The five companies that dominate the oilsands industry have remained “incredibly profitable” despite low oil prices and delays in building new pipelines, according to a report from the Parkland Institute.
“Despite the 2014 oil price crash and the ongoing hand-wringing over pipelines and the price differential, the reality is that the big five oilsands producers have remained incredibly profitable corporations,” said Ian Hussey, lead author of a report released Thursday by Parkland Institute and the Canadian Centre for Policy Alternatives.
Last year alone, the companies banked or paid out to shareholders a total of $13.5 billion, he said.
“These companies have been able to continue to transfer sizeable amounts of money to their shareholders or to their bank accounts, while at the same time in 2015 cutting almost 20,000 jobs from the Alberta economy,” Hussey said.
The report analyzed the business economics of Suncor Energy, Canadian Natural Resources Limited, Cenovus Energy, Imperial Oil, and Husky Energy, who together produce 80 per cent of Canada’s bitumen.
The economic numbers used in the study included a 10-year oil boom from 2004 to 2014, when prices were high, and the bust period from 2014 to 2016, he said.
“They’ve been able to continue to pay out high dividends to their shareholders when they’re crying poor to the public and in the media,” Hussey said.
From 2009-17, the five companies paid $31.76 billion in dividends to shareholders, including $12.56 billion since the oil price crash in late 2014, the report said.
In 2017, the companies transferred to shareholders $4.16 billion in dividends and $2.04 billion in share buy backs, it said.
At the same time, the companies had residual savings of $7.3 billion, while paying out $4.72 billion in taxes and royalties to all levels of government.
Those in Canada’s oil industry say the comparison of money paid to shareholders and money paid to governments in taxes and royalties shows the system is fair.
“Both companies and the governments are sharing in the benefits of the development, which is actually quite consistent with the nature of the royalty and resource development system that was built in Alberta,” said Ben Brunnen with Canadian Association of Petroleum Producers. “So I would sort of make the case that we see here is an example of the system working quite well.”
Brunnen said it’s important for oil companies in Alberta to reward their shareholders, or investors will go elsewhere.
“We live in a very competitive market for capital, and that money has been leaving this country,” he said.
The aggregate gross profit of the five companies in 2017 was $46.6 billion, which was close to the Alberta government’s revenues of $47.3 billion, the report said.
The multinational corporations — all with significant assets in the U.S.— have been able to shift their operations in response to market conditions to ensure they remain profitable, Hussey said.
The data used in the report was gleaned from “dozens of data sets,” including company annual reports and Statistics Canada, he said.
Parkland Institute is a public policy research institute at the University of Alberta.
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Sherwood Park is a large hamlet in Alberta, Canada within Strathcona County that is recognized as an urban service area. It is located adjacent to the City of Edmonton’s eastern boundary, generally south of Highway 16 (Yellowhead Trail), west of Highway 21 and north of Highway 630 (Wye Road). Other portions of Sherwood Park extend beyond Yellowhead Trail and Wye Road, while Anthony Henday Drive (Highway 216) separates Refinery Row to the west from the balance of the hamlet to the east.
Sherwood Park was established in 1955 on farmland of the Smeltzer family, east of Edmonton. With a population of 70,618 in 2016, Sherwood Park has enough people to be Alberta’s seventh largest city, but technically retains the status of a hamlet. The Government of Alberta recognizes the Sherwood Park Urban Service Area as equivalent to a city.
Sherwood Park, originally named Campbelltown, was founded by John Hook Campbell and John Mitchell in 1953 when the Municipal District of Strathcona No. 83 approved their proposed development of a bedroom community east of Edmonton. The first homes within the community were marketed to the public in 1955. Canada Post intervened on the name of Campbelltown due to the existence of several other communities in Canada within the same name, so the community’s name was changed to Sherwood Park in 1956.
The Sherwood Park Urban Service Area is located in the Edmonton Capital Region along the western edge of central Strathcona County adjacent to the City of Edmonton. The majority of the community is bound by Highway 16 (Yellowhead Highway) to the north, Highway 21 to the east, Highway 630 (Wye Road) to the south, and Anthony Henday Drive (Highway 216) to the west. The Refinery Row portion of Sherwood Park is located across Anthony Henday Drive to the west, between Sherwood Park Freeway and Highway 16. Numerous developments fronting the south side of Wye Road, including Wye Gardens, Wye Crossing, Salisbury Village and the Estates of Sherwood Park, are also within the community. Lands north of Highway 16 and south of Township Road 534/Oldman Creek between Range Road 232 (Sherwood Drive) to the west and Highway 21 to the east are also within the Sherwood Park urban service area.