National Energy Program
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The National Energy Program (NEP) was an energy policy of the Government of Canada. It was enacted by the government of Prime Minister Pierre Trudeau in 1980, and administered by the Department of Energy, Mines and Resources.
The NEP was introduced in the wake of the energy crises of the 1970s. Due to high oil prices, there was a major transfer of wealth away from the eastern provinces, where the Trudeau government had much of its political support. The NEP was designed to promote oil self-sufficiency for Canada, maintain the oil supply, particularly for the industrial base in eastern Canada, promote Canadian ownership of the energy industry, promote lower prices, promote exploration for oil in Canada, promote alternative energy sources, and increase government revenues from oil sales through a variety of taxes and agreements. The NEP's Petroleum Gas Revenue Tax (PGRT) instituted a double-taxation mechanism that did not apply to other commodities, such as gold and copper.
The program was unpopular in Western Canada, especially in Alberta where most of Canada's oil is produced. This fueled talk of a 'western separatist party', much like the separatist Parti Québécois in Québec. By keeping oil prices below world market prices, it was essentially subsidizing the eastern provinces. The prices of these commodities were also escalating rapidly at the time. Researchers at the University of Calgary estimated that the tax removed $100 billion from Alberta's economy.
Petro-Canada, the nationalized oil company headquartered in Calgary, was responsible for implementing much of the program. Petro-Canada was given the nickname "Pierre Elliott Trudeau Rips Off - Canada" by opponents of the National Energy Program, and the Petro-Canada Centre in Calgary became known as "Red Square" to those same opponents. A popular western slogan during the NEP - appearing on many bumper stickers - was Let the Eastern bastards freeze in the dark.
Alberta Premier Peter Lougheed, responded by stalling development on several oil sands projects. He went on national television to announce that oil shipments to the rest of Canada would be cut, forcing the federal government to import more expensive oil to compensate. After negotiations between Trudeau and Lougheed, the NEP was revised so that the price of Canadian oil would eventually rise to the world price.
The NEP ending up heightened distrust of the federal government, especially in Alberta. Many Albertans believed that the NEP was an intrusion of the federal government into an area of provincial jurisdiction. [1]
The justification for the program died when oil prices fell in the early 1980s, leading to its abandonment by the new Progressive Conservative government of Brian Mulroney. Mulroney had campaigned against the policy in the 1984 election.
The success of the program is debated. After it was implemented, Canada fell into a recession that would turn out to be the worst economic downturn since the Great Depression and hit Alberta especially hard. While most economists blame external factors for causing the recession, they also accept that even if NEP did not cause the recession, it may have aggravated it, especially in Calgary.
[edit] References
- ^ McKenzie, Helen. Ed. Current Issues System: Western Alienation in Canada. Ottawa: Research Branch, Library of Parliament, Government of Canada, 1981.
