Costs rise; revenue goes in the other direction

If oil and gas ever goes in the tank (so to speak), rural municipalities might as well close up shop and turn the keys over to the Department of Municipal Affairs. That’s the kind of talk not uncommonly heard around council tables these days.

There are ominous signals. One of them is oil companies defaulting on property taxes. A companion piece to that is energy companies lobbying the province to lower the rates they pay in the first place.

This sort of thing is decried as greedy tactics; in some cases it might be, but it is a general reflection of the economics in times of a low price for a barrel of oil. Margins are slim and every bit that can be gained might make the difference between a well staying in production or being shut down.

This sort of thing is inevitable in declining fields; it has always been coming and should be no surprise to anyone who has been paying attention. Oil is not a renewable resource. So there is a transition happening anyway, regardless of any social or political trends that may play a role.

Having said all of that…. demand for any commodity is affected by global attitudes. Those are shifting.

Getting back to municipalities…. There is only so much they can do. If costs and expectations always rise but revenue doesn’t – it’s a recipe for hard times.

But nobody can say for sure what might arise to replace the energy gravy train.

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