Editing National Energy Program (section)

==Impact on Alberta==

===Revenues===

While the program increased domestic price controls, the emphasis on revenue sharing and incentives for oil exploration on federally owned lands was viewed critically by [[Alberta Premier]] [[Peter Lougheed]].{{sfn|Tupper|2004|p=216}} Lougheed fought the program vigorously in the courts and in public, where he actively stoked Alberta nationalism in a television address, stating the program would bring more "Ottawa" to the province. Prior to the announcement of the National Energy Program, Lougheed had threatened to reduce Alberta's production of oil and gas to counter any federal program to increase taxes. If Alberta reduced production, Central Canada refineries and other businesses would need to purchase foreign oil which would be heavily subsidized by the federal government, a cost that it could not afford to with a $13.7 billion deficit in 1980.{{sfn|Perry|Craig|2006|p=534}} 

Lougheed finally decided to exercise this authority to force Trudeau to concede some measures of the Program, and Lougheed announced on television a 60,000 barrel reduction to Alberta's production of crude oil to take place over nine months beginning in April 1981, and the suspension of two oil sands projects.{{sfn|Tupper|2004|p=216}}{{sfn|Perry|Craig|2006|p=535}}{{sfn|Wood|1985|p=175}} Lougheed however pledged that he would not allow a national oil shortage to occur, and would suspend the cuts if a shortage occurred.{{sfn|Perry|Craig|2006|p=535}} The threat was successful as Trudeau and Lougheed signed "an oil and gas prices and revenue sharing" agreement in 1981:

{{blockquote|"The agreement sets a series of price increases for old oil starting with a $2.50 a barrel increase on October 1, 1981 and "generous" near world prices for new oil, effective January 1, 1982, which will see an estimated wellhead price of $49.22 per barrel by July 1, 1982. New oil is defined as oil from pools initially discovered after December 31, 1980. It includes new conventional oil found in Alberta, synthetic oil, including existing production from the SUNCOR and SYNCRUDE plants, and new oil from Canada lands.... At their press conference Tuesday, the leaders of both parties estimated the deal is worth an approximate $212.8 billion in revenues to Ottawa, Alberta and the petroleum industry over the next five years. An estimate of the revenue share compared to the NEP proposal indicated the federal government will receive $14 billion more than in the NEP schedule, the industry will receive $10 billion more and Alberta will receive $8 billion more. According to Lalonde, in percentage terms compared to the NEP, Ottawa's share will rise from 24% to 29%, Alberta's share will rise to 34% from 33%, and industry's share will drop from 43% to 33% over the life of the agreement. Lougheed said because of the pact industry will receive about 25% more cash flow due to the two-tier new and old pricing scheme, which represents an improvement in cash flow of at least $2 billion for each year of the agreement."|Nickle's Energy Group 1981<ref name="nickles">{{citation|author=Nickle's Energy Group |title=Trudeau, Lougheed Sign Agreement |work=Daily Oil Bulletin |date=2 September 1981 |url=http://www.junewarren-nickles.com/history/article.aspx?id=8191 |url-status=dead |archive-url=https://web.archive.org/web/20150204021703/http://www.junewarren-nickles.com/history/article.aspx?id=8191 |archive-date=February 4, 2015 }}</ref>}}
{{multiple image
 | width = 150
 | image1=Prime Minister Pierre Trudeau 1975 (UPI press photo) (cropped).jpg | alt1=Pierre Trudeau
 | image2=Peter Lougheed - Premier of Alberta - 1983.jpg | alt2=Peter Lougheed
 | footer = [[Alberta Premier]] [[Peter Lougheed]] (right) was a vocal opponent of the NEP introduced by the federal government of [[Prime Minister of Canada|Prime Minister]] [[Pierre Trudeau]] (left)
}}

Lougheed's success in the agreement was marked by a widely published photograph of a celebratory champagne toast with Trudeau and himself.{{sfn|Tupper|2004|p=216}} Lougheed later admitted to regretting the toast.{{sfn|Wood|1985|p=181}}

Lougheed's battle with the National Energy Program corresponded with the [[1980s oil glut]] where energy prices dropped dramatically due to falling demand. Lougheed was forced to lower royalty rates through the Oil and Gas Activity Program and focused the government's efforts on natural gas diversification to stem falling revenues and a declining economy.{{sfn|Wood|1985|p=182}}

Helliwell et al. (1983) reported that the early 1980s energy price declines  prompted the federal and provincial governments to update their revenue-sharing agreements.<ref name="Helliwell_1983">{{citation |series=Canadian Public Policy |title=The National Energy Program Meets Falling World Oil Prices |volume=9 |issue=3 |pages=284–296 |first1=John F. |last1=Helliwell |first2=Mary E. |last2=MacGregor |first3=Andre |last3=Plourde |work=Department of Economics, the University of British Columbia |year=1983 |jstor=3550777 |publisher=[University of Toronto Press, Canadian Public Policy] |doi=10.2307/3550777 }}</ref>{{rp|284}} The amended agreements allowed for $4.2 billion in higher revenues ($1.7 billion for the federal government and $1.2 billion each for the provincial governments and industry),<ref name="Helliwell_1983" />{{rp|290}} which was 30% of the increase that would have been gained from going to world prices.<ref name="Helliwell_1983" />{{rp|290}} According to Helliwell et al., the NEP made did not in fact cause industry to be significantly exposed to the declining global oil prices, but the largest part of direct revenue losses accrued to governments.<ref name="Helliwell_1983" />{{rp|294}} Thus, industry operated throughout the period of the NEP under relatively-similar oil prices, the "made-in-Canada" oil price (see item (a) in National Energy Program Details, above).

In 1981, the Edmonton economist Scarfe argued that the greatest impact of the NEP was its failure to deliver the revenues that had been originally forecast in the 1980 federal budget. Introduced by Finance Minister [[Allan MacEachen]], it projected a reduction of federal deficits from $14.2 billion in 1980 to $11.8 billion in fiscal 1984, primarily from substantial increases in revenues from the oil and gas sector, and the maintenance of expenditures.<ref name="Scarfe_1981" />{{rp|10}} Scarfe speculated that the NEP would discourage large-scale oil investment projects and thus reduce these projected revenues.<ref name="Scarfe_1981" />{{rp|10}} Federal deficits had been expected to decrease, primarily by substantial increases in revenues from oil and gas.<ref name="Scarfe_1981" />{{rp|10}} Instead, by 1983, the Ministry of Finance had concluded that the federal government had established a [[structural deficit]]<ref name="dsp-psd.tpsgc">{{citation |title=The Federal Deficit:Some Economic Fallacies |first=Marion |last=Wrobel |work=Depository Services Program, Canada |date=February 1986 |url=http://dsp-psd.tpsgc.gc.ca/Collection-R/LoPBdP/BP/bp144-e.htm}}</ref> of $29.7 billion, an increase from 3.5% of GNP in 1980 to 6.2% of GNP in 1983.<ref name="dsp-psd.tpsgc_a">{{citation |title=The Federal Deficit in Perspective: Table 1 Inflation-Adjusted Federal Government Budget Balances (National Accounts Basis) |work=Department of Finance, Canada |date=April 1983 |url=http://dsp-psd.tpsgc.gc.ca/Collection-R/LoPBdP/BP/bp144-e.htm>}}</ref>{{rp|64}}

Estimates have placed Alberta's losses between $50&nbsp;billion and $100&nbsp;billion because of the NEP.<ref>{{cite journal |first = Mary Elizabeth |last = Vicente |title = The National Energy Program |journal = Canada's Digital Collections |publisher = Heritage Community Foundation |year = 2005 |url = http://www.abheritage.ca/abpolitics/events/issues_nep.html |access-date = April 26, 2008 }}</ref><ref>{{cite journal |first = Robert |last = Mansell |author2 = Schlenker, Ron |author3 = Anderson, John |title = Energy, Fiscal Balances and National Sharing |publisher = Institute for Sustainable Energy, Environment and Economy/[[University of Calgary]] |year = 2005 |url = http://www.iseee.ca/files/iseee/ISEEEResearchReportNov1805.pdf |access-date = April 26, 2008 |archive-url = https://web.archive.org/web/20080626113516/http://www.iseee.ca/files/iseee/ISEEEResearchReportNov1805.pdf <!-- Bot retrieved archive --> |archive-date = June 26, 2008 }}</ref> Alberta still initially enjoyed an economic surplus due to high oil prices, but the surplus was heavily reduced by the NEP, which, in turn, stymied many of Lougheed's policies for economic diversification to reduce Alberta's dependence on the cyclical energy industry, such as the [[Alberta Heritage Savings Trust Fund]], and also left the province with an infrastructure deficit. In particular, the Alberta Heritage Fund was meant to save as much of the earnings during high oil prices to act as a "rainy day" cushion if oil prices collapsed because of the cyclical nature of the oil and gas industry. The NEP was one reason that the fund failed to grow to its full potential.<ref name="National_Post_2012">{{citation |title=A legacy rich as oil: Ex-Alberta premier Peter Lougheed's ideas imprinted on party still in power 41 years later |first=Jen |last=Gerson |date=14 September 2012 |url=http://news.nationalpost.com/2012/09/14/a-legacy-rich-as-oil-ex-alberta-premier-peter-lougheeds-ideas-imprinted-on-party-still-in-power-41-years-later/ |work=National Post |access-date=3 February 2015}}</ref> In 2022, the Heritage Savings Trust Fund has $19B, a moderate increase on the $13B it had in 1986. This slow growth occurred despite some years when Alberta government had multi-billion-dollar surpluses.<ref>{{cite web | url=https://www.alberta.ca/heritage-savings-trust-fund.aspx | title=Heritage Savings Trust Fund }}</ref><ref>{{cite web | url=https://calgary.ctvnews.ca/province-extends-affordability-measures-amid-fiscal-year-end-3-9b-surplus-1.5966221 | title=Province extends affordability measures amid fiscal year end $3.9B surplus | date=28 June 2022 }}</ref>

===GDP===
Alberta's GDP was between $60 billion and $80 billion annually during the years of the NEP (1980-1986). It is unclear whether the estimates took into account the decline in world crude oil prices that began only a few months after the NEP had come into force, the graph of long-term oil prices shows that prices adjusted for inflation did not drop below pre-1980s levels until 1985. Since the program was cancelled in 1986, the NEP was active for five years with among the most expensive for oil prices on record, and the NEP prevented Alberta's economy from fully realising those prices.<ref name="nickles" />[[Image:Alberta Per Capita Federal Contribution and International Oil Price Fluctuations.jpg|thumb|250px|Fluctuations: Oil Prices & Alberta Per Capita Federal Contributions 1975-1981]]

====Provincial per capita federal contributions====
In inflation-adjusted 2004 dollars, the year the NEP took effect (1980) per capita had fiscal contributions by Alberta to the federal government increase 77% over 1979 levels from $6,578 in 1979 to $11,641 in 1980.<ref name="iseee.ca">{{cite journal |first1=Robert |last1=Mansell |last2=Schlenker |first2=Ron |last3=Anderson |first3=John |title=Energy, Fiscal Balances and National Sharing |publisher=Institute for Sustainable Energy, Environment and Economy / University of Calgary |year=2005 |url=http://www.iseee.ca/files/iseee/ISEEEResearchReportNov1805.pdf |access-date=26 June 2008 |archive-url=https://web.archive.org/web/20080626113516/http://www.iseee.ca/files/iseee/ISEEEResearchReportNov1805.pdf <!-- Bot retrieved archive --> |archive-date=26 June 2008}}</ref>{{rp|11}} In the five years prior to the NEP (1975–1979), the per capita contributions by Alberta had approximated the fluctuations in the price of oil (see graph Fluctuations: Oil Prices & Alberta Per Capita Federal Contributions 1975–1981). In 1980, however, the inflation-adjusted average price of oil was only 5% higher than the previous year, but the per capita contributions from Alberta rose 77%<ref name="iseee.ca"/> (see graph Fluctuations: Oil Prices & Alberta Per Capita Federal Contributions 1975–1981).
Again in inflation-adjusted 2004 dollars, the year the NEP was terminated (1986) had per capita contributions to the federal government by Alberta collapse to $680, a mere 10% of 1979 levels.<ref name="iseee.ca"/>

During the NEP years (1980–1985), only one other province was a net contributor per capita to the federal government: Saskatchewan, which also produces oil. In 1980 and 1981, Saskatchewan was a net per capita contributor to the federal government with a peak in 1981 at only $514, compared to Alberta's peak of $12,735 the same year, both values being 2004 inflation-adjusted dollars.<ref name="iseee.ca"/> Thus, during the NEP (1980 to 1985), Alberta was the sole overall net contributor to the federal government, and all other provinces enjoyed being net recipients.<ref name="iseee.ca"/>

=== Bankruptcies and unemployment ===
In 1982, during the severe global recession, there were over 30,000 consumer bankruptcies in Canada, a 33% increase over the previous year. The bankruptcy rate began to fall from 1983 to 1985, as the economy strengthened.<ref name="Bankruptcy">{{citation |title=Personal Insolvency Guide |first=Earl |last=Sands |url=https://www.bankruptcycanada.com/PersonalInsolvencyGuide.pdf |access-date=27 January 2015 |date=nd |archive-url=https://web.archive.org/web/20150705172027/https://www.bankruptcycanada.com/PersonalInsolvencyGuide.pdf |archive-date=5 July 2015 |url-status=dead}}</ref>{{rp|23}} From 1980 to 1985, bankruptcies per 1,000 businesses in Canada peaked at 50% above the 1980 rate.<ref name="statcan">{{citation |work=Statistics Canada |title=National and Regional Trends in Business Bankruptcies, 1980 to 2005 |date=October 2006 |at=Table A3 Number of bankruptcies per 1,000 businesses, Canada and regions, 1980 to 2005 |url=http://www.statcan.ca/english/research/11-624-MIE/11-624-MIE2006015.pdf |access-date=2008-01-16 |archive-url=https://web.archive.org/web/20080226211533/http://www.statcan.ca/english/research/11-624-MIE/11-624-MIE2006015.pdf |archive-date=2008-02-26 |url-status=dead}}</ref>{{rp|20}} Meanwhile, the bankruptcy rate in Alberta rose by 150% after the NEP took effect.<ref name="National_Post_2012" /><ref name="statcan_a">{{citation |work=Statistics Canada |title=National and Regional Trends in Business Bankruptcies, 1980 to 2005 |date=October 2006 |at=Figure 4-2 Incidence of bankruptcies — Prairie provinces, 1980 to 2005 |url=http://www.statcan.ca/english/research/11-624-MIE/11-624-MIE2006015.pdf |access-date=2008-01-16 |archive-url=https://web.archive.org/web/20080226211533/http://www.statcan.ca/english/research/11-624-MIE/11-624-MIE2006015.pdf |archive-date=2008-02-26 |url-status=dead}}</ref>{{rp|12}}

Since bankruptcies<ref name="statcan" /> and real estate prices<ref name="phn">{{citation |work=Phillips, Hager and North Investment Management Ltd. |title=North American Real Estate: Bubble Trouble? |date=24 June 2004 |quote=Chart 10: Average House Prices (real terms), Eastern Canada (Indexed to 1980 = 100) |url=https://www.phn.com/Portals/0/PDFs/Articles/North%20American%20Real%20Estate%20062504.pdf |access-date=16 January 2008 |archive-url=https://web.archive.org/web/20080226211535/https://www.phn.com/Portals/0/PDFs/Articles/North%20American%20Real%20Estate%20062504.pdf |archive-date=26 February 2008 |url-status=dead}}</ref> did not fare as negatively in Central Canada as in the rest of Canada and in the United States,<ref name="phn_a">{{citation |work=Phillips, Hager and North Investment Management Ltd. |series=North American Real Estate: Bubble Trouble |date=24 June 2004 |title=Chart 1: U.S. Real House Prices (Indexed to 1975 = 100) |url=https://www.phn.com/Portals/0/PDFs/Articles/North%20American%20Real%20Estate%20062504.pdf |access-date=16 January 2008 |archive-url=https://web.archive.org/web/20080226211535/https://www.phn.com/Portals/0/PDFs/Articles/North%20American%20Real%20Estate%20062504.pdf |archive-date=26 February 2008 |url-status=dead
}}</ref> the NEP might have had a positive effect in Central Canada.

The unemployment rate in Alberta rose from 3.7 percent in September 1980 to 12.4 percent in 1984 following passage of the NEP.<ref>{{cite web |last1=Corbella |first1=Licia |title=Corbella: Imagine if the National Energy Program never happened |url=https://calgaryherald.com/news/local-news/corbella-imagine-if-the-national-energy-program-never-happened |website=Calgary Herald |access-date=5 June 2023 |date=28 October 2020}}</ref><ref>{{cite web |last1= |first1= |title=Unemployment rates in Alberta and Canada |url=https://www150.statcan.gc.ca/n1/daily-quotidien/160205/cg-a003-eng.htm |website=Statistics Canada |date= 5 February 2016|access-date=5 June 2023}}</ref>