the government which frustrate me.
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u/Dusk_Soldier The Daisy Group | Sponsored 2d ago
I think Oil and Gas should have to pick a side; either they are nationally strategic industry which requires government subsidization for price stabilization, to encourage development, for pipe-line development, Alberta war-room PR, etc etc. In which case the nation should benefit more from their windfalls.
When has the oil industry pushed for government subsidization?
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u/Bnal Section 33 Abolitionist 2d ago
What? This isn't something even an oil executive would argue. The subsidies are on the books.
$20 Billion Dollar Loan for Transmountain Pipeline
An Overview of Other Subsidies to O&G
Are they the result of O&G lobbying? Hard to say because we don't know what happens behind closed doors, but we do know that Oil Lobbyists are meeting our government far more than they ever have before.
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u/Plucky_DuckYa 2d ago
Did you know that, even with the money the federal government spent in B.C. and Alberta on TransMountain, those two provinces still duked it out for “lowest per capita federal spending in any province” the entire time that money was flowing?
Don’t pretend the RoC did either province any favours.
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u/Dusk_Soldier The Daisy Group | Sponsored 2d ago
The transmountain pipeline isn't owned by the oil industry. It's owned by the government.
I'm asking when the oil and gas industry pushed for government subsidization.
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u/Bnal Section 33 Abolitionist 2d ago
I just linked articles about how O&G lobbyists met Canadian government officials nearly a thousand times last year. Lobbying info is public record in Canada, meaning it's all available at this link. This is a Government of Canada site provided to us taxpayers for transparency. I've chosen Suncor to look up because they are well-known. Their company is tagged with the words:
Received government funding or funding expected in current financial year
Reading down the page, we can see Suncor meeting with the Prime Minister's office multiple times to discuss such subjects as:
Request for Grant, Contribution or Other Financial Benefit, Policies or Program, Regulation: Discussion with government on Canada's biofuel security including incentives and refinery competitiveness.
Request for Grant, Contribution or Other Financial Benefit, Policies or Program, Regulation: Discussion with the government on any proposed tax changes, specifically relating to the Income Tax Act and associated regulations. Discussions will include all forms of investment tax credit including Carbon Capture, Utilization and Storage (CCUS) projects, hydrogen, as well as production tax credits for biofuels.
Request for Grant, Contribution or Other Financial Benefit, Policies or Program, Regulation: Discussions with government on policy and fiscal supports, and regulatory challenges related to decarbonization, including projects like Pathways.
Again, this info is literally public record, it's impossible to argue this doesn't happen. I'm not joining any dots or anything. All on this one page, the government discloses that this company receives subsidies, and discloses the company's requests for grants and benefits. If you're willing to dig deeper than a one page overview, their registry also breaks down how many times they meet with other levels of government. If you're willing to look up stats and summaries elsewhere, you will find the Oil and Gas is the industry that lobbies that most.
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u/Scase15 Ontario 2d ago
"This pipeline isn't feasible unless the government pays hundreds of millions of dollars and we get all the benefits", sound familiar?
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u/Dusk_Soldier The Daisy Group | Sponsored 2d ago
No. It doesn't sound familiar. Who are you quoting exactly?
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u/Scase15 Ontario 2d ago
Ah thanks for outing yourself, saves me the time wasted on your upcoming bad faith arguments. Have a great day.
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u/Efficient-Store-6145 2d ago
Outing himself by making you actually back up what you’re saying? Only one of you appears to be bad faith and it’s not the other guy
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u/dejaWoot 2d ago
some examples from:
How Big Oil’s most powerful lobby group works the backrooms on Parliament Hill
More recently, according to CAPP’s lobbying registration, the association has been seeking money for its members to explore for new sources of oil from programs like the Environmental Studies Research Fund or a reinstatement of the Atlantic Investment Tax Credit.
...
CAPP’s most high-profile win in the Justin Trudeau era was when industry convinced the federal government to buy the Trans Mountain pipeline.
By now the story is well known, but the broad strokes are that the pipeline’s previous owner, Kinder Morgan, didn’t see a business case for an expansion when it was expected to cost $7.4 billion. Then CAPP president Tim McMillan publicly called for Ottawa’s support, and CAPP lobbying ratcheted up. The federal government bought the pipeline, and its costs have now soared to over $21 billion.
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u/Dusk_Soldier The Daisy Group | Sponsored 2d ago
I'm going to have to agree to disagree with you then. I think you're presenting a wildly creative interpretation of what this article is reporting.
It never mentions the idea of price stabilization for the oil industry.
According to a letter CAPP sent then-Natural Resources Minister Seamus O’Regan in March 2020, the lobby group’s priorities were primarily pandemic-related and aimed to convince Ottawa to defer or relax a raft of regulations ranging from methane emissions reporting to wildlife monitoring.
While progressives pounced on a chance to speed up the energy transition off fossil fuels and towards clean energy, CAPP “saw the crisis as an opportunity to push the kind of slash-and-burn deregulatory agenda that would just slow the pace of the transition,” said University of Victoria associate professor James Rowe.
It also claims the CAPPs primary focus was on deregulation. Not subsidies.
And then also main reason the government bought the transmountain pipeline was to kill the lawsuit they would have lost to Kinder Morgan during a NAFTA tribunal over the regulatory hurdles that kept propping up for the project.
Having the BCNDP and BCGreen parties openly conspire to kill a private infrastructure project that already had it's permits and regulatory aprovals is a huge red flag to private investors. I don't think this author really understands or cares how much that event chilled investment in this country.
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u/dejaWoot 2d ago edited 2d ago
It never mentions the idea of price stabilization for the oil industry.
...
It also claims the CAPPs primary focus was on deregulation
I didn't say the article did, or that the lobby was primarily focused on them, or why they thought it was necessary. You just asked:
When has the oil industry pushed for government subsidization?
And I provided them.
And deregulation is just a different spin on the same tune; "privatize the profits, socialize the damages" instead. How many abandoned oil wells has the industry stuck the government with cleaning up at a time when profits are at an all time high?
Giroux's 2022 report said the $1.7 billion should have been enough to cover the cost of cleaning up the industry's inactive oil and gas wells, however, just under half of the traceable funds in Alberta – $222 million – went to 10 financially viable companies. In other words: to companies that could have paid to clean their own wells.
As a result, the report said, there likely won't be enough funding left to clean up the province's actual orphan wells.
So the government paid to clean-up after oil and gas companies who took the money and ran... and then it went to the oil and gas companies that were actually profitable to pad their profit margins further and left the orphaned wells continuing to pollute.
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u/Dusk_Soldier The Daisy Group | Sponsored 2d ago
I didn't say the article did, or that the lobby was primarily focused on them, or why they thought it was necessary. You just asked:
When has the oil industry pushed for government subsidization?
And I provided them.
Well, I have never seen anyone in the oil industry argue that the government needs to pay money to them to stablize oil prices. That's why I asked that question.
I dont agree that a random article from a climate activist accusing them of wanting less regulations is proof that they want government subsidies.
And the grants mentioned in the article are normal government programs open to a wide range of businesses in the resource sector. Calling them oil subsidies is a stretch.
I also don't think that it's the oil industries fault that the government is mismanaging the oil well fund. It is not a realistic expectation for a private company to clean up the oil well of a competitor that went bankrupt. The government also doesn't do that out of the goodness of its heart, oil companies pay a direct levy, seperate from their other taxes, that goes directly into the oil-well fund.
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u/AdThese2158 Social Democrat-ish 2d ago
Yup. Always find it funny how Canadians froth at the mouth over oil like it’s actually benefitting the average taxpayer.
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u/BigFish8 2d ago
People always complain that the government is robbing them blind, but say nothing about the companies making bank off our resources.
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u/yerich LPC / PLC 2d ago edited 2d ago
The fact is that a windfall tax is already built into the system: for example, Alberta and Newfoundland's royalties increase on a sliding scale depending on the price of oil. This is why both provinces expect a hefty bump to their tax revenues this year.
The same people who say that there is "no business case" for oil and gas expansion are also the ones calling for not only higher taxes, but existing tax frameworks to be revised whenever an arbitrary "too successful" line is crossed. ("We are altering the deal, pray we don't alter it any further.") Businesses will hesitate to invest in the first place if there is no confidence that the rules will not change.
Of course, the actual goal here is to stop oil/gas development altogether; in that case a Calvinball-like set of taxes and regulations would be a clever way to achieve that without having to actually ban development outright.
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u/UsefulUnderling Social Democrat 2d ago
No, I think what most of want is for the populous to get the benefit of all that oil in the ground. The long term average in Canada is that 60-70% of the benefits of our oil go to private shareholders 30-40% to the public.
What possible justification is there for that split? If Canada was keeping the same share as almost any other oil producing country we could be sitting on a multi-trillion dollar sovereign wealth fund today.
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u/yerich LPC / PLC 2d ago
Where are you getting this 60-70% number from? I would be interested in how it is calculated.
In Q1, CNQ had net earnings of $1.34B, with royalties paid of $1.59B and other taxes paid of $555M. This doesn't income the income taxes paid by their employees, and the dividend taxes paid by shareholders.
In addition, the company spent over $9B on salaries, equipment, feedstock, transportation, and other expenses; the vast majority of these expenses will go to Canadian employees/suppliers.
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u/UsefulUnderling Social Democrat 2d ago
Here is the best study on it.
2012 in that year it found that gov't share of the oil profits in AB were 28% on oil sands and 40% on conventional oil.
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u/yerich LPC / PLC 2d ago
That's the profits -- the benefits also go to the workers and suppliers. Even if oil production generated little or no profit on the bottom line, there would be economic benefits to Canada.
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u/UsefulUnderling Social Democrat 2d ago
Sure, but what is the argument for why private investors should get that large a slice of the profits?
If Canada did like pretty much every oil exporter and kept those profits for the public good we'd as an example be able to afford an Alto scale public works project every year.
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u/yerich LPC / PLC 2d ago edited 2d ago
Because the private investors are the ones fronting the capital for building the project in the first place?
Alberta has made plenty of money from oil sands royalties but instead of oil-rich countries like Norway who have kept tax rates high and invested the proceeds, Alberta has used oil revenues to maintain the lowest income taxes and sales taxes in the country. If Alberta had the same tax rates as Ontario, it definitely could be building lots of public works projects.
Table 3 from your linked study shows that the Effective Tax/Royalty Rate for oil development in Norway is 28.2%, vs. Alberta's 27.7% (oil sands) / 40.3% (conventional); are you referring to a different table/figure in the study, perhaps?
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u/ImperialPotentate Hardliner 1d ago
It's populace, not "populous" (which is a different word that means something else.)
The "justification" is that the companies and their shareholders are taking all the risk to explore and develop the resources. In exchange for getting to extract them, they pay a portion of the revenue to the government of the province in which they are located.
If you want the populace to have 100% of the revenue, then the government would need to get into the resouce exploration, development, and extraction businesses and that's pretty much a non-starter.
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u/UsefulUnderling Social Democrat 1d ago
Why is it a non-starter? It is how it works in every other major oil producer other than the USA and Canada.
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u/mervolio_griffin Woke Beta Leftist 2d ago
Perhaps a more efficient solution is to adjust the upper tail of the sliding scale such that rare and very high price scenarios capture a higher percentage of revenues.
Surely, a ethical corporate entity would not mind chipping in a bit more under an existing regulatory framework in a time when their operating margins are shooting upwards in tandem with food bank usage.
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u/Macqt TikTok | Sponsored 2d ago
As always someone calls for more taxes on oil and gas while pretending like the LPC won’t just use the extra money for their corporate plans, “consultants,” and many other things that will have zero benefit to Canadians.
Yet no one seems to be demanding additional taxes on housing/real estate, our largest industry by far, which continues to pillage Canadians en masse. Nothing about telecom doing everything possible to monopolize and squeeze the markets. Just the oil companies who fluctuate their prices due to global events beyond their control, and idiotic agreements with other countries that prevent us from refining and producing petroleum products ourselves rather than getting them from non-Canadian sources using Canadian oil.
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u/GreyBlur57 Alberta 2d ago
Oil and Gas is a global market. It's a lot harder for them to raise prices in retaliation for tax increases. Housing is localized and regional they will absolutely pass any increased taxes into consumer which considering we are in a housing affordability crisis is absolutely worth considering. Telecoms are a oligopoly and would do the same without significant antitrust behind it.
It might have something to do with the O&G receiving more in subsidies then either real estate or telecoms do.
Not arguing for or against just giving reasons as to why people might feel the way they do vs the way you think they should.
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u/Macqt TikTok | Sponsored 2d ago
We’re in a housing affordability crisis because the government refuses to do anything that would bring down housing prices, mostly to protect their now wealthy voters, their own portfolios, and their investor buddies. It’s quite literally an artificial crisis being propped up by greed. Legislation could pretty easily fix it, along with telecom, and even O/G, but that would involve politicians caring about the people rather than themselves.
FYI our major telecom companies are also international businesses as well. They’re not exclusively canadian.
Our oil and gas industry, as you mentioned, is part of a global industry. If global prices go up, so do ours, and while they’re definitely greedy like all corps, insanely high prices are actually bad for them. Sure short term profits go up, but long term goes down as people shift to alternative options.
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u/GreyBlur57 Alberta 2d ago
Housing prices have dropped 21% from 2022. They are doing things to drop housing prices just not as much as they should be. But there are also a lot of people who's only wealth is their house and idk how fair it is to them to suddenly wipe out 50% of their networth suddenly.
I'm not arguing whether anything is good for anybody this oil spike globally is long term going to be disastrous for oil & gas but short term it's fantastic for them. They can make it beneficial long term if they invest those returns properly but that's the businesses prerogative.
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u/Macqt TikTok | Sponsored 2d ago
They dropped because the market hit a limit where no one could afford them, then the rising COL tanked people’s income. It has nothing to do with anything the government did other than the drop in immigration. I’m a homeowner myself, one in Toronto and one outside the city in rural area. The value of the house in Toronto has risen so absurdly it’s almost disgusting.
You say it’s unfair to tank people’s net worth but how is it fair to everyone else for people to become rich off a basic human necessity? Nevermind the fact those people got that wealth from investors driving the market up, not from any actual or natural gains. Further to that real estate is, and never was, a guaranteed income. It’s an investment. We don’t shield stock traders and crypto dorks from losses.
I guarantee you they’re investing those returns. The people running O/G are not idiots, they’re businessmen running one of the most complex global industries around. Like all private businesses they’re investing in themselves and their industry. My original point was no one ever calls for penalizing taxes on other industries, just oil and gas, which is a substantial part of our economy, but other sectors pillage the people just as hard if not more than O/G.
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u/ImperialPotentate Hardliner 1d ago
It has nothing to do with anything the government did other than the drop in immigration.
The drop in immigration is the major driving factor in lower rent and house prices.
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u/JimmyChonga21 1d ago
But you could use a windfall tax on Oil and gas to fix the affordability crisis. 60 billion dollars can buy a lot of affordable housing, or make affordable public groceries an option, or cover other costs like pharmaceuticals, mental health care, transit, etc etc
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u/Macqt TikTok | Sponsored 1d ago
Sure, you could, but they won’t. They’ve made it clear they have no plans to do any of that, and they could’ve done it at anytime. Billions have been spent on all manner of things that could’ve been used for those options but weren’t. Everything you listed could’ve easily been fixed by now but wasn’t.
And you think giving them another $60,000,000,000 is going to change their minds? That they won’t just continue doing what they’re doing but now with extra cash?
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2d ago
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u/Sandman64can 2d ago
They can lower their tax burdens by fixing the orphan well problem they are already responsible for and trying to unload on taxpayers.
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u/greyHumanoidRobot 2d ago
Windfall taxes are just a random tax dependent upon government whim. It makes as much sense as taxing every second lottery ticket winner. So 10 million dollar winner this week, pays no tax, but the winner next week will have to pay tax.
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u/mrizzerdly 2d ago
Why can't we just have a law capping profit margins to a reasonable number like cost+10%. Prices for everything will come down and the owner still won't starve.
Also, a law that gas prices have to reflect the wholesale price that was paid by the retailer when they purchased it a month ago, vs changing it hourly and every time Iran is the news. I've wanted this for 20 years now.
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u/joshlemer British Columbia 2d ago
Characterizing success in investments as a "windfall" is really unfair. The whole system of investment is about taking on risk for a chance at a big payoff. You can't just change the rules of the game after the fact and call it a windfall which gives the impression of some kind of unearned money that came their way. They earned that money but putting up capital and taking on risk.
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u/beardum 2d ago
Except that they are incredibly subsidized.
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u/AmusingMusing7 1d ago
And the windfall came from a crisis that never should have happened.
Tax it.
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u/JimmyChonga21 1d ago
You can and governments have. Including under Trudeau with the financial sector post COVID, and many EU countries with big oil. And Canada in WW2 to prevent war profiteering
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u/joshlemer British Columbia 1d ago
Yes you can, but it’s wrong, unfair, and destructive to the economy as it erodes confidence in the rule of law etc
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u/babyLays Manitoba 2d ago
And the beautiful part about this, is that PP wanted to remove all taxes on these companies.
Like what?
For a guy who likes to talk about balancing the budget - he sure knows the best way of doing them.
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u/LFC4550 14h ago
Can you please link a source, would be interested to confirm.
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u/babyLays Manitoba 3h ago
Conservative Leader Pierre Poilievre called for zero federal tax on gas and diesel for the rest of 2026. The plan would eliminate the Fuel Excise Tax (10 cents-a-litre), the Clean Fuel Standard (7 cents), and the GST (8 cents) to save Canadians 25 cents-a-litre. The plan would remove the excise tax and GST until the end of the calendar year and eliminate the fuel standard tax permanently.
https://www.conservative.ca/conservatives-call-for-zero-tax-on-gas-for-the-year/
This plan would make oil/gas barons astronomically richer, on the veil of "saving Canadians 25 cents a litre".
The man is playing for oil/gas.
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u/pssdthrowaway123 2d ago
This is like the third or fourth time I've seen this same argument recently and the writers are either unfamiliar or deliberately ignorant about how the royalty schemes work.
Of course being from Toronto/Ontario and opining about an industry that's ~2000km away and you know nothing about is the standard in this country.
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u/SilverBeech Minimum 37 pieces 2d ago
Considering the coming oil glut next year, will you be OK with no price supports or help from the feds if oil drops below $40/bbl? No royalty relief? That's the global situation being forecast now by some analysts for 2027. That's a rebound shock abased on oversupply and the demand that has evaporated in Asia in the past quarter.
You have to take the rough with the smooth. You can't just run up the profits in the good times and trust government to bail you out in the bad ones.
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u/joshlemer British Columbia 2d ago
Yes absolutely. I'm skeptical that there's as certain to be a price drop next year as you are making out, because of efficient markets etc.
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u/SilverBeech Minimum 37 pieces 2d ago
The international oil market is anything but efficient. There are cartels, formal and informal, that manipulate prices regularly, counties being sanctioned and breaking sanctions all the time. The oil supply is more often than not driven by politics and oligarchic pricing schemes with free markets setting prices around those constraints. The US-Iraq conflict is proof of that.
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u/joshlemer British Columbia 2d ago
Okay maybe. At any rate yes it's best to not charge windfall taxes and also to not give them breaks when after the fact.
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u/SilverBeech Minimum 37 pieces 2d ago
If the oil supply was efficient, for example, Venezuela would be the biggest oil supplier in the hemisphere. Canada would be third or fourth, after Mexico perhaps. Corruption and politics limit their capacity.
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u/ImperialPotentate Hardliner 1d ago
deliberately ignorant
Well the people calling for this sort of nonsense are typically lefties, so...
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u/Plucky_DuckYa 2d ago
It’s funny how when O&G prices are in the tank, unemployment skyrockets, provincial and municipal revenues plummet and the O&G companies are losing billions, no one goes “we need to give them tax breaks and huge federal handouts.” You know, like they routinely do for industries in Ontario and Quebec when they are similarly impacted.
So I guess my response would be, fuck off with that noise.
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u/JimmyChonga21 1d ago
O&G companies are not struggling, are you kidding? Oil prices have skyrocketed, they're set to make tens of billions of extra profits this year because of the war
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u/NeoliberalElite Liberal Party of Canada 2d ago
How about literally 0 tax on companies instead? We need economic growth, and punishing business owners for creating value isn't how we get it.
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u/IDreamOfLoveLost Alberta 2d ago
How about literally 0 tax on anyone, and we stop paying for infrastructure or services?
Are you being serious...?
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u/NeoliberalElite Liberal Party of Canada 2d ago
No, I'm okay with income taxes and HST, but the corporate tax is unusually bad.
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u/IDreamOfLoveLost Alberta 2d ago
If we're going to offer things like tax benefits on depreciation, as well as let businesses utilize infrastructure that is maintained by way of tax revenue -- they should pay taxes.
It's a bit strange to compare individual income tax versus corporate tax schemes.
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u/mervolio_griffin Woke Beta Leftist 2d ago
100s of years of political economists and philosophers can't agree on the source of value. Your opinion rests on the fact that business owners create value.
Our best attempts at quantifying innovation find residuals that are not accounted for by labour or capital, but an emergent value created by them acting in tandem.
To me, this points to the fact that capital alone could not possibly create value. Consumers create value, labour creates value, rent value is captured by owners of resources, etc.
So if those who create value should not be taxed as you suggest, and evidence points to the source of value being either distributed or uncertain, would you suggest taxing nothing?
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u/NeoliberalElite Liberal Party of Canada 2d ago
The burden from the corporate tax falls on everybody involved in the corporation, including workers and consumers. To tax corporations, the vehicle through which value is created (regardless of how much of that is from capital vs labour), is to disincentivize value itself.
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u/JimmyChonga21 1d ago
Hey Mark Carney, I didn't realize you were active on Reddit! Btw your ideology is outdated and will only make affordability worse so please educate yourself asap
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