Apparently, I am not the only one familiar with James Boren, the subject of yesterday’s report Mumbling and fuzzifying. A writer in government followed Boren’s prescription by presentation of a matter in “terms that permit adjustive interpretation.”
In Government’s latest three-year Budget and Fiscal Plan, we find this:
Natural gas royalties are expected to increase 49.1 per cent in 2017/18 due to the impact of higher prices for natural gas… Royalties are forecast to be relatively flat in 2018/19 as the effects of higher production volumes are offset by lower natural gas prices and utilization of royalty program credits…
That paragraph in the Finance Ministry document may reveal the quality of expertise managing British Columbia’s natural resources. In the coming fiscal year, it says:
- royalties will increase because of higher prices,
- royalties will be relatively flat, and
- royalties will decrease because of lower gas prices.
Scoring 10 out of 10 on the Boren scale, the ministry wordsmiths covered every base. How can they be wrong?
By the way, here is a Bloomberg natural gas price chart that is more definitive:
The following chart shows royalties reported by government, adjusted to 2016 dollars, based on Bank of Canada inflation calculator as of February 22, 2017:
This chart in downloadable pdf format:
But, remember, gas producers earn credits that can reduce future royalty payments and those have been building steadily. As of March 2016, unused credits – reported in yearly financial statements by Auditors’ footnotes – totalled $1.932 billion. Not wanting to draw attention to these subsidies, Government does not record the amounts as a liability, nor does it report the total in quarterly reports.
If the liabilities owing producers were recorded routinely, provincial natural gas revenue would be less than zero in two of the last four years. In current dollars, BC’s gas income, including rights sales, declined by more than $2.5 billion, comparing 2016 to 2001. Of course, the volume of production was much higher in 2016.