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Goals
of the National Energy Program
There were three goals of the NEP, as outlined by Marc Lalonde:
1. "It must establish the basis for Canadians to seize control of their
own energy future through security of supply and ultimate independence
from the world oil market.
2. It must offer Canadians, all Canadians, the real opportunity to
participate in the energy industry in general and the petroleum
industry in particular, and to share in the benefits of industry
expansion.
3. It must establish a petroleum pricing and revenue-sharing regime
that recognizes the requirements of fairness to all Canadians no matter
where they live."
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Real Reason Behind the NEP
"The major factor behind the NEP
wasn’t Canadianization or getting more from the industry or
even self-sufficiency. The determinant factor was the fiscal imbalance
between the provinces and the federal government.... Our proposal was
to increase Ottawa’s share appreciably, so that the share of
the producing provinces would decline significantly and the
industry’s share would decline somewhat."
-Rt. Honourable Marc Lalonde, Minister of Energy |
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What the NEP Was
The specific objectives of the above goals of
energy
security, "fairness" and increased "Canadianization" were outlined
specifically in the following objectives:
1. Energy security was to be achieved through gaining elimination of
oil imports by 1990
2. "Fairness" in pricing and revenue sharing was to be achieved by
holding the consumer price of oil significantly below the world price
and increasing the revenue share of the federal government to 25%.
3. "Canadianization" was to be met by reducing foreign ownership of the
petroleum industry to 50% by 1990.
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How the NEP Destroyed the
Albertan Economy and Albertan Jobs
The entire NEP was based upon shoddy management of
decision making under uncertainty. The NEP simply assumed that energy
prices would continue to rise. By 1983, prices fell dramatically.
Instead of finding themselves with a rich industry that they could tax
at higher rates, they found a depressed industry that was even less
attractive after the seemingly punitive NEP was taken into
consideration.
In addition to hampering the energy industry, the "Canadianization"
aspects of the NEP had measures that halted and sometimes reversed
foreign ownership, and even by retroactively changing resource
ownership conventions. This caused a flight of capital in the energy
industry, but also in other sectors of the economy.
Thus Albertans were left with an industry that the government tried to
redistribute revenues from, and in the process that industry became
unattractive. And that industry, already lacking as an investment due
to that hampered profitability, was hammered again by the draconian
nature of the Canadian government trying to decrease foreign ownership.
Not only was the depressed industry unprofitable, it became a much
riskier investment, which scared away investment. Thus the energy
industry got destroyed. |
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The NEP was a Political Program, Not an
Economic One
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