EDITORIAL

Leduc’s free-enterprise flame is guttering in the political wind

Peter C. Newman March 16 1981
EDITORIAL

Leduc’s free-enterprise flame is guttering in the political wind

Peter C. Newman March 16 1981

Leduc’s free-enterprise flame is guttering in the political wind

EDITORIAL

Peter C. Newman

One of the few sustaining myths of Canada’s short, but lively, business history is Imperial Oil’s dramatic discovery at Leduc on Feb. 13, 1947. The company had spent $23 million drilling 133 consecutive dry holes across the Prairies. The drill site in a sleepy Edmonton suburb was to be Imperial’s final shot at finding a major petroleum pool. When its rig struck an elephant-size reservoir at 1,524 metres, Carl Nickle, then the editor of the Daily Oil Bulletin, recorded the ecstasy of the moment: “In the small hours of this morning, I shivered in a raw wind while my hand on the flow pipe recorded the steady pulsating of oil heading for the storage tanks and gas heading for the flare. ... This writer is more impressed by Leduc’s performance than by any other western oil discovery in the past decade. Leduc may be the beginning of a different story for Imperial.”

And so it was. By year’s end, the Leduc field boasted 28 producing wells. The Alberta oil rush was on. Imperial’s proud achievement ranked as one of those economic miracles made possible by the kind of risktakers bred inside the great multinationals, impelled by their faith in the free-enterprise system.

But the 1,800-page report issued last week by Ottawa’s Combines Investigation Branch cast Imperial Oil in a very different light (see page 26). The Exxon subsidiary has been painted as part of a “joint monopoly” of oil companies that allegedly overcharged the Canadian public an estimated $12 billion (in 1980 dollars) between 1958 and 1973. The four largest Canadian oil companies—Imperial, Gulf, Shell and Texaco—together control a total of 64 per cent of Canadian refining capacity and more than half the existing gasoline outlets.

Certainly, there is something fishy about the Ottawa report’s timing. The document is based on an eight-year investigation beginning in 1973. The fact that the bombshell document just happened to be released the week after Peter Lougheed cut Alberta’s oil flow, and at a time when Ottawa is in the process of nationalizing multinational oil companies, hardly qualifies as a lucky coincidence. It is also true, as Imperial President Jim Livingstone has pointed out, that if the oil companies had broken any laws, charges would have been laid.

But every capitalist society must tame the reach of its entrepreneurs if the system is to remain healthy. Canadians should be alert to the fact that in the third quarter of 1979, Exxon, the world’s largest multinational energy company, took a-4hird .pf its profits from this country. The current allegations about Imperial Oil hardly perpetuate its brave days at Leduc.