Canada

Suicide squeeze for Petrocan

Roy MacGregor,Jane O’Hara October 29 1979
Canada

Suicide squeeze for Petrocan

Roy MacGregor,Jane O’Hara October 29 1979

Suicide squeeze for Petrocan

Canada

Roy MacGregor

Jane O’Hara

In baseball they refer to it as a “suicide squeeze.” It is a term that should be appreciated by Don McDougall, a director of the Toronto Blue Jays, and chairman of the federal task force that, last Monday, tabled its 48-page report calling for the “privatization” of PetroCanada. The idea in baseball is relatively simple: the play is sent in by the manager, no arguing allowed, the runner is committed to head home and the onus is on the batter to hit whatever pitch is thrown. It is a dangerous scheme, but when it works it ends up as a valuable score.

When Prime Minister Joe Clark gave his signal to McDougall and the rest of the task force on Sept. 5, there was never any doubt that they were going to do exactly as instructed. The question was not whether to sell off the national oil company’s $3.3 billion assets, but how best, as Energy Minister Ray Hnatyshyn put it, “to give individual Canadians a chance to share in Canada.” The task force, after a hasty deliberation, recommended that 97 per cent of Petrocan’s assets be distributed free in the form of a $100 share-stake to individual Canadians, the remaining three per cent to be gathered into a new governmental agency which would also assume Petrocan’s $1.5-billion debt. The new agency would perform as Ottawa’s agent in both frontier exploration and overseas oil buying.

All Clark would say of the plan was that he was “very much attracted by the idea.” New Democratic Party leader Ed

Broadbent, however, came to the House of Commons on Monday not to praise the idea but to bury it. Pushing a shopping cart full of 100,000 names on petitions calling for the retention of the integrated company, Broadbent labelled the scheme “deceptive quackery.” That, of course, was predictable—the NDP has claimed the oil company as its own since its inception in 1975, although NDP support was unnecessary given the Liberal majority at the time. What was

not predictable was Ontario Premier Bill Davis’ turning thumbs down on the idea, or the surprising phone-in poll taken by CBC-TV in Edmonton that found free-enterprising Albertans were 1,947 to 252 against dismembering Petrocan.

The irony almost went unnoticed, but on the very day the task-force report was tabled, U.S. consumer advocate Ralph Nader was speaking at Ottawa’s Carleton University. His message: hang on to Petrocan. Backed by the United Auto Workers, the International Association of Machinists and fronted by senators, congressmen, Nader and others, the “Campaign for Lower Energy Prices” last week used phone-ins, demonstrations and work stoppages in 98 American cities to push formation of a national oil company using Petrocan as a model.

But on Monday night, Clark was less interested in what Nader was saying than he was in how many Liberals showed up for the second non-confidence vote on Petrocan. To no one’s surprise, the Liberals were missing 10 members and the vote was defeated 137 to 128. But that does not mean Clark’s tough energy days are behind him. Reports last week that he was close to proposing new oil-pricing arrangements brought shrieks of outrage from both the producing and consuming provinces. Davis called Clark’s reported plans to levy a 30-cents-a-gallon increase in the excise tax on gasoline (up

from seven cents) and to increase the price of oil per barrel by $4 in 1980 “an attack” on Ontario. Alberta’s Premier Peter Lougheed has been said to have rejected a federal proposal that would create a new formula for provincial-federal sharing of the estimated $3 billion in new annual revenues which would be forthcoming with the $4-a-barrel increase.

Although the government is still uncertain about nailing down oil-pricing agreements, those most confused by the oil situation are the individual citizens who begin to resemble the Greek masks of Comedy and Tragedy, worn simultaneously. The citizen as shareholder of Petrocan is all smiles, with $100 worth of free shares coming and the opportunity either to sell them—after a sixmonth \yaiting period—or to collect dividends from them. The task force recommended that individuals be limited to one-per-cent maximum interest in the company. “Eligible institutions” will be unable to purchase more than a three-per-cent interest and the government hopes to retain control by purchasing the estimated 10 per cent of shares it presumes will go unclaimed. But the mammoth details of distribution have yet to be worked out (for B.C.’s somewhat comparable experience with BCRIC, see box), and it is unlikely that citizens will get their hands on the oil certificates until sometime next year. First, the report must be accepted in principle by caucus and cabinet and then, according to Clark himself, legislation dealing with Petrocan’s realignment will be placed before the House. “We haven’t begun to look at the fine-

tuning aspects,” said Joe Osier, Clark’s press secretary. “We have no estimates about how much it will cost, or how it should be allocated. Nobody has looked at the proposal in any scope.”

However, given that Petrocan is likely to make a $3-million profit in 1979, the future of Petrocan stocks appears “perfectly golden,” according to one Toronto oil and energy analyst. Add to that the 68 million acres of Crown reserves (oil and gas lands) in which Petrocan wants the right to dabble, and one can understand McDougall’s claim that Petrocan can become “not just a major player, but the major Canadian player on the scene.”

But then comes the citizen as taxpayer. Here the face is soured by frowns. With the new government agency assigned to push high-risk frontier exploration, the costly drilling bills will likely be met by the taxpayer with as much enthusiasm as a bill from the dentist.

“If we’re to meet our domestic oil needs by 1990,” said NDP Energy critic Cyril Symes, “then it’s estimated we’ll require $180 billion in capital investment. A lot of that’s going to come out of the federal treasury. Either you give oil companies higher prices and tax concessions or they could go on an exploration strike as they did in 1974-75.”

During the spring election campaign, Clark mentioned a number of options including the share-selling approach used in the dispersal of Alberta Gas Trunk Line, as well as the straight share giveaway now recommended by the task force. But Tory strategists may decide it’s easier to buy love than sell it. With a recent Gallup poll showing that the Tories have enjoyed little increase in popularity since the election, the $100 freebie may begin to look more seductive with each passing day.

The “squeeze play” is on. If executed properly, it could mean political points for the Blue Jays of federal government.^