National Energy Program

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, and 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. At the status quo even with transfer/equalization payments, there was still a flow of wealth from the eastern oil-dependent provinces, particularly Ontario and Quebec, to the western oil-producing provinces.

The program was extremely unpopular in Western Canada, where most of Canada's oil is produced, and heightened distrust of the federal government, especially in Alberta, British Columbia and Saskatchewan. Many Albertans believed that the NEP was an unjustified intrusion of the federal government into an area of provincial jurisdiction and was designed to strip their province of its natural wealth. By keeping the oil prices below world market prices, it was essentially subsidizing the eastern provinces. The NEP's Petroleum Gas Revenue Tax (PGRT) instituted a heavy double-taxation mechanism that did not apply to other commodities, such as gold, copper, etc. 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.

However, Trudeau had underestimated the resolve of Alberta Premier Peter Lougheed, who responded by stalling development on several oil sands projects. Lougheed endeared himself to Albertans when he went on national television to announce that oil shipments to the rest of Canada would be cut. As a result, the NEP was revised so that the price of Canadian oil would eventually rise to the world price.

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 actual success of the program is still debated. Shortly 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 certainly aggravated it, especially in Calgary.

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.

However, it should be noted that in order to develop a nascent oil industry in Alberta, the National Oil Program was introduced in 1961 that resulted in Ontarions paying more for oil than they would normally pay for under a free market, since they were restricted from buying imported oil refined in Montreal at a cheaper price.

External links

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