A good post from VCI.

We’re heading into a difficult time in terms of Provincial tax revenues. One of the other areas that is poised to torpedo the Provincial budget ( aside from the forestry, fishery, retail, property, mining and buisness failures on top of higher welfare, retraining, , unemployment , crime etc etc as general cost increase, never mind the Olympic budget bomb that has yet to be made public) is the off the cliff drop in natural gas revenues and land leases auctions which have literally ground to a halt in late 2008 and died in 2009 due to excess capacity.

If the government projects a rosy outlook from the gas field revenues in the upcoming budget you’ll know they are lieing big time. The truth is the the industry is on life support and the government can no longer count on the juicy revenues it enjoyed from 2004 through 2008. There will be a collapse in royalties and a nero zero response from land lease contractors in 2009.

In 2008 the government sold almost 1 billion dollars of natural gas land exploration leases. Since that time the gas buisness has near collapsed and every company has near ceased to explore. Drillers are virtually going out of buisnesss due to lack of contracts. Unemplyment in the once invincble gas patch has skyrocketed and is shedding jobs in the tens of thousands. many of these O&G workers were the mainstay of many condo projects in the Victoria and Okanogan areas for example, all on spec, all based on future earnings and continued appreciation of property prices. For many ( as everywhere,) it’s the perfect storm of job loss and property price collapse.

In 2007 the tax revenue from Natural gas royalties to the province was 238 million with nat gas fetching $6.50 per G. The price of gas has fallen to $4.61 per G and falling, consequently many well heads are being shut in, not producing.

With a Provincial budget coming up ahead of this very important election I expect that the real numbers will wrapped in so many layers of obfuscating toilet paper as can be found to try and hide the stink of reality looming for this boom and bust Province. Expect the local media to play along and do a lot more SPCA stories and whale birthing exposes’.