Strategic Non-Renewable Resource Governance: A History of Alberta Oil Sands Royalty Regulations, Public Finances, and Global Oil Markets

Abstract

The following thesis examines Alberta oil sands royalty regulations and public finances across different stages of oil sands development and oil price fluctuations from 1967 to 2014. The main emphasis of this thesis is on how Progressive Conservative governments managed the collection, saving, and distribution of economic rent through the design of oil sands royalty regulations and the spending and saving of royalty revenue. The design of oil sands royalty regulations shaped the degree of economic rent collected by the government, and in turn the amount of non-renewable resource revenue available for managing public finances. Economic rent is understood as the public’s share of economic benefits from non-renewable resource development, and the difference between the price a non-renewable resource can be sold for on commodity markets and the total discovery, production, and opportunity costs. The complex history of economic rent and oil sands development is detailed in relation to commodity markets and fiscal regimes in Alberta since 1967. Progressive Conservative premiers Peter Lougheed, Don Getty, Ralph Klein, and Ed Stelmach each approached the design of oil sands royalty regulations and management of public finances with the goal of encouraging private investment in oil sands development. Differences in the management of public finances are revealed through examination of the boom and bust economic fluctuations of the oil industry as well as Alberta’s reliance on volatile oil markets. Progressive Conservative governments viewed the oil sands industry as the main source of economic opportunity for Alberta, and development of this industry was prioritized in the design of royalties and the management of public finances.