Editorial

Selling Petrocan will cost Canada money and its key card in the world oil game

Peter C. Newman September 17 1979
Editorial

Selling Petrocan will cost Canada money and its key card in the world oil game

Peter C. Newman September 17 1979

Selling Petrocan will cost Canada money and its key card in the world oil game

Editorial

Peter C. Newman

The basic misconception in the Clark government’s handling of Petrocan is that it views the issue as an ideological touchstone. For a Conservative administration, presumably, all forms of government intrusion into the economy must be avoided; free enterprise must be allowed to flourish unimpeded by any drains to the federal treasury. In fact, Petrocan’s functions have no connection with political philosophy. This is the age of the energy crisis, and national oil companies are the rule rather than the exception. (It’s no accident that the national oil companies of Britain, West Germany, France, Italy and Japan are all operating in Canada.)

Petrocan is the only chance we have of being represented in any major way in the world oil game with a voice independent of the huge multinationals. Even Jack Armstrong, the chairman of Imperial Oil, the largest of these big internationals, has wisely come out against selling Petrocan to the private sector. “I think that the man on the street would like to have some representation on a national basis in the oil industry,” he said on CTV’s Question Period recently. Peter Lougheed, who hardly qualifies as a radical, set up the Alberta Energy Company to show what government initiatives can accomplish.

As Jane O’Hara reports on page 38, “to sell off the profitable assets of its Crown corporation, Petrocan, the funds needed for high-risk frontier exploration, as well as research and development in oil and gas, will, by necessity, have to come from the federal treasury.”

This will make no mean difference. Canadian taxpayers have, to date, invested $924 million in Petrocan, with the rest of the company’s acquisitions financed by borrowing. Its purchases of Atlantic Richfield Canada Ltd. and Pacific Petroleums Ltd. cost $2 billion. But the investment is now worth at least $3 billion. It’s from such profits that Petrocan has been able to move into those marginal exploration activities closed to firms governed solely by bottom-line considerations. The $50 million invested by Petrocan in the successful gas drilling operations on the ocean shelf off Nova Scotia—long after the area had been abandoned by other companies—is only the most recent example. “If Petrocan is not needed,” Wayne Cheveldayoff lamented in The Globe and Mail, “why is it being asked by private oil companies to join risky ventures?”

By stripping Petrocan of its dynamic components and thus making it dependent on federal generosity instead of its own profits, Joe Clark would deprive us of the least costly, most efficient method of achieving Canada’s energy goals.