Three Wacky Accounting Numbers for LNG and Shale Gas
Close read of BC’s budget shows realities of this subsidized industry boondoggle.
The first concerns revenue. Premier Christy Clark promised in 2013 that profits from the LNG industry would pour like manna into a $100-billion provincial prosperity fund.
In the months before the election that year, the government persuaded citizens that a complex, high-cost and foreign-owned industry, tied to a volatile greenhouse gas, could somehow make the province debt-free and bless it with Alberta-like prosperity.
Twenty LNG proponents all lined up at the government trough, expecting low royalties and taxes. But not one of the 20 proponents has committed to go ahead with a LNG project, because the economic justification has vanished in a sea of volatility. Many are folding, such as the Douglas Channel LNG project, because of what industry calls “unfavourable market conditions.”
New LNG terminals in Australia, Papua New Guinea and Angola have created an oversupply while demand is falling in key markets like Japan, South Korea and China due to economic stagnation. Prices for LNG are expected to remain in the tank for years or become as volatile as oil.
No matter. Faced with her pet industry’s dire prospects, Premier Clark took $100 million, about what the province will bring in through higher Medical Services Plan premiums, and boldly placed those hard-won tax dollars into B.C.’s newly created LNG prosperity fund.
Clark is trying to preserve the illusion of a revenue stream that doesn’t exist. In so doing, her government has out-Orwelled Orwell with some very creative explanations.
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