Record oil prices recall definitive moment in Alberta history

In Alberta almost everything hinges on the price of a barrel of oil. So when it shattered yet another record last week fetching $135 a barrel you could almost hear the whole province yell a collective “yahoo.”

People feel more secure about their jobs. Oil companies ponder more long-term investments in the province. Alberta’s finance minister gets itchy fingers just thinking about all the money that will pour into the treasury.

However you don’t have to dig deep to find a certain amount of anxiety as well. Historically sharp increases in the price of oil attract the attention of the federal government. And as Albertans see it federal governments are more concerned about all those consumers (and voters) in central Canada who complain about the high price of gasoline than they are about the people in the provinces who actually produce the stuff.

This was indeed the situation in the 1970s when the price of a barrel of oil was also rising dramatically. In just 10 years it went from $2.50 a barrel to $44.50 thanks to international forces completely beyond Alberta’s control. Peter Lougheed was premier then and he was determined to wring as much financial benefit for Albertans as he could from the province’s resources.

The federal government led by Pierre Trudeau had other ideas. Trudeau and his energy minister Marc Lalonde saw Alberta’s oil riches as Canada’s oil riches. They were determined to funnel some of it into the federal treasury and ease the pain of consuming provinces like Ontario. Needless to say Ontario’s premier Bill Davis also thought that was a great idea.

The feds imposed a number of taxes on petroleum products including an export tax on oil and natural gas pipelined into the U.S. They established expensive subsidy programs for oil companies so they would explore further afield than Alberta — in the Beaufort Sea for example. And throughout it all as the world price for oil went higher and higher Alberta producers selling into the domestic market were stuck with a made-in-Canada price that was lower than the world price.

The federal government’s initiatives became known as the National Energy Program or NEP. Just the mention of it still sparks fury in most Albertans. In fact NEP has become code for plunder by the federal government (read: Liberal government) on behalf of Ontario and Quebec.

Trudeau and Lougheed eventually came to terms in 1981 when they signed an agreement that allowed for new oil reserves destined for the domestic market to fetch the same price as they would on the international market — $45 a barrel at the time.

The agreement came too late however. Despite bold predictions by politicians bankers oil executives economists and stock market analysts that the price of oil would soon hit $60 a barrel the price went down instead of up. By 1988 oil was selling for $19 a barrel and the good times were definitely over for Alberta. Just goes to show that even those who seem to know what they are talking about when it comes to oil prices really don’t.

And of course once the price was low and stable the federal government didn’t have much interest in what was happening in Alberta. That was then and this is now. The price of oil is again flying past old barriers and consumers in central Canada are loudly complaining about the outrageous price of gasoline. And Albertans are wondering what the federal government will do about it this time.

Gillian Steward is a Calgary-based journalist who has covered politics since the Lougheed days.