National Energy Program

The National Energy Program (NEP) was introduced on 28 October 1980 as part of the first Liberal budget after the 1980 election. Coming in the wake of the 160% increase in world oil prices in 1979-80 and the prolonged stalemate between the federal government and Alberta over energy pricing and revenue-sharing, the NEP was a unilateral attempt by the federal government to achieve 3 objectives: energy security, by which was meant oil self-sufficiency; a redistribution of wealth towards the federal government and consumers; and a greater Canadian ownership of the oil industry. To reach these objectives, the government adopted a wide-ranging set of measures. Among these measures were grants to encourage oil drilling in remote areas; grants to consumers to convert to gas or electric heating; new taxes on the oil industry; an expanded role for the Crown Corporation PETRO-CANADA; and a 25% government share of all oil and gas discoveries offshore and in the North. These measures were all promised on the expectation that the world oil price would continue to rise indefinitely. When it did not (the price started to fall in 1982), any justification for these interventionist policies evaporated and the NEP itself was shown to have been ill conceived.

The NEP, one of the most sweeping government policies ever undertaken in Canada, was dismantled by the Progressive Conservatives after their 1984 election victory. Although the NEP did reduce Canadian dependence on oil and foreign ownership of the oil industry, its chief legacy was one of distrust of the federal government by the western provinces.