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 Government of Canada is the federal government of Canada. ... Regions Political culture Foreign relations Other countries Atlas  Politics Portal      The Prime Minister of Canada (French: Premier ministre du Canada), is the Minister of the Crown who is head of the Government of Canada. ... Trudeau redirects here. ...

The NEP was introduced in the wake of the energy crises of the 1970s. Because of high oil prices, several economic problems that were beginning to manifest themselves through the 1970s 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 would "... redistribute revenue from the [oil] industry and lessen the cost of oil for Eastern Canada..." in an attempt to insulate the Canadian economy from the shock of rising global oil prices.^[3] In short, the NEP was a national government's response to a national crisis. By keeping domestic oil prices below world market prices, the NEP was essentially mandating provincial generosity and subsidizing all Canadian consumers of fuel, primarily at Alberta's expense. This article is about energy crises in general. ... Alternative energy is energy derived from sources that do not harm the environment or deplete the Earths natural resources. ...

Reaction in western Canada

The program was extremely unpopular in western Canada, especially in Alberta where most of Canada's oil is produced. With natural resources falling constitutionally within the domain of provincial jurisdictions, many Albertans viewed the NEP as a detrimental instrusion by the federal government into the province's affairs.^[4] This article is about the region in Canada. ... For other uses, see Alberta (disambiguation). ...

Politically the NEP further fuelled talk of a 'western separatist party'. In western Canada – and Alberta especially – the prevailing tendency was to vilify Prime Minister Pierre Trudeau and asserted that the NEP was 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 likely has contributed to a decades-long Conservative provincial government.

Petro-Canada, the government-established oil company headquartered in Calgary, was made responsible for implementing much of the Program. Petro-Canada was backronymed to "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.^[5] Another popular bumper sticker that appeared was Please God, let there be another oil boom. I promise not to piss it away this time. As of 2008, Alberta is again experiencing an oil boom thanks to the record price of oil and the Athabasca Oil Sands. Petro-Canada is a Canadian oil and gas firm headquartered in Calgary, Alberta. ... A backronym (or bacronym) is a phrase that is constructed after the fact from a previously existing word or abbreviation, the abbreviation being an initialism or an acronym. ... Petro-Canada Centre Situated in the office core of downtown Calgary, the Petro-Canada Centre is a 1,945,000 square foot (181,000 m²) project comprised of two granite-clad and reflective glass office towers of 32 floors and 53 floors. ... 2008 (MMVIII) will be a leap year starting on Tuesday of the Gregorian calendar. ... The Athabasca Oil Sands in Alberta, Canada. ...

Alberta Premier Peter Lougheed stopped development on several oil sands projects.^[6] 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 so called "new" Canadian oil (discovered after December 31, 1980) would eventually rise to the world price but existing "old" oil would still be capped at 75% of the world price.^[7] Ralph Klein The Premier of Alberta is the first minister for the Canadian province of Alberta. ... Peter Lougheed, painting by C. Leeper The Honourable Peter Lougheed, PC , CC , QC (born July 26, 1928, in Calgary, Alberta) is a Canadian lawyer, politician and Canadian Football League player. ...

Impact in western Canada

The key areas of GDP, per capita federal contributions (since this was a federal program), housing prices and bankruptcy rates during the years of the NEP (1980-1985) are examined in this section. For housing prices and bankruptcy rates, the experience of Alberta in particular is contrasted to the other regions of the country in an attempt to see whether the problems experienced due to the global recession were worse in Alberta perhaps due to the NEP.

Provincial GDP

It is estimated by various scholars that Alberta lost between $50 billion and $100 billion because of the NEP.^[8] 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 and the NEP prevented the Alberta oil industry from fully realising those prices.

Long-term oil prices, 1861-2007 (top line adjusted for inflation).

Image File history File links Oil_Prices_1861_2007. ... Image File history File links Oil_Prices_1861_2007. ...

Per Capita Federal Contributions

In inflation adjusted 2004 dollars, the year the NEP took effect (1980) per capita fiscal contributions by Alberta to the federal government increased 77% over 1979 levels - from $6,578 in 1979 to $11,641 in 1980.^[9] Again in inflation adjusted 2004 dollars, the year the NEP was terminated (1986) per capita contributions to the federal government by Alberta collapsed to $680, a mere 10% of 1979 levels.^[10] During the NEP years, 1980-1985, there was only a single other province which was a net contributor per capita to the federal government. It was Saskatchewan, another oil producer. In 1980 and 1981 Saskatchewan was a net per capita contributor to the federal government with their peak in 1981 at a mere $514 in comparison to Alberta's peak of $12,735 that same year, both values being 2004 inflation adjusted dollars. ^[11]

Housing Prices

As cited in a report by Phillips, Hager and North, the U.S. Office of the Federal Housing Oversight (OFHEO) reported overall declines in real estate prices of between 10% and 15% from 1980 through to 1985, the years of the NEP^[12]. That same report presents information from the Canadian Real Estate Association (CREA) showing that during that same time period (1980–1985) in eastern Canada Toronto housing prices held relatively steady while in other parts of the east prices fell 10% - 15%^[13]. In contrast, the CREA historical data shows a decline from 1980 through to 1985 of approximately 20% for Vancouver, Saskatoon and Winnipeg while the drop approached 40% in the oil dominated economies of Edmonton and Calgary^[14], yet through those years oil prices were still historically high (see figure Long-Term Oil Prices, 1861-2007).

Bankruptcies

For the period 1980 through 1985, government statistics show that while the overall number of bankruptcies per 1,000 businesses in Canada peaked at 50% above the 1980 rate.^[15] During that same time the bankruptcy rate in Alberta's economy rose by 150% after the NEP took effect^[16] despite those years being amongst the most expensive for oil prices on record (see figure Long-Term Oil Prices, 1861-2007).

How did other oil based economies fare during the NEP years?

North Sea Oil Prices and Norway's Trade Balance, 1975-2000. Source: Satistics Norway

In around 1970 Norway started to become an oil dominated export economy comparable to Alberta. As with most of the world's manufacturing economies, Norway's manufacturing experienced recession beginning in the 1970s. However, in the late 1970s the rise in oil prices saw Norway's oil exports grow and provide the nation with a trade surplus (see figure North Sea Oil Prices and Norway's Trade Balance, 1975-2000). Image File history File links No higher resolution available. ... Image File history File links No higher resolution available. ... For other uses, see Alberta (disambiguation). ...

"Norway saw deindustrialization at a more rapid pace than most of her largest trading partners. Due to the petroleum sector, however, Norway experienced high growth rates in all the three last decades of the twentieth century, bringing Norway to the top of the world GDP per capita list at the dawn of the new millennium."^[17]

Thus, not all oil based economies suffered as Alberta did during the global slowdown of the early 1980s. Norway experienced an economic boom during the NEP years thanks to the historically high oil prices (see figure Long-Term Oil Prices, 1861-2007). The economic boom of the early 1980s in Norway lasted until the price of oil collapsed in late 1985 just before the NEP was terminated (see figure North Sea Oil Prices and Norway's Trade Balance, 1975-2000).

End of the NEP

The rationale for the program weakened when world oil prices began to slowly decline in the early 1980s and then collapsed in late 1985 (see figure Long-Term Oil Prices, 1861-2007). A phased shutdown was commenced by Jean Chrétien while he was Minister of Energy, Mines and Resources. Joseph Jacques Jean Chrétien, usually known as Jean Chrétien, PC, QC, BA, BCL, LLD (h. ...

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 - see figure Long-Term Oil Prices, 1861-2007). The conservative government's delay was a contributing factor to the creation of a new conservative party, western Canada's Reform Party of Canada. The Canadian federal election of 1984 was called on July 4, 1984, and held on September 4 of that year. ... Martin Brian Mulroney PC CC GOQ (predominantly known as Brian Mulroney) (born March 20, 1939), was the eighteenth Prime Minister of Canada from September 17, 1984, to June 25, 1993 and was leader of the Progressive Conservative Party of Canada from 1983 to 1993. ... Martin Brian Mulroney PC CC GOQ (predominantly known as Brian Mulroney) (born March 20, 1939), was the eighteenth Prime Minister of Canada from September 17, 1984, to June 25, 1993 and was leader of the Progressive Conservative Party of Canada from 1983 to 1993. ... The Reform Party of Canada was a Canadian federal political party that existed from 1987 to 2000. ...

Impact

The economic effect of the program is debated. After it was implemented, Canada, along with all of the economies of Europe (except for Norway, ironically due to their petroleum industry) 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. The recession of the early 1980s was caused by the combination of 1) tight monetary policy, 2) the Reagan tax cut, 3) increased government spending [citation needed]. The causing aggregate demand to increase, while at the same time constraining the money supply resulted in very high interest rates, which caused... For other uses, see The Great Depression (disambiguation). ...

Given that bankruptcies^[18] and real estate prices^[19] did not fare as negatively in central Canada as in the rest of Canada and America^[20] during the NEP, it is possible that the NEP had a positive effect in central Canada.

Given that 1. bankruptcies^[21] and real estate^[22] did much worse in Alberta than in other parts of Canada and America; 2. economies like Norway performed well^[23]; and 3. the estimated loss of between $50 and $100 billion provincial GDP^[24] (at the time, an entire year's GDP for the province) during the NEP period it is possible the NEP had a negative effect in Alberta.

Finally, politically the NEP heightened distrust of the federal government in western Canada, especially in Alberta where many Albertans believed that the NEP was an intrusion of the federal government into an area of provincial jurisdiction.^[25] The Government of Canada is the federal government of Canada. ... For other uses, see Alberta (disambiguation). ...

See also

• Energy policy of Canada

Canada is a significant producer of natural gas, petroleum, coal and electricity, and is a major supplier of oil, gas and electricity to the United States and coal to Asia, Europe and Latin America. ...

References

2008 (MMVIII) is the current year, a leap year that started on Tuesday of the Common Era (or Anno Domini), in accordance with the Gregorian calendar. ... is the 116th day of the year (117th in leap years) in the Gregorian calendar. ... 2008 (MMVIII) is the current year, a leap year that started on Tuesday of the Common Era (or Anno Domini), in accordance with the Gregorian calendar. ... is the 116th day of the year (117th in leap years) in the Gregorian calendar. ... 2008 (MMVIII) is the current year, a leap year that started on Tuesday of the Common Era (or Anno Domini), in accordance with the Gregorian calendar. ... is the 116th day of the year (117th in leap years) in the Gregorian calendar. ... 2008 (MMVIII) is the current year, a leap year that started on Tuesday of the Common Era (or Anno Domini), in accordance with the Gregorian calendar. ... is the 116th day of the year (117th in leap years) in the Gregorian calendar. ...

External links

• 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. Historical 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/>