Tough times are continuing for Alberta's oil and gas country, with the amount of unpaid property taxes that oil and gas companies owe to Alberta towns has more than doubled?
Tough times are continuing for Alberta's oil and gas country, with the amount of unpaid property taxes that oil and gas companies owe to Alberta towns has more than doubled over the course of just a year.
The total tax debt outstanding? $173 million?a 114% increase from this time last year as the industry comes up short thanks to patches of huge gaps between the price of West Texas Intermediate and Western Canadian Select oil benchmarks, and production curtailments to producers in an attempt to keep that gap in check.
And now, oil and gas producers are?whether out of a sheer inability to pay or by design--passing on their pain to the governments they are beholden to.
This, even as municipal tax rates on shallow gas wells and pipelines were recently reduced by as much as 35% in an effort to ?prevent further company failures and job losses? in Alberta.
Saddled with unpaid tax invoices, Canada is also facing an exodus of oil companies?either foreign ones who are tired of trying to make a go of it in Canada, or native ones looking for greener pastures--the most recent of which is Encana, who will change its name and hightail it across the border to Denver, Colorado. Other recent runaways, either in whole or in part, are Kinder Morgan, whose Canadian experience rose to nightmarish proportions, ConocoPhillips, Shell, Equinor, and Marathon Oil.
The situation is so dire for the municipalities, according to the Financial Post, that some now have a ?write-down budget?, to account for taxes due from companies who are likely to never make good on their payments.
Last year, the Alberta Court of Appeal ruled that municipalities are unsecured creditors when it comes to bankruptcy?this means that are last to get paid in the event of default?and less likely to see the money ever.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
China Finds Oil In Asia's Deepest Onshore Well
Oil Is The Only Way Back Up For Venezuela
Hedge Funds Dump Oil After Middle East Tensions Ease