Can’t rely on oil and gas
Mayor says new term will differ from recent years as the city looks to monitor its finances closely
The City of Medicine Hat must move beyond the hope of a natural gas price recovery, and not expect higher oil prices to improve city finances or the local economy, Mayor Ted Clugston told a business audience on Tuesday.
He also said the next four years won’t be “boring,” as he said on the campaign trail, but that it’s time for the private sector to be responsible for more ribbon-cuttings than City Hall.
However, he said, boosting the outlook of the city’s energy interests — and possibly selling off any new discovery — is key to building Medicine Hat in to “what it can be.”
“We’re going to try to get NGPR (the petroleum division) back to profitability,” the recently re-elected mayor said afterwards. “We’re not going to be building recreational features while we build up our cash reserves again.
“It’s a radical change from the last two terms really, when there were a lot of sod turnings and ribbon cuttings. But we’ll be watching the financial ship.”
The annual mayor’s breakfast address traditionally takes place in October during small business week, but this year was postponed for the election.
Since the new council was only elected three weeks ago, and a strategic plan including input from all council members won’t be developed until January, Clugston told the crowd he was speaking for himself.
But much of what he said was well covered during the four-week election campaign that concluded on Oct. 16.
During his address, Clugston said tax and utility rates may have been hotly discussed during the election, but local tax rates are moderate and utility rates remain the lowest in the province.
“Businesses aren’t just looking for low tax rates,” he said, before promoting amenities and city services.
He reiterated that possible private sector investment in helium production paired with city effort to develop the resource would help development.
As for energy production, the city is coming to the end of year one of a three-year $45-million drilling program aimed at boosting oil production.
Clugston has previously said the city’s oil leases are profitable with North American oil priced in the range of mid-US$40 per barrel. West Texas intermediate closed at a two-year high above US$55 last week.
He also said the city should consider “monetizing” a new find — basically selling fields after proving the reserves — rather than producing oil itself.
That’s a departure from past practice, said Clugston, but could provide more stable revenue when invested in money markets.