Remember the movie about a boy named Lorenzo and the combination of oils that temporarily relieved his medical condition.
Alright, so the tie-in is a bit vague.
Just a bit.
Well, here are a couple of links to oil pricing to help you understand why most people think Loyola Sullivan's projected oil royalties numbers are as useless as they can be.
This one is to a site that quote for Brent light crude (a benchmark for our crude) and includes some futures out to 2007 (!). Brent is currently trading at around US$55 per bbl and the futures market has it running in the same neighbourhood out for another two years.
Here's another one that shows some trending charts for Brent. Note that in the previous 12 months, Brent has spent way more time above US$38 per bbl than it has at or below that price.
I appreciate that economists and accountants are conservative people, but surely there must be some basis for making a reasonable projection that oil revenues will be higher than the number Loyola included in his budget. Even with oil production down 6% last year over 2003, we still raked in $100 million more than forecast due entirely to higher oil prices.
If oil production goes back up to where it ought to be this year we will hardly make less money this year than last. If we look ahead to the next fiscal year, namely 2006, we should expect ever larger amounts of money.
Loyola has a problem with oil revenues; always has and I would venture always will.