From Wikipedia, the free encyclopedia

This article or section is missing citations or needs footnotes. Using inline citations helps guard against copyright violations and factual inaccuracies.(August 2007)

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, several economic problems that were beginning to manifest themselves through the 1970’s were accelerated and magnified. Inflation was out of control and interest rates were through the roof. Unemployment was epidemic in the eastern provinces where the Trudeau government had much of its political support.^[1] 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.^[2] 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 extremely unpopular in Western Canada, especially in Alberta where most of Canada's oil is produced. The NEP further fueled talk of a 'western separatist party', and arguably legitimized Alberta's long-standing tradition of militancy within Canadian confederation. Unlike the culture-focused movement for separation in Québec through the Parti Quebecois, the impetus for Alberta's separatist movement was largely of provincial economic self-interest during a time when the Canadian people and economy suffered greatly under the burden of inflated energy prices. By keeping domestic oil prices below world market prices, the NEP was essentially mandating provincial generosity and subsidizing all Canadian consumers of fuel, at Alberta's expense. In short, the NEP was a national government's response to a national crisis. In Western Canada -- and Alberta especially -- the prevailing tendency was to vilify Prime Minister Pierre Trudeau, and asserted that the NEP was really for the benefit of the eastern provinces. This casting of the eastern provinces, the federal government, and liberal governance as 'the enemy' has persisted to the present day, and has made possible a decades-long Conservative provincial government.

It is estimated that Alberta lost between $50 billion and $100 billion because of the NEP.^[3] Alberta GDP was between $60 billion and $80 billion annually through the years of the NEP, 1980 to 1986. While it is unclear whether the estimates took into account the decline in world crude oil prices that began only a few months after the NEP came into force, the graph of Long-Term Oil Prices show that prices adjusted for inflation did not drop below pre-1980s levels until 1985. Given that the program was cancelled in 1986, the NEP was active for five years which are amongst the most expensive for oil prices on record.

Long-Term Oil Prices, 1861-2006 (top line adjusted for inflation).

Petro-Canada, the government-established oil company headquartered in Calgary, was made 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." A popular western slogan during the NEP - appearing on many bumper stickers - was Let the Eastern bastards freeze in the dark.^[4] Another popular bumper sticker that appeared shortly after the main cause of Alberta's recession, the collapse in world oil prices, was Please God, let there be another oil boom. I promise not to piss it away this time.

Alberta Premier Peter Lougheed responded by stalling development on several oil sands projects.^[5] Given that oil sands production was not yet technologically or economically feasible, the gesture was largely symbolic. 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 rationale for the program weakened when world oil prices began to decline in the early 1980s, leading to the start of a phased shutdown by the new Minister of Energy, Mines and Resources Jean Chrétien. In the 1984 election the government of Brian Mulroney was elected with the support of western Canada after campaigning against the NEP. However, Mulroney did not eliminate the last vestiges of the program until two and a half years later at which time world oil prices had dropped below pre-1980s levels (as adjusted for inflation). This was a contributing factor to the creation of western Canada's Reform Party of Canada.

The success of the program is debated. After it was implemented, Canada, along with all of the economies of Europe and the economy of the United States, fell into a worldwide recession. It would turn out to be the worst economic downturn since the Great Depression and hit the oil-dependent Alberta economy especially hard. While virtually all economists blame external factors for causing the worldwide recession, many also accept that even if NEP did not cause the recession, it may have aggravated it, especially in Calgary.

The NEP heightened distrust of the federal government in Western Canada, especially in Alberta. Many Albertans believed that the NEP was an intrusion of the federal government into an area of provincial jurisdiction.^[6]

• Energy policy of Canada

• CBC Archives of the National Energy Program and Alberta's oil history

• Discussions prior to NEP's creation

• Discussion of changes and dollar impact to NEP in 1981

• Dismantling the NEP

• Political Issues - National Energy Program

• Clarkson, Stephen. Canada and the Reagan Challenge: Crisis and Adjustment, 1981-85. Toronto: J. Lorimer, 1985.
• “Energy Policy.” The Canadian Encyclopedia. Historica Foundation of Canada. N.d. January 2005. <http://www.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=J1ARTJ0002613>
• “Trudeau, Lougheed Attend Energy Conference.” Television News. Reporter: Don McNeill. CBC Television. CBC Archives. April 9, 1975. January 6, 2005. <http://archives.cbc.ca/500f.asp?id=1-73-378-2148>
• “National Energy Program.” The Canadian Encyclopedia. Historica Foundation of Canada. N.d. January 2005. <http://www.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=J1ARTJ0005618>
• “West Historically Exploited for Resources.” Radio Interview. John Crispo, interviewed. Sunday Magazine. CBC Radio. CBC Archives. December 9, 1973. January 6, 2005. <http://archives.cbc.ca/IDCC-1-73-378-2147/politics_economy/alberta_oil/>