Oil Prices Hit New Highs

I know it is convenient to blame the big oil companies greed for the high price of oil but, Charles Maxwell of

Weeden & Co offers some other explanations:
National oil companies (NOCs) now control some 70% of the
production and just under 80% of the reserves of the world oil industry.
NOCs are commonly starved of sufficient funds to expand their
exploration and production because the funds they produce are critical
to keeping the governments of these countries in power and critical to
meeting the basic everyday needs of their people (in that order). There
is little left over after this job is done to develop skilled manpower,
emphasize new infrastructure to support exploration success, build
pipelines and refineries to deliver the oil to where it is needed and in
usable product form, and so on.

Maxwell goes on to point out that oil companies cannot support 60% of world capacity and development expenditures with only 22% of world reserves. I am unable to reproduce the entire report due to copyright restrictions but one can try contacting Maxwell@Weeden.com for a copy.

The whole report supports what Donald Coxe has long suggested; investing in basic resource companies whose reserves are located in politically safe areas. The Candian oil sands are a good example.

Canada Shooting At Their Own Feet

Jeff Saut in his weekly comments discusses the moves in Alberta to put a tax chokehold on its greatest strength.

For much of this year we have roiled against our government’s increasing movement towards intervention and regulation. Little did we know we had to worry about the same thing in Canada’s most business-friendly province, namely Alberta. As we understand it, last week the Alberta Provincial Government proposed changes to Alberta’s tax code that raises the existing Royalty regime for the province’s oil industry. The proposed (emphasize “proposed”) changes would hike the government’s Royalty rate from 25% to 33% combined with a sliding scale “Oil Sands Severance Tax” (OSST). Taken together, these changes could lift the government’s “take” from roughly 47% to 64% leaving the remaining 36% for the developers/investors. Consequently, the folks providing the “risk capital,” and developing the projects, by default become minority participants in their own projects. This, ladies and gentlemen, is the sort of thing one expects to hear from Venezuela, not Canada!

The one constant across all governments is the inability to keep their hands off any enterprise that is doing well. Spending even ten percent of that effort on cutting spending would do immeasurable good.
here is an article on the tax proposals:

Alberta panel calls for hefty tax increases on oil sands, oil and natural gas