Thursday, March 26, 2009

Closing The Books on Petro-Canada

20 years later, Petro-Canada goes away quietly

The recent announcement of a merger between Petro-Canada and Suncor made news internationally.

More than simply a monster merger in the energy industry, the merger also marks the final closure on a long chapter of Canadian history.

Petro-Canada was founded in 1975 as part of Pierre Trudeau's scheme to partially nationalize the Canadian oil industry. It was founded in 1973 as a response to the quadrupling of world oil prices. Working in close cooperation with the NDP -- who actually tabled the bill to create the company -- the Liberals created the company, and placed more stringent controls on it than was usual for a crown corporation. The goal was to use the company as a policy tool.

The company was also the beneficiary of a surcharge at all the country's gas pumps, which was used to finance Petro-Canada buyouts of foreign-owned oil companies.

When Joe Clark arrived in office in 1979, his first goal was to eliminate this surcharge -- a goal he attempted to achieve in his ill-fated first budget. However, Clark also proposed an 18% tax on gasoline as a deficit-fighting measure. The Liberal party officially insisted that they defeated Clark's government over this fuel tax hike.

But Trudeau had also warned Clark against dismantling Petro-Canada. His proposed elimination of the Petro-Canada surcharge seemed to be a prelude to dismantling the company.

When Trudeau, returned to government, introduced the National Energy Program in 1980, Petro-Canada was used to administer it, making the company even more unpopular in Western Canada -- particularly in Alberta.

In 1991 Brian Mulroney finally began to privatize the company. Now, only a regulatory approval by Stephen Harper's government stands between Petro-Canada and its absorption into Suncor.

It's taken 20 years and the efforts of three different Prime Ministers to finally ferry Petro-Canada into the turning pages of history, but the task has finally been finished.

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