There’s another enduring mythology, also promoting by business interests, about the Trudeau Liberal’s* National Energy Program, or NEP for short. Basically, Alberta (particularly conservatives and businesses) shout that the NEP devastated the Alberta economy in the early 1980s. It’s treated with absolute contempt in much of Alberta politics. For example,
Albertans might remember it better by its former name: the National Energy Program.
Pierre Trudeau was successful in his quest to rape the Albertan economy in order to fulfill his need to oversee nationalized wealth distribution in the late 1970’s-early ’80’s. Back then, the tools of misdirection used by the Liberals was the oil shortage and the bad economy. Seizing the opportunity to use a crisis to further his agenda, Trudeau exacerbated a West-East rift that still lingers to this day.
Now, again, this is just post hoc. NEP was there, bad shit happened, therefore the NEP is to blame- flawless logic!… Well, no. During that time ( in the early 80s) there was an international recession going on. People should try and remember such an essential piece of information. It sort of matters. Just so we’re clear, international recessions do impact Canada, especially when foreign companies invest in Canada – this includes the oil sands. Which, ironically, is something the NEP tried to limit.
An astute commentator points out an essential flaw in all the NEP rhetoric:
Can you explain something to me–what is the factual basis for asserting that the National Energy Program did anything that significantly hurt Alberta? What effects did it have on oil production, oil company or provincial revenues between its anouncement in 1980 and the Lougheed-Trudeau agreement of 1981? How did the NEP, including the post Lougheed-Trudeau agreement, which ended in 1985, screw Alberta if the value of producers’ sales of hydrocarbon products went up every year of the NEP both in real dollars and so did the provincial GDP? As the chart below shows, the collapse in sales of Albertan hydrocarbon products occured in 1986, after the NEP ended.
According to the Canadian Petroleum Association in 1990 the value of sales were as follows (with GDP figures from Stats Canada) (all in millions of dollars)
Year Sales GDP Sales % of GDP
1979: $11767 $35480 33.2 %
1980: $14892 $43148 34.5 %
1981: $15923 $49934 31.9 %
1982: $19161 $52896 36.2 %
1983: $22077 $55386 39.9 %
1984: $24401 $58941 41.4 %
1985: $25409 $65351 38.9 %
1986: $15454 $57317 27.0 %
1987: $16661 $59614 27.9 %
1988: $14300 $61810 23.1 %
Emily Dee, who I often quote and praise, again provides the research so it’s convenient for me to flesh out these things. According to Western academic Trevor Harrison,
Oscar Wilde wrote that there are only two tragedies: one is not getting what one wants; the other is getting it. In the fall of 1985, the latter tragedy befell Alberta’s oil industry. The OPEC cartel failed to agree upon a world oil price. The result was a global free-for-all among producing nations. Canada’s oil and gas producers were caught in the middle. Having recently gained freedom from the NEP, Canada’s oil and gas industry was not protected as the price of oil dropped from US $27 per barrel … to $8 per barrel by August 1986. … Forty-five thousand oil workers lost their jobs.
Since it’s Emily Dee I steal these convenient passages from, I’ll quote her directly as well,
So Alberta’s wounds were self inflicted… Revisionist history and good PR has turned this [NEP’s legacy] into a mythical bogey man.
So, what was the real cause of this outrage channelled at the NEP?
There are three plausible explanation for this.
1. Emily Dee has a convincing theory which you can read here. Essentially, the NEP was a scapegoat for the wealthy. During Trudeau’s rule, the Liberals targeted closing tax loopholes that corporations would exploit – this angered many corporations. Some corporations went on ‘strike’ so to speak, leaving Canada, halting projects, etc. If businesses launched a campaign against tax-reform, that would have been a lot more blatant than something seemingly more innocuous. So, the NEP was targeted for attack, as it got in the way of maximum oil profits and expansion.
2. Now, another reason the NEP was much-hated was because it limited foreign ownership of the oil sands, and this upset American oil companies – so they also channelled their anger towards it.
3. And surely, the fact Petro-Canada – a state-owned company at the time – was active there also infuriated oil companies wanting to expand their profits and developments.
All the NEP did was try to ensure stable prices, as well as ensure Canadian ownership. And, yes, grant some revenue through royalties from the oil industry to the federal coffers. Which as it happens, is the smart thing to do, anyways.
Yet again, this mistruth about the NEP still dominates much of the public perception, especially in Alberta (just read the comments on anything dealing with the NEP). There’s typically no explanation whatsoever, just the bold assertion. Statistics easily prove most of the assertions to be misguided. And mere thinking shows it to be utter bunk.
The NEP was just there at the time. But, we’ve been duped… again.
*To be fair, some blame can be put on the Liberals for the recession in the early 80s – not as the result of the NEP, but for appointing a Governor to the Bank of Canada who, much like his successor John Crow, pursued a policy of high interest rates – which as discussed before, has devastating impact; thus exacerbating the impact of the international recession at the time on Canada.
By 1981, [Gerald] Bouey [the Governor of the Bank of Canada] had radically increased interest rates to 22 percent. In doing so, he certainly beat inflation, but also created the worst recession in the Canadian economy since the 1930s. (1)
This was only topped twice in Canada. Later in the early 90s recession (for the same reason), and the most recently in the 2008 recession.
(1) Dobbin, Murray. Paul Martin: CEO for Canada? Toronto: James Lorimer &, 2003. Page 65