Saskatchewan Government Resource Revenues
Our resource sector has provided the provincial government with between $1 and $4.5-billion dollars in annual revenues, which has been between 10% and 25% (‘ish) of all the government’s revenues.
If you look at how that is broken-out by resource, oil has traditionally been the largest contributor, but with the plummeting oil prices lately, potash is now similar.
Now, that $3-billion drop in total resource revenues from their high in 2008 to today’s levels, reflects the cyclic nature of industry. We cannot always count on high prices and sales generating high royalties. So, in turn, we need to insure that our companies can be competitive on a global scale – which means keeping costs low as they all receive similar prices. These costs can be impacted by things like internal efficiency and royalties. Companies also need to able to build cash reserves so they can make it through the tough times, without having to lay-off staff.
Also, that $3-billion drop in royalties has a massive impact on provincial budgeting. $3-billion could be massive portions of the provincial budget, here’s what it looks like.
Now, if the price of oil goes or potash goes up, or the amount we sell goes up, so do our royalties. Conversely, if the Canadian dollar drops our royalties go up since the products are sold in US dollars. However, the Canadian dollar ‘tends’ to follow the price of oil so, usually, sky-rocketing oil prices will also somewhat drag the Canadian dollar up with it, thus negating part of the price increase.
And for reference sake, here is what they used for forecasting this coming year.