The SaskatchewanSIPP Institute of Public Policy Saskatchewan's Oil and Gas Royalties: A Critical Appraisal by Erin Weir Public Policy Papers Student Editions From time to time the Institute is in a position to publish papers from students. These papers demonstrate the independent thought of our youth in the field of public policy. While we are pleased to be able to publish this unique body of work,the views expressed are not necessarily the views of the Institute. Table of Contents Contact Information Foreword . .1 Section I: Introduction and Overview . .2 Section II: The Current Royalty Regime . .4 Section III: A Conceptual Model . .6 Section IV: The Short-Term Tradeoff . .11 Section V: The Long-Term Tradeoff . .16 Section VI: Constraints on Royalty Policy . .19 Section VII: Historical Performance Evaluation . .23 Section VIII: Inter-Jurisdictional Performance Evaluation . .29 Section IX: Ideological and Electoral Factors . .32 Section X: Policy Recommendations . .41 PLEASE NOTE – The following sections are available online only at www.uregina.ca/sipp: • Tables I,II,IV and V; • Section XI: Appendices; and, • Section XII: References. Author Erin Weir can be contacted for comment (through April 2003) at: Telephone: (403) 210-7634 E-mail:
[email protected] or
[email protected] FOREWORD This paper provides a critical appraisal of Saskatchewan’s oil and gas royalties and argues that they should be increased. It was written between June and September of 2002 to convince the provincial government to raise its royalties, rather than to criticize its decision, announced on October 7th, 2002, to greatly reduce them. However, the October 7th announcement makes the paper’s analysis and conclusions all the more timely.