If we transition away from hydrocarbons by 2050, where will our public sector find the same level of funding as it currently enjoys from our oil and gas sector?.The Chief Executive Officer of Alberta’s Canadian Natural Resources (CNRL) Ltd highlighted in his third-quarter earnings call that CNRL’s contribution to Canadian government revenues to date in 2022 was more than $11 billion. At this rate CNRL will likely pay out a full $15 billion by year’s end. That's a 120% increase relative to 2021. This statistic covers resource royalties and corporate income tax only, the bulk of corporate payments. Meanwhile, the Royal Bank of Canada’s (RBC) July 2022 report estimated Canada’s oil and gas sector will generate roughly $48 billion for Canadian governments in 2022, to rise to $64 billion in 2023. RBC did not include CO2 emission taxation, Crown lease sales, indirect employment, land-use fees and employee personal income taxes..Given these changes in revenue are a function of the sanctions against Russia and the continued calls to reduce investment in growing or maintaining global hydrocarbon supplies, it's fair to suggest we're facing a new normal. In the absence of a major economic downturn, it's likely we will see corporate royalties and income tax on oil and gas production ranging between $50 and $70 billion per year from now to 2030..On the customer side, revenues from taxing consumption show as of May 2022 the national average taxation revenue per litre of gasoline was $.55 when gasoline was $1.76/litre. Extrapolating to 2030 and accounting for escalating weather taxation policies on gasoline across all three levels of government, this will push the national average taxation burden to $.96/litre — plus the $.08/litre tax-on-taxes.” .By 2030, half of the tax at the pump will be the $170 per tonne charge on the carbon content in the fuel.. Gas tax breakdownThe 24th Annual Gas Tax Honesty Report, The Canadian Federation of Taxpayers, May 2022. .Stats Canada shows 40 billion litres of gasoline and 18 billion litres of diesel were consumed by Canadians in 2021. Rounding up to 60 billion litres for 2022, assuming similar consumption rates in 2030 and applying the $.55 and $1.04 per litre total tax rates, suggests that total public revenues from consumption will rise from $33 billion in 2022 to as much as $62.4 billion by 2030..As the RBC estimate did not factor in the “carbon levy,” I will estimate this remaining factor from 2022 to 2030 for natural gas..At $50 per tonne in 2022, Canadians will pay approximately $9 billion for the carbon levy on natural gas. By 2030 when the levy reaches $170 per tonne, Canadians will pay approximately $32.4 billion..Therefore, public sector revenues from oil and gas production and consumption in 2022 will be approximately $90 billion and by 2030 will range from $145 to $165 billion. This equates to an annual taxation rate increase of 9.3% from now until 2030..On a yearly per-capita basis, this represents an increase in taxation revenue from $2,368 to $3,875..What industry is capable of funding to the tune of $700 billion to $1 trillion dollars over the next seven years without going bankrupt? That is a rhetorical question, because there is no segment of our economy that has the productivity of the energy sector..According to Natural Resources Canada, 4.5 % of our workforce employed in the energy sector creates over 10.5 % of the gross domestic product. It is this exceptional productivity and the fact that energy is a foundational, which makes taxation pressure in this space so effective..Will these public revenues simply be replaced by equal taxation of electrical energy production post hydrocarbon transition?.Some simple energy accounting will help answer this question..As people are most familiar with the price of energy paid at the fuel pump, let's compare natural gas and electricity price-wise on an energy equivalent basis to that in a litre of gasoline..In October the pre-tax price charged by a refinery in Edmonton Alberta is around $.89 per litre..Direct Energy five Year fixed rate of $6.69 per GJ for natural gas = $.22 per L.Electricity at $.25 per kWh = $2.22/L.Note: Electricity price includes consumption, transmission and distribution fees..Now imagine adding the 2030 tax for gasoline of $1.04/L onto what Albertans are paying for electricity on a gasoline equivalent basis?.That would be equivalent to $3.26/L..Who can afford that?.Electricity has always been the most expensive form of energy..So then why are we being pushed into a pure electric economy?
If we transition away from hydrocarbons by 2050, where will our public sector find the same level of funding as it currently enjoys from our oil and gas sector?.The Chief Executive Officer of Alberta’s Canadian Natural Resources (CNRL) Ltd highlighted in his third-quarter earnings call that CNRL’s contribution to Canadian government revenues to date in 2022 was more than $11 billion. At this rate CNRL will likely pay out a full $15 billion by year’s end. That's a 120% increase relative to 2021. This statistic covers resource royalties and corporate income tax only, the bulk of corporate payments. Meanwhile, the Royal Bank of Canada’s (RBC) July 2022 report estimated Canada’s oil and gas sector will generate roughly $48 billion for Canadian governments in 2022, to rise to $64 billion in 2023. RBC did not include CO2 emission taxation, Crown lease sales, indirect employment, land-use fees and employee personal income taxes..Given these changes in revenue are a function of the sanctions against Russia and the continued calls to reduce investment in growing or maintaining global hydrocarbon supplies, it's fair to suggest we're facing a new normal. In the absence of a major economic downturn, it's likely we will see corporate royalties and income tax on oil and gas production ranging between $50 and $70 billion per year from now to 2030..On the customer side, revenues from taxing consumption show as of May 2022 the national average taxation revenue per litre of gasoline was $.55 when gasoline was $1.76/litre. Extrapolating to 2030 and accounting for escalating weather taxation policies on gasoline across all three levels of government, this will push the national average taxation burden to $.96/litre — plus the $.08/litre tax-on-taxes.” .By 2030, half of the tax at the pump will be the $170 per tonne charge on the carbon content in the fuel.. Gas tax breakdownThe 24th Annual Gas Tax Honesty Report, The Canadian Federation of Taxpayers, May 2022. .Stats Canada shows 40 billion litres of gasoline and 18 billion litres of diesel were consumed by Canadians in 2021. Rounding up to 60 billion litres for 2022, assuming similar consumption rates in 2030 and applying the $.55 and $1.04 per litre total tax rates, suggests that total public revenues from consumption will rise from $33 billion in 2022 to as much as $62.4 billion by 2030..As the RBC estimate did not factor in the “carbon levy,” I will estimate this remaining factor from 2022 to 2030 for natural gas..At $50 per tonne in 2022, Canadians will pay approximately $9 billion for the carbon levy on natural gas. By 2030 when the levy reaches $170 per tonne, Canadians will pay approximately $32.4 billion..Therefore, public sector revenues from oil and gas production and consumption in 2022 will be approximately $90 billion and by 2030 will range from $145 to $165 billion. This equates to an annual taxation rate increase of 9.3% from now until 2030..On a yearly per-capita basis, this represents an increase in taxation revenue from $2,368 to $3,875..What industry is capable of funding to the tune of $700 billion to $1 trillion dollars over the next seven years without going bankrupt? That is a rhetorical question, because there is no segment of our economy that has the productivity of the energy sector..According to Natural Resources Canada, 4.5 % of our workforce employed in the energy sector creates over 10.5 % of the gross domestic product. It is this exceptional productivity and the fact that energy is a foundational, which makes taxation pressure in this space so effective..Will these public revenues simply be replaced by equal taxation of electrical energy production post hydrocarbon transition?.Some simple energy accounting will help answer this question..As people are most familiar with the price of energy paid at the fuel pump, let's compare natural gas and electricity price-wise on an energy equivalent basis to that in a litre of gasoline..In October the pre-tax price charged by a refinery in Edmonton Alberta is around $.89 per litre..Direct Energy five Year fixed rate of $6.69 per GJ for natural gas = $.22 per L.Electricity at $.25 per kWh = $2.22/L.Note: Electricity price includes consumption, transmission and distribution fees..Now imagine adding the 2030 tax for gasoline of $1.04/L onto what Albertans are paying for electricity on a gasoline equivalent basis?.That would be equivalent to $3.26/L..Who can afford that?.Electricity has always been the most expensive form of energy..So then why are we being pushed into a pure electric economy?
