4.9 percent of the Hebron oil field off shore of Newfoundland for $100 million is quite a coup for Newfoundland premier Danny Williams. Not only does it guarantee a steady source of revenue for the ailing province, but it sets a significant, and some say dangerous, precedent.

The question is, however, does the nascent provincial policy of owning 5% of any hydrocarbon project constitute a political risk factor that may alienate Big Oil, or will they take it in a 'cost of doing business' kind of stride.?

If you compare the provincial grab for 5% against the light of current partnership splits with other sovereign entities, Newfoundland is cheap by any stretch of the imagination. Since the 60/40 split forged by Kuwait, Venezuela and others during the last century, a domestic 5% piece is easily digestible - especially by oil companies reporting billion dollar profits.

So in my opinion, the danger that is in fact clear and present in the excessively cheap cost represented by Newfoundland, is the question of whether or not it was too cheap.

Now I can hear the anti-socialist rhetoric and communist accusations forming in so many minds, but consider this situation against the light of the unfolding financial chaos.

Pure capitalism is no more present in Canadian or American society than is democracy or communism. The fact of the matter is we capitalize our wins and socialize our losses. One need look no further than dubious announcements in support of Fannie Mae and Freddie Mac, whose demise is protected by federal decree in the States, or the railroading by the Canadian Supreme Court of large corporate victims of the Canadian brand of ABCP, which essentially grants immunity against civil litigation to the architects and perpetrators of the disaster.

Proof positive that established business groups enjoy the protection of a corrupt legal system. If you or I said "I didn't know" in the reselling of counterfeit paper, off to jail we'd surely go. When the same is perpetrated by banks and ratings agencies with whom there is obvious conflicts of interest and tacit collusion, the courts are invoked to deploy a smokescreen on their behalf.

Thus the cost of a capitalized bad investment is passed on to the taxpayer through inflation and more expensive credit. The bottom line is the cost of living for the majority of North Americans goes down because an elite and connected minority deluded themselves into a bad deal.

In Newfoundland's case, they're contributing $100 million to the exploration of the Hebron field, which means they have skin in the game for a minority piece. They don't get to decide how the field is developed beyond an existing regulatory framework. They are limited to the role of a silent financial partner who can cast a vote, but it will never mean anything. The interests of the oil companies participating are aligned. Should they at any point run contrary to those of the province or its people, too bad.

Bear in mind that this is not a rant against free markets - it is a criticism of anyone who assumes that markets are in any way free. They are neither free nor equitable in their current configuration, but tiered and tainted with patronage and other forms of subtle corruption.

While the Hebron deal is indeed a win for Newfoundland now, much can be derived and leveraged from this precedent on behalf of Big Oil, and heaven forbid should the interests of the citizens run contrary to this group.