DEBATE: Should Canada Be Taxing "Big" Oil's Excess Profits?

Debate - Does Taxing Big Oil's Excess Profits Hurt or Help Canadians, global energy security and the environment

Global energy shortages driven by the pandemic, underinvestment in supply and now the war in Ukraine has shot energy prices sky high for consumers around the globe. As a result, energy companies are seeing record revenues, leading some politicians and activists to demand a new tax on "Big" oil's excess profits.

Would a new tax on energy companies help or hurt Canadians, global energy security and the environment? Those are good questions, explored on The Mike Smyth Show's debate between Canada Action and The Wilderness Committee, airing on August 3rd, 2022.

LISTEN TO THE DEBATE NOW

Or, keep on reading for everything said between Cody Battershill, Chief Spokesperson and Founder of Canada Action, and Peter McCartney, Climate Change Campaigner with The Wilderness Committee.

Should We Increase Taxes on Canadian Energy?

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DEBATE TRANSCRIPT:

Mike: All right, here we go with our big oil profits debate on the show today. Big oil making big bucks here right now. They are making huge profits.

Should they be slapped now with a windfall profits tax? That's what many people are demanding here. Now.

Have you seen some of these profits being reported by the big oil companies? Oh, my God. They're just raking it in. Exxon, they just reported $17.9 billion in profit in three months. That's a one-quarter earning report. $17.9 billion. Chevron, $11.6 billion in profit. This is US dollars, by the way, BP, their profits have tripled, $9.6 billion profit in the last quarter.

Have a listen to this report here now from NBC News.

NBC News: Here at home, a pair of US oil companies announced record profits Friday. In the second quarter, ExxonMobil reported nearly $18 billion. Chevron, recording over $11.5 billion in profits.

Soaring energy prices have contributed to record inflation, driving up the cost not only of fuel, but everything from apples to toilet paper. It's leaving some Americans struggling right now to pay for gas and food and other basic necessities.

Mike: Okay, so the question now is, should these big oil companies face a big tax bill tax the profits on the oil companies? Some people are demanding that. Democrats in the US congress are lobbying for that.

Here at home, NDP leader Jagmeet Singh has also called for an excessive profits tax.

Let's discuss it now.

We got both sides of it for you, Cody Battershill is from Canada Action in Alberta. They support the oil sands in Alberta.

Hey, Cody.

Cody: Hey, Mike. Thanks for having me.

Mike: Thanks for coming on again. Peter McCartney is a climate change campaigner at the Wilderness Committee. Peter.

Peter: Hey, pleasure to be here.

Mike: Okay, guys, thank you to both of you for being here once again. Peter, let me go to you first. An excessive profits tax on oil companies. You support that, right?

Peter: Absolutely.

I think ultimately this is just a question of fairness. People are really struggling to put gas in their vehicles to get to work, to put food on the table.

All of the rising prices of everything we have that are caused by global supply chain issues, the pandemic, the war in Ukraine, global climate disasters, things that are completely out of their control. And yet these companies are taking advantage of the exact situation that is causing this for people, and they're paying billions of dollars out to their shareholders at a time when Canadians are struggling.

So I think you can't look at this situation and say that this is working as intended and we need this excess profit tax to reign in inflation and help people out and help them able to afford their daily lives.

Mike: How much would the tax be, in your mind? How much would it raise?

Peter: I think the tax has been suggested is 50% of any excess profits or whatever these companies have made in the past decade. At the moment, they're making up three times that at this point. And so we would take half of that and use it to rebate Canadian so they can afford their daily costs and help make life a little easier on folks.

Mike: Okay. 50% tax. That's a big tax. Cody Battershill, your thoughts?

Cody: Well, I think we need to go back and just look at the facts. So the Canadian oil and gas industry has generated more than a half trillion dollars for our government since the year 2000. This year, it's expected the industry will generate almost $50 billion. That's money going into public funding, public services, our quality of life.

It's not just a one way street here.

This is, of course, an industry that's made up of Canadians supporting communities. And we already charge a version of a windfall tax as royalties go up, as prices go up. So Canadians are already getting more from these companies the more they earn.

Also, when we're talking about global instability, it's been a lot of the pipeline activism and trying to shut down oil and gas. That has, in some ways, contributed to an over-reliance on countries like Russia that we cannot rely upon, that also have weaker environmental standards and less investment in Canada.

And so as we've done that, we've created these shortfalls of supply, and we're going to need all energy forms for decades to come.

Oil and gas industry is one of the biggest investors in renewables as well, so there's a lot more to this. I mean, during the Pandemic, we weren't taxing excess profits of tech companies. So we really need to just slow down and talk about the net contribution.

We all use oil and gas. It's a Canadian industry that we can support, and it's generating huge amounts of money for our government. It's not just a one-way street here.

Mike: Okay, Peter, what do you say to that?

Peter: Well, it's always good to think that the tax money that these companies are breaking in is going to our governments, but the truth is it's not. It's going to higher dividends for their shareholders. Suncore tripled its dividend. It raked in $3 billion in the first three months of this year alone.

The top ten oil and gas companies in this country have made $29 billion in record profits in six months. And that money is going back to their shareholders, is making the rich richer in this country as the people who are struggling to afford their daily lives are left behind.

And so I can't see how you think that as a fair situation. These companies are making record profits, and they need to be forced to give a little more back.

Mike: Go ahead, Cody.

Cody: Mike. I just got to jump in. Peter's wrong. He doesn't have the facts straight.

When we look at oil and gas this year, again, it's projected to be $50 billion to our government. So if Peter is talking about $29 billion, well then that's already almost double what the governments are going to get than the number that Peter just quoted.

The real estate industry from 2000 to 2019 was $211 billion to Canadian governments. Oil and gas was more than double that. Construction sector, $298 billion.

When we go back and look at the facts, number one, pipeline obstructionism and blocking Canadian energy doesn't help people or the planet.

Number two, this industry is employing our families and creating tremendous massive fiscal stimulus for our governments, for our social spending.

Peter: You know I think the really interesting point is about employing people because the main way that these companies are making so much money is they're automating as many jobs as they possibly can.

My friend that works as a mechanic up in the tar sands is now basically just sitting there and maintaining automated trucks as they move tar sands oil around. So they are putting as many people out of work as possible and they're getting rich doing it.

As for Canadian taxpayer money, we are spending $25 billion on a pipeline that is a gift to this industry. We could at least call that back in the record profits that they're making. Yeah.

Mike: Peter, do you think that drivers are getting ripped off at the gas pump right now? I mean gas prices have gone down a little bit lately, but with these record profits being raked in by oil and gas companies, what do you think about what Canadians are paying at gas prices at the gas pump right now?

Peter: Yeah, I mean it's pretty clear that these companies will charge whatever people can handle and take the profits and give them to their shareholders. And that means that people just trying to get out for their summer vacation are paying more.

And the people who own the stock in these companies, which I certainly don't and I don't know many people who do, are making record profits to pay for summer vacations that are far more lavish than you and I could ever dream of.

Mike: Cody, what do you say to that?

Cody: I mean, first and foremost, many people's retirement plans, pension plans are going to hold some Canadian oil and gas stocks.

Canadian oil and gas is a climate leader, reducing emissions, like I said, investing in renewables, working with Indigenous communities who support Coastal GasLink. A majority also support Trans Mountain.

The Canadian government helping Trans Mountain get built after all of the obstructionism. I'm looking at you, Peter, and other groups that have caused the cost to escalate so severely.

That is a strategic decision. So Canada can maximize the value of our resource, selling to the whole world for the best price.

And if we don't invest in oil and gas today, we're going to have even more shortages in the future.

When the US did a windfall tax in Jimmy Carter's administration, they found after the fact that it decreased production, causing the US to rely more on foreign sources that as we all know do not have the same standards for protecting people, for protecting the planet and those foreign producers do not benefit Canadian families, period.

Mike: Okay, all right. It's our excessive oil profits tax debate with my guests Cody Battershill and Peter McCartney.

Tons of phone calls, Sam in Salmon Arm. Hi Sam, go Ahead.

Sam: Hey yeah this is a fellow who was talking about these shareholders who are making all this money. Like who are these shareholders to you? I'm a shareholder and I'm not an ultra wealthy person but I do see benefit when the companies I invest in do make profits. It's called investing.

Mike: Peter, what do you say to him?

Peter: Yeah, I mean I think the amount of shares you probably own compared to Jimmy Patterson and the wealthiest people in this country is not much.

I would say that the shareholders of oil companies tend to be Bay Street hedge funds who are willing to take on the risks of a massively volatile commodity and it's not low income people who are struggling to put gas in their car and food on their tables and have roof over their heads.

The people who are getting richest from these dividends are the people who can most afford to forgo these profits.

Mike: Cody, you want to weigh in on that?

Cody: Yeah, I mean if we're going to tax these windfall profits then I guess we're going to have to give them all money when oil goes negative and the industry is struggling.

And let's be honest, you don't get to oppose pipelines like Peter does which causes delays which increase the cost and then complain about the cost because you're part of the problem.

We need to invest in this country so that we have more jobs, so we can reduce the cost of living so that we can support all Canadian families and be pragmatic about energy demand and resource reality.

Mike: Let's go to Darryl on the line in Coquette. Hi, Daryl. Go ahead.

Darryl: Yes, I would like your guest Peter to definitively define what he means by excessive profit and would he apply that to all publicly traded corporations, law blog, group of companies, CN Rail, CP Rail and the vast holders in the energy sector of those shares are pension funds that pay dividends to pensioners.

So if you could ask Peter what his definition of all that is.

Mike: Okay Peter go ahead. Yes.

Peter: The definition that folks have been using around the world and they've done this in several European countries. They've passed it through the United States has is excess profits over the amount that these companies made from the last decade before the Pandemic.

Before global supply chain issues and the war in Ukraine and there is a long history of taxing companies during a time of crisis who are getting rich off of that crisis. So absolutely I think we should be taxing Loblaws, we actually already brought in an excess profits tax for the banks this year, 15% over that amount of money that they made in the last decade.

Because we recognized that they had to contribute to solving the crisis that they are currently getting rich off of and making it a little easier for people to bear it.

Mike: Back to the phone lines. David in North Vancouver. Hi, David. Go ahead.

David: Hi, I'm just listening to that Peter and his comments are creative at best. And talk about a tar sands in Fort McMurray. There is no tar sands. Excuse me? There are no tar sands. It's oil sands.

And all these dividends that these people are getting and we should tax them. The taxes are paid by the people that receive  dividends.

So when they get more from the oil companies, the government gets more. Like he lives in a dream world.

Mike: Peter, what do you say to that?

Peter: Suncor was the first people to name the tar sands the tar sands, so I'll put that one aside.

But in terms of capital gains tax is one of the lowest taxes we have in comparison to an excess profits tax. It would not be nearly as much what we're saying. These companies aren't investing in creating jobs, they're not investing in renewable energy, they're not investing in even more supply.

What they're doing is paying their shareholders record profits and we should be able to take some of that and help the people out who are no longer able to afford their product.

Mike: Cody, go ahead.

Cody: Peter, why would they want to invest in more production when you vilify the industry and the Canadians who are trying to feed their families.

This industry is one of the largest investors in renewables. What you said is absolutely false.

We've got so much obstructionism in this country and you've got all these callers saying that they're receiving dividends, their grandmas are receiving dividends, our pensions are receiving dividends, the taxes are being paid.

This industry is generating so much for communities across this country and yet you still want to shut down pipelines and make things more expensive.

It's not pragmatic and it's not fair to Canadians.

Mike: Peter, go ahead.

Peter: These pipelines have nothing to do with the gas that goes into your car. Trans Mountain is 100% for export to Asian markets.

There is no gas that's being refined here in Canada because it's more profitable to ship it somewhere else, refine it there and then import it from the United States. I don't know what Cody is talking about when he thinks that the pipelines that we are fighting are actually going to deliver oil and gas.

Cody: Energy east is a great example. And just increasing the cost of all these pipelines that you're then complaining about. This industry, all industries, renewables as well. It's very important for Canadian families.

We got to work together and be honest.

Mike: Thank you guys for a really good discussion. I'd love to keep it going. We're up against the clock.

Thank you to both of you. Cody Battershill, Canada Action. Peter McCartney from the Wilderness Committee.

Thank you for all your calls there.

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