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David Olive: The National Energy Program’s bitter aftertaste has lasted 40 years and provided a hard lesson to Ottawa

David Olive: The National Energy Program’s bitter aftertaste has lasted 40 years and provided a hard lesson to Ottawa
Business
This year marks the 40th anniversary of the National Energy Program, one of the most arrogant and misguided acts by a Canadian federal government.

Ranking high on the list of giant, well-intentioned government schemes that failed, the NEP marked an end to ambitious nation-building projects in Canada.

As historian Taylor C. Noakes aptly put it in an essay this year on the NEP’s legacy, Canada’s “executive leadership lives in fear of three little letters throwing shade on seemingly everything Ottawa does.”

That fear is most evident today among Albertans, the Canadians most powerfully affected by the NEP. To this day Albertans invoke those three letters as proof that Ottawa is ready to impose its high-handedness on their province at any time.

Alberta, a province unlike the others, fiercely opposes Canada’s national carbon-pricing scheme — a scheme that’s a first anywhere in the world, and the most powerful tool the world has in fighting climate crisis.

Alberta believes it gets a raw deal from the system of national equalization payments. It is of a mind to turn the federation inside-out to remedy that perceived injustice.

Wild Rose Country is the jurisdiction where Trumpism finds most of its Canadian adherents. And Alberta is unmatched in exporting the regional grievance that largely defines it, seeking support from other provinces to thwart new federal initiatives, and to undermine or scrap existing ones.

Western grievance did not begin with the NEP, of course. But the NEP inflamed it and made it permanent. It haunts us still, undermining our national governance.

The NEP was a set of 1980 federal tax and investment measures to combat the energy crisis and resulting double-digit inflation of that era. The program was a rushed response to the “energy shocks” of 1973 and 1979, which had driven the world oil price from less than $2 (U.S.) per barrel to $34 (U.S.) in just five years — a global economic calamity with few equals in history.

But NEP was incoherent. Its myriad goals, noble and necessary though many of them were, often were in conflict. It was so convoluted that no one really understood it then, and hardly anyone does today.

The one thing that Albertans, certainly, were able to grasp — and quickly — was that the NEP was arbitrary, imposed on Canada’s oil- and gas-producing regions without prior consultation.

Albertans saw the NEP’s measures to redistribute the province’s oil wealth as a federal grab for Alberta’s energy endowment, an attack on Alberta sovereignty. To this day, Albertans blame the NEP for the punishing, decade-long slump in the world oil price that began just one year after the program’s imposition.

Actually, Ottawa wasn’t to blame for the oilpatch’s lost decade of the 1980s.

The world raced to find alternatives to overpriced oil, curbing demand. Meanwhile, the OPEC cartel that caused the oil shocks with production cuts reversed itself in 1981 and glutted the world with oil, driving the price down to $9 (U.S.) per barrel by the end of the 1980s.

But for many Albertans, the overlap between the NEP and the onset of oil’s lost decade had to be more than a coincidence.

It was a coincidence. But the NEP was too ambitious by half.

The program sought to rapidly achieve Canadian self-sufficiency in oil and gas and Canadian ownership of a largely foreign-owned Canadian oilpatch. It even promoted alternative energy sources more than two decades before “clean energy” became a global priority.

The NEP provision most detested by Albertans, its Petroleum Gas Revenue Tax, was an unapologetic federal transfer of Alberta’s oil wealth to the rest of the country.

The program was actually the second response to the 1970s oil shocks by the government of Pierre Trudeau. The first was Petro-Canada, created in 1975 as a state oil company to derive benefits for all Canadians from the global oil boom.
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