The biggest news to come out in awhile from the Alberta bitumen development was a committee report detailing how the province has been short-changed to the tune of 4 billion dollars by not changing the royalty structure since the price of oil took off in 2002. According to one newspaper article the report has been downloaded over 200,000 times. The article quotes Jay O'Neill, spokesman for Alberta Finance, inferring that many of the hits are from out of province — presumably investors. I don't know if this is backed up by actual hit tracking or not.
This puts the newish Premier Ed Stelmach in a bit of a tight spot. For one, he was the minister in charge of royalties for the period this report covered. Hence, if he admits to the royalties being mismanaged, it occurred on his watch. The big meme that appeared in the Alberta newspaper's was the royalty on bitumen sales (or lack thereof). The report recommended a royalty of 33 % after recovery of capital costs. The Premier's office gave him a month to craft a reply, which is rather extended for a politician who is already developing a reputation for doing nothing. The opposition Liberals have previously proposed a similar royalty rate at 25 %, which puts the Premier in a tough spot, since they are ahead of the news and he is not. If he accepts the committee's numbers, he'll come off as less business friendly than the opposition and irritate many of his doners. If he takes a month to arrive at the same figure, he'll just be reinforcing the 'Mr. Dithers' (or Harry Strom) stereotype. If he low balls the royalty, he'll be accused of being in the oil corporations' pocketbooks.
Toronto Dominion bank economist Don Drummond thinks that Alberta's not headed for the inevitable 'bust' following the 'boom', which I half agree with. Oil isn't likely to head into a price collapse given global production woes, but he seems to making the common error in underestimating the role of natural gas production in the province's prosperity. New drilling is down since 2003-4. The oil sands (bitumen) boom has also been fueling a real-estate bubble that has more or less doubled the price of homes in the prairie province the last couple of years. However, immigration is slowing slightly. Edmonton is too flat (literally) to support a real-estate bubble for an extended period. Trying to sell a 50-year old wood frame dwelling for 300x the cost of monthly rent is not rational in a city with an effectively unlimited quantity of land to start new construction on. This applies especially so in the face of rising interest rates and a US housing recession.
The other big news is that Prime Minister Harper has decided against any significant restrictions on carbon dioxide and other greenhouse gas emissions. There's some effort to disguise this as a different plan from the flawed Kyoto model, but it's hot air. The fact of the matter is that he has refused to set a price on carbon dioxide emissions, and that's all that really matters. It's been pretty obvious that he was going to take this path for awhile now. See my post, "EcoAction: Real or Greenwashing?" under the heading Airborne Pollution. I gave him an incomplete but that's clearly an 'F' now. In related news, the federal government had a $14.2 billion surplus this fiscal year. As it happens, that surplus has to be plowed into the national debt by law, but it's worth considering that it would pay $20/ton for the average 20 tons of CO2 emitted by all of 33 million Canadians. A carbon tax that is offset by a drop in income tax shouldn't cost nearly that much.
Lastly, Exxon and Murphy Oil are trying to sue the government of Newfoundland and Labrador over a clause in their contract that requires them to invest more of their development costs in the provinces themselves. They are trying to claim this under NAFTA. Good luck with that... Resources belong to the province; the federal government doesn't have a lot of say in their management. Also, Harper will not do anything since it would set a president that could be applied to Alberta at a later date. Furthermore, it's not like someone held a gun to the head of the oil companies' head negotiator here. They signed the contract, now they can honour it or walk away from their investment.
Update: A good editorial by Fabrice Taylor in the Globe. He puts some numbers on the natural gas situation in Alberta: 60 % of all royalties come from natural gas, and not oil; existing natural gas wells are declining at a rate of 20-30 % a year, being propped up by what were previously considered stranded pockets and coal-bed methane. At current extraction rates, the conventional natural gas reserves should be gone by 2012, leaving mostly new exploration and coal-bed methane to make up the gap.