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East Beats West

Essay by   •  January 13, 2011  •  Research Paper  •  1,231 Words (5 Pages)  •  1,005 Views

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With gas-guzzling automobiles, expanding highways and growing suburbs, the Canadian economy was increasingly fuelled by oil in the 1970s. This increase in fuel usage ended the era of secure, cheap oil. The period brought on the creation of the Organization of Petroleum Exporting Countries (OPEC); oil prices reached an all time high, when OPEC cut back on oil production in 1973. The impact was huge and caused high unemployment and major inflation in Canada. This cut back became known as the OPEC energy crisis and caused distress in Canada between Ottawa and the West, especially Alberta. Alberta was a province rich in oil and the federal government turned to them during the crisis to keep Canadian gas prices below the world levels. By adding a tax to their oil exports, the government caused a long struggle with Alberta for control of energy prices and revenues. Throughout history the federal government has looked for ways to help Canada's East, but many times at the expense of Western Canada and attempts to rectify the energy crisis caused further hostility in the West.

Since the West joined Canada there has been constant feelings of alienation among the western provinces, which was further increased by the effects of the energy crisis. The roots of western alienation go all the way back to Sir John A. Macdonald and his national policy, which set out three main things. This policy included the completion of a transcontinental railway, settlement of the prairies, and the creation of a manufacturing base in Eastern Canada. It was expected the policy would create unity between Canada, however it eventually began the West's discontent with the rest of Canada. To Western Canada, the policy left behind unfair freight rates and a resource-based economy which favoured the manufacturing and financial sectors of Eastern Canada. When the energy crisis came about, it appeared again, that the government's only concern was helping Eastern Canada. Ottawa had realized they had an advantage over many other nations. Alberta produced almost two thirds of Canada's oil and the rest of Alberta's oil was piped to the United States. Owing to the fact that the Maritimes and Quebec did not receive oil from Alberta, the government needed a way to pay for the inflation of OPEC's oil prices. By adding a tax to Alberta's oil exports, they would be able to use the revenue to pay for the OPEC oil prices and also freeze the price of Alberta's oil, well below the world price. However, Western Canada viewed this as benefiting those in the East, at the expense of western oil producers. The West was fed up with Ottawa's policies.

During the OPEC energy crisis, when Ottawa tried to take control of Alberta's oil, it brought about many separatist groups and infuriated Alberta's provincial government. Historically in Canada provincial governments have struggled with Ottawa for power over their resources. Provinces legally control any tax royalties on their own natural resources, according to Section 109 of the Constitution Act of 1867. However, Ottawa may reject provincial legislation; apply broad taxation and claim authority over interprovincial trade. According to the Constitution, the federal government is not disregarding any laws but at the same time has to look at the well being of its provinces. The Canadian government used the revenues from Alberta's oil to create Petro Canada to search for oil in the tar sands of Alberta, further increasing western alienation. When Ottawa created Petro Canada, the company began to "confiscate" oil from Alberta, and the profits would then be used to run Petro Canada. Alberta began to feel the government was ignoring their needs and were enraged and Alberta Premier Peter Lougheed cut oil production in 1980. He vowed to reduce the industry to about 85 per cent of its capacity. The Alberta provincial government were not the only one angered by the situation. Albertans were angry too, and a newspaper poll found Albertans supported the Premier's actions 5 to 1. On a call-in radio program, one resident said "If my voice is trembling it's because I am terribly angry, to the point where I would be happy to fight for our freedom and I literally mean fight with a rifle." The residents of Alberta were not happy and an unofficial poll revealed 49% of Alberta wanted to separate from Canada. Trudeau was hung in effigy and the West was at its wits end.

When a second energy crisis occurred in 1979, the Trudeau government introduced the National Energy Program (NEP), which has left a lasting impression in Canada's West. The objectives of the NEP were to fix oil and gas prices, increase Canadian ownership of the oil and gas industries and claim more oil and gas revenue for the federal government. Although all



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