There were two key messages contained in the recent Alberta Royalty Review Panel's report. The first was that, as Albertans, we should begin to think like owners; the second was that we “do not receive (our) fare share from energy development and … have not, in fact, been receiving (our) fare share for quite some time."

I agree.

My own studies, which I began in the early 1990s, of Alberta’s royalty and energy rent regime (defined as a surplus value, i.e. the difference between the price at which a resource can be sold and its respective extraction or production costs, including normal returns), support the Panel’s findings that Albertans receive significantly lower returns on their oil and gas assets than other jurisdictions such as Norway, Alaska and even conservative states such as Texas and Wyoming.

Alberta's "generic" oilsands royalty regime, which charges a mere 1% on net profits (after all capital is expensed), is so generous that it can be compared to allowing a farmer to write off a combine machine or a businessman an entire office building against one year’s revenues!

It isn’t surprising, of course, that the oil industry would complain about any increase in Alberta's oil and gas royalty structure. But it is important to remind the industry that the oil and gas in the ground represents a significant asset for Albertans and all Canadians.

As the owners of the asset, Albertans and Canadians must at least be assured that they are receiving a fair and optimum share of the wealth these resources are generating.

As owners, we expect our government -- as asset managers -- to fully account for the costs incurred and the benefits accrued from the exploitation of our assets. The government then has the responsibility of ensuring that we receive a fair share of the wealth being generated while ensuring that the industry remains viable.

A full accounting of the energy rents must include transparency in the real costs of extracting the resource. The industry’s obligation to disclose its actual operating and capital costs should be made commensurate with its license to extract the resource.

A full accounting would clear the air and answer industry complaints that the Review Panel's analysis did not account for the real cost conditions it faces. In the absence of a full accounting, the debate is rhetorical, circular and filled with innuendos.

As an Albertan, I would like to propose that my government introduce the following policy recommendation:

that some of the extra $2 billion we should be legitimately collecting as our fair return on our natural capital be used to buy a 5 per cent or greater share in all of the companies that are operating in Alberta's oil patch.

Such an investment only follows the tradition set by many other jurisdictions, such as Norway and recently Newfoundland.

The investment would provide us with a legitimate right to ask for industry production cost information so we would have a basis of assuring that we are in fact collecting a fair share. Ironically, I'm sure we already have this right to exercise with some of our Heritage Fund invested in petroleum company stocks.

Consider the benefits that Norway now enjoys by investing directly in its North Sea oil reserves; it's Petroleum Fund (now renamed the Government Pension Fund- Global) has grown to US$285 billion, generated a return of 7.9% in 2006 and grew by an astounding $78 billion in a single year from what it collected from its oil and gas royalties!

Norway, with similar oil and gas reserves as Alberta and with a population of 4.5 million people, could earn US$22.80 billion at an 8 percent return from its in 2007 fund assets. That would roughly equal 69 percent of the $33.1 billion of the Alberta Government's forecasted expenditures for 2007!

Norway is both thinking, and acting, like an owner of its resources. So should we.

Mark Anielski is an economist, president of his family-owned corporation Anielski Management Inc. and author of The Economics of Happiness: Building Genuine Wealth.

YOUR VIEW What do you think? Are the recommendations in the Royalty Review Report reasonable? Do they go too far? Or too little? Share your views with other Albertans here.