On This Day: National Energy Program unveiled, 1980

On Oct. 28, 1980, Finance Minister Allan MacEachen tabled a federal budget that contained the National Energy Program, a sweeping plan to put more of Canada’s oil and gas industry in Canadian hands and to hold domestic prices below world levels, according to Wikipedia. Some calendars of Canadian history credit Trudeau with introducing it, but MacEachen delivered the budget.

The government of Prime Minister Pierre Trudeau presented the program as a response to the oil price shocks of the 1970s. The Canadian Encyclopedia said its aim was to ensure Canada could supply its own oil and gas needs by 1990. Wikipedia lists three core objectives: more Canadian ownership of the industry, fair energy prices for Canadians and security of supply.

The budget set a target of at least 50 per cent Canadian ownership of oil and gas production by 1990, according to Wikipedia. It also created a blended “made-in-Canada” oil price that was never to exceed 85 per cent of the lower of the imported or U.S. price. A new petroleum and gas revenue tax of eight per cent was added, along with a new and rising federal tax on natural gas and gas liquids. Wikipedia said Ottawa’s share of wellhead income was to rise from about 10 per cent to 24 per cent between 1980 and 1983. Petro-Canada, the Crown corporation created in 1975, carried out much of the plan.

The program was initially popular with consumers and was seen as a symbol of economic nationalism, the Canadian Encyclopedia said. Industry and some provincial governments opposed it.

Nowhere was the reaction sharper than in Alberta. Premier Peter Lougheed, who governed the province from 1971 to 1985, argued that a change of this scale should have involved provincial consultation, according to the Canadian Encyclopedia. Wikipedia said he fought the program in court and on television, and in 1981 announced cuts to crude production and suspended two oil sands projects. A bumper sticker that read “Let the Eastern bastards freeze in the dark” became a lasting symbol of the anger, Wikipedia said.

The economic damage is a matter of debate. Critics of the program have linked it to a rise in Alberta’s unemployment rate from 3.7 per cent in September 1980 to 12.4 per cent in 1984, and to a 150 per cent increase in bankruptcies, according to Wikipedia. The same account notes that the early 1980s recession and an oil price collapse also played a role.

Trudeau and Lougheed reached a pricing and revenue-sharing agreement in 1981. Under it, Wikipedia said, Ottawa’s share of revenue was to rise from 24 per cent to 29 per cent, while industry’s share was to fall from 43 per cent to 33 per cent. A widely published photograph of the two leaders toasting the deal with champagne is one Lougheed later regretted, according to the same source.

The program did not last. The Canadian Encyclopedia said a phased dismantling began in 1982, and that by 1984 and 1985 the conditions that produced the program no longer existed as oil prices fell. Brian Mulroney’s Progressive Conservatives won a majority in the 1984 federal election after campaigning against it. The Western Accord on Energy took effect on June 1, 1985, ending the program and deregulating oil prices, the encyclopedia said.

The Canadian Encyclopedia said the program failed in its main goal of national energy security, but it did help drive development of the Alberta oil sands and Atlantic offshore drilling. Both it and Wikipedia connect resentment of the program to the rise of Western alienation as a political force and, in part, to the Reform Party, which broke through in the 1993 election and merged with the Progressive Conservatives in 2003 to form the Conservative Party of Canada.

The debate over who controls Canada’s energy resources has not gone away. On Oct. 27, Alberta backed a bill to repeal the federal oil tanker ban off B.C.’s north coast, as Canada News Media reported, after Conservative Leader Pierre Poilievre asked Prime Minister Mark Carney to scrap the ban.

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Sources: Wikipedia, “National Energy Program”; The Canadian Encyclopedia, “National Energy Program”.