The National Energy Program or NEP is a four letter word in Alberta. It was an attempt by the government of Pierre Trudeau to make certain the exploitation of Alberta's oil wealth benefitted the largest number of Canadians.
This all came to my mind when it was announced last week that the government of Alberta was imposing mandatory production cuts on the oil industry as a result of the exceedingly low price for bitumen. It is causing all sorts of problems for the companies that produce it. The blame for this situation is the glut of easier to exploit and cleaner oil on the market. This has forced down the price of all oil, not just bitumen. But with bitumen not really being oil, requiring a very expensive process to convert it into something that can actually be refined into a finished petroleum product, it took a particularly big hit in the world markets. The blame also lies at the feet of a succession of Alberta governments, including the current one, who did not plan for the inevitable busts that always happen after booms. They did not save for a rainy day or attempt to diversify their economy when oil was selling at a high price so when the price of oil collapsed they were left holding an empty bag.
Of course, no one in Alberta is going to take any responsibility for their situation. Instead they are going to blame everybody but themselves. The Federal government is a handy scapegoat because it has always been a handy scapegoat for provincial governments that have shit the bed. The conventional wisdom is if the Federal government would have done what was needed, earlier, to have a pipeline built to the BC coast all of this would have been prevented. That is wrong of course. Bitumen is not in high demand because there are cheaper alternatives out there. Having an additional pipeline would not change that fact.
This brings me back to the NEP. Essentially the NEP was designed to assist Alberta to exploit its oil wealth, including its vast reserves of Tar Sands oil, process and refine it and then get it to market. The Federal government put together a program that provided Federal funds to develop the technology to develop Tar Sands oil and convert it into something that could be refined. It included funds and fast track approvals for refineries so that the processed bitumen could be refined in Canada. It included funds and fast track approvals for pipelines heading East, South and WEST so that the refined products could be sent to market. Canada being what it is all of this would have started in Alberta but eventually other provinces would get their cut, which would have made the oil industry in this country a national industry instead of just a provincial one. That would have given Canadians in all regions of the country a stake in the health of the industry, which could only have benefitted Albertans.
The only catch for all of this was the program required oil companies to sell to Canadians at a price lower than the market price. Not so low that they could not make a profit and not so low that Alberta would not be able to make money on the exploitation of their resources but low enough to make certain that all Canadians could catch a break on the price of the petroleum products that they consumed. And this only applied to oil being sold to fellow Canadians. Any oil being exported could be sold at the world price.
The response of Albertans. "Let those f$%*&!#g Easteners freeze to death in the dark". They went crazy, voted out Mr. Trudeau Sr. and voted in Brian Mulroney who immediately canceled the NEP when he attained power. They then went on to squander two opportunities to leverage their oil wealth into improving and diversifying their economy.
Looking at the current troubles in the Alberta oil industry and the causes of it has to be said that if the NEP would have been implemented as envisioned the Alberta government probably would not have had to interfere in the oil market last week.
But they did and now I am an Easterner who is nice and warm typing away in a well lit room, watching the troubles of Albertans, who just cannot find any sympathy for their troubles, no matter how much a try to find it. This all could have been prevented by Albertans over 30 years ago but for their continuing shortsightedness and greed. They gave into both and are now paying the price and I am fine with that.
