Page 1 |
The price drop, Trudeau acknowledged in his memoirs, meant "we were underwriting subsidies to the Canadian oil companies and lower prices to the Canadian consumers with money we didn't get."
The death of the NEP
The National Energy Program lasted four years. It was killed by Brian Mulroney's Conservative government, elected on September 4, 1984 with a market economy and free trade agenda fundamentally opposed to the decade of government petroleum engineering in the Trudeau era. The funeral director was Patricia Carney, the former business journalist and economic consultant who was Mulroney's energy minister. The burial took place on March 28 the following year when Carney and the energy ministers of the Western provinces signed the Western accord. It abolished oil and gas price controls, effective June 1. Five federal NEP taxes were abolished immediately, while the annual 82.5-billion petroleum and gas revenue taxes were phased out over 3.5 years. No more PIP grants were to be issued, but those already approved were continued. Tax incentives to some extent replaced the PIP grants and ended the PIP discrimination against foreign investment and exploration expenditures in Western Canada. PetroCanada's contentious 25-percent back-in privilege on Canada Lands was abolished. The changes were expected to cost the federal treasury half a billion dollars in 1985 but add $3 billion to oil company revenues. The industry gains didn't last long: the following year, the now decontrolled benchmark price for Canadian oil, in step with world prices, collapsed by more than 40 percent (from $37 to $20).
A quarter of a century later, for many Albertans the National Energy Program remains the shorthand phrase for the cause of all the blows the province suffered in the 1970s and 1980s: the alleged theft of billions of dollars in public revenues that should have stayed in Alberta; the collapse of drilling activity as rigs headed south; the loss of jobs and savings; the corporate and personal bankruptcies. Estimates of what the NEP cost Alberta range from $50 billion to $134 billion, which Robert Mansell, University of Calgary dean of economics, calculates as the net withdrawal from the province to the federal treasury and petroleum consumers from ] 978 to 1985, as measured in 1990 dollars.4 In fact, the NEP was only the climactic part of detested federal energy policies that began with the energy crisis in 1973 and didn't end until 13 years later with the signing of the Western accord.