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Policy instruments in the American and Canadian oil sectors, 1973-77 : a comparative analysis Williams, Stephen T. 1988

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POLICY INSTRUMENTS IN T H E A M E R I C A N A N D C A N A D I A N OIL SECTORS, 1973-77: A COMPARATIVE ANALYSIS by S T E P H E N T . W I L L I A M S B.P.A., Car le ton Universi ty, 1987 A THESIS SUBMITTED IN PARTIAL FULFILLMENT O F T H E REQUIREMENTS FOR T H E DEGREE O F MASTER O F ARTS in T H E FACULTY O F GRADUATE STUDIES DEPARTMENT O F POLITICAL SCIENCE W e accep t this thesis as c o n f o r m i n g t o the requi red s tandard T H E UNIVERSITY O F BRITISH C O L U M B I A O c t o b e r 1988 (c) S tephen T. Wi l l iams In p r e s e n t i n g this thesis in partial f u l f i lmen t o f t he r e q u i r e m e n t s fo r an advanced d e g r e e at t he Univers i ty o f British C o l u m b i a , I agree that t h e Library shall make it f ree ly available f o r re ference and s tudy . I f u r the r agree tha t permiss ion f o r ex tens ive c o p y i n g o f th is thesis f o r scholar ly pu rposes may be g ran ted by the head o f m y d e p a r t m e n t o r by his o r her representat ives. It is u n d e r s t o o d that c o p y i n g o r p u b l i c a t i o n o f th is thesis f o r f inancial gain shall n o t be a l l o w e d w i t h o u t m y w r i t t e n pe rm iss ion . D e p a r t m e n t o f VoV.ViQgJ, S c ' i e ^ a The Univers i ty o f Brit ish C o l u m b i a Vancouver , Canada Date Q c j r . \ \ DE-6 (2/88) ii ABSTRACT This thesis compares policy instruments in the American and Canadian oil sectors from 1973 to 1977, the years immediately following the Arab oil embargo. Public policy has traditionally emphasized objectives over instruments even though instruments are at the heart of the policy making process. This case study helps to address this deficiency in the policy literature. It begins by providing a review of the instrument choice literature. Doern and Phidd's typology, which arranges instruments in terms of degrees of coercion, subsequently forms the basis for Chapter Two. Chapter Two's analysis of American and Canadian oil policy reveals that both countries agreed upon the security of supply objective. Furthermore, both deployed many similar instruments including suasion, direct expenditures, loans and guarantees, taxation, and regulation to reach the objective. However, one very important difference in instrument choice was made. While Canada deployed the most coercive policy instrument (public enterprise), the United States did not. Chapter Three offers three explanations for this specific difference. They are (1) differences in ideology, (2) market factors, and (3) differences in government institutions. The difference in ideology is the most important explanation. American ideology is decidedly more conservative than Canadian ideology. As such, American governments are less inclined to create government corporations, like national oil companies, than are Canadian governments. Furthermore, ideology is invariably reflected in a nation's party system, and neither of America's mainstream parties advocated the creation of an NOC while Canada's government party did. Market factors are also important. Countries with formidable industrial bases, such as the United States, are less likely to create public corporations than are those with weaker industrial bases. In the particular case of oil, Canada's oil industry was predominantly foreign-owned owing °to insufficient pools of domestic capital. America's industry was overwhelmingly domestically-owned. Hence whereas Canada's NOC was the only oil company truly loyal to the Canadian people, iii an A m e r i c a n N O C w o u l d have had to c o m p e t e w i th home-based mult inat ionals m a k i n g it relatively unat t ract ive to govern ing elites, and unnecessary to the Amer ican publ ic . Finally, the di f ferences be tween Canadian and Amer ican inst i tut ions are stark a n d impor tant . Canada 's par l iamentary sys tem of government fosters publ ic corpora t ions because co rpora t ions are easy t o create a n d offer signif icant benefi ts to their poli t ical masters w h o can cont ro l t h e m . The Canad ian gove rnmen t set out to create an N O C in the mid-1970s and c a m e ac ross no obstac les . O n the o ther hand , Amer ica 's presidential sys tem d iscourages publ ic corpora t ions . Not on ly d id Amer i can Presidents a n d Congressmen not desire an N O C , but t hey were unable to legislate wha t c o m p r e h e n s i v e oil po l icy they d id desire. iv TABLE O F CONTENTS Page ABSTRACT ii TABLE O F CONTENTS iv LIST O F TABLES v LIST O F FIGURES vi A C K N O W L E D G E M E N T vii INTRODUCTION 1 CHAPTER O N E : A REVIEW O F THE INSTRUMENT CHOICE LITERATURE 3 CHAPTER T W O : AMERICAN A N D CANADIAN OIL POLICY INSTRUMENTS, 1973-1977 9 Oil Pol icy Inst ruments C h o s e n by the United States 11 Oil Pol icy Inst ruments C h o s e n by Canada 21 CHAPTER THREE: REASONS FOR POLICY INSTRUMENT DIVERGENCE 30 Part I: Dif ferences in Ideo logy /Po l i t i ca l Cul ture 30 In t roduct ion 30 . The Dif ference in Ideo logy Between Canada and the Uni ted States 31 Ideology and Oil Pol icy 33 Ideology and Polit ical Part ies 35 Oil Pol icy and Party Pol i t ics 39 S u m m a r y 42 Part I I : E c o n o m i c / M a r k e t Factors 43 In t roduct ion 43 The E c o n o m i c A r g u m e n t 43 Canada 's Fo re ign -Owned versus Amer ica 's Domest ica l ly -Owned Oil Industry 48 S u m m a r y 51 Part III: Dif ferences in G o v e r n m e n t Inst i tut ions 52 In t roduct ion 52 Canada 's Par l iamentary versus Amer ica 's Presidential Sys tem of Government 52 Public Enterpr ise a n d the Structure of Government 53 Oil Pol icy and G o v e r n m e n t Inst i tut ions 58 S u m m a r y 62 C O N C L U S I O N 63 BIBLIOGRAPHY 67 APPENDIX 73 V UST OF TABLES Table 1: • Publ ic Enterpr ise Shares of Selected Western E c o n o m i e s Table 2: Compara t i ve S u m m a r y of Amer ican and Canad ian Oil Pol icy Inst ruments, 1973-77 VI LIST OF FIGURES Figure 1: The Inst ruments of Govern ing ACKNOWLEDGEMENT This thesis w o u l d not have c o m e to fruit ion wi thout the gu idance and ass is tance of George H o b e r g . His insight, coup led wi th outs tand ing teach ing ability, has m a d e all the di f ference. I part icular ly apprec ia ted his pat ience w i th me w h e n I elected to w o r k out of t o w n for m u c h of the summer . My t imetable for thesis comple t ion bec am e d e m a n d i n g o n us b o t h as a result of m y dec is ion . The cont r ibut ions that o thers have m a d e to this thesis, part icular ly Professors Alan Cairns, Paul Tennant , Peter Nemetz , Diane Mauzy, and w o r d p rocessor Sandy Carter, also war ran t a c k n o w l e d g e m e n t and thanks. 1 INTRODUCTION In 1973 a n A r a b oil boyco t t threatened to comple te ly cut off oil suppl ies to c o n s u m i n g nat ions. As a suff ic ient supp ly of oil w a s crucial to the main tenance of their po l i t i co -economic sys tems, all o i l - consuming count r ies , inc luding Canada and the Uni ted States, re-evaluated their respect ive energy pol ic ies. The ha lcyon days of relatively stable energy pr ices were g o n e forever, and every c o u n t r y modi f ied its pol icy object ives and pol icy inst ruments consonan t w i th the new era. T h e p u r p o s e of this thesis is twofo ld ; first, to c o m p a r e Amer i can and Canadian oil po l icy ins t ruments be tween 1973 a n d 1977. 1 Chapter One prov ides a review of the inst rument c h o i c e l i terature, f ocus ing o n four diverse ways of conceptua l iz ing and examin ing po l icy inst ruments. Chapter T w o , in tu rn , c o m p a r e s Amer ican and Canadian inst ruments by a r rang ing po l icy ins t ruments a long a c o n t i n u u m start ing w i th m i n i m u m coerc ion and ex tend ing t o m a x i m u m coerc ion . Before oil b e c a m e a ma jo r po l icy concern , these two countr ies ' po l icy ins t ruments c o n v e r g e d : "Nor th of M e x i c o - w h e r e the nat ional izat ion of oil occur red in the late 1930s - the Nor th Amer i can cont inent was , f rom the d a y s of J o h n D. Rockefel ler until the era of Sheik Yaman i , an exclusive preserve of pr ivate oi l" (Pratt 1981, 96). After 1973, Canadian and Amer i can po l icy makers no longer ag reed o n h o w to tack le oil pol icy. The biggest di f ference was that Canada created a gove rnmen t o w n e d oil c o m p a n y , and the Uni ted States d id not. The s e c o n d purpose of the thesis is to explain the d ivergence be tween Canad ian and Amer i can inst rument cho ice . Chapter Three offers three potential exp lanat ions for the pos t -embargo d ivergence. They include di f ferences in ideology, market factors, and gove rnmen t inst i tut ions. All have been used successfu l ly by others to explain the s c o p e of publ ic enterpr ise in var ious countr ies. However , m y paper tests their abil ity to explain the speci f ic po l icy d ive rgence be tween C a n a d a and M977 w a s c h o s e n because that year marked the passage of the Nat ional Energy Plan (NEP) in the Uni ted States, and the first anniversary of the creat ion of a nat ional oil c o m p a n y (hereafter referred t o by its abbrev iat ion, NOC) in Canada. 2 the Uni ted States in the oil sector. At the conc lus ion of m y paper, ideology, marke t forces, and gove rnmen t insti tut ions are o rdered in te rms of their impor tance. Chapter 1 A REVIEW OF THE INSTRUMENT CHOICE UTERATURE Pol icy ins t ruments are the means adopted to meet gove rnmen t object ives. They "are the major w a y s in wh ich gove rnmen ts seek to ensure compl iance, suppor t a n d implementa t ion of publ ic pol icy" ( D o e m and Phidd 1983 ,110) . Pol icy instruments inc lude di rect expendi tures, tax expendi tures, regulat ion, publ ic enterpr ises, loans and guarantees, m ixed enterpr ises, and suas ion /exhor ta t ion . A tax expendi ture is potent ia l revenue the government chooses not t o col lect w h e n it reduces tax liabil ity for certain des ignated types of income or weal th , whi le suas ion consis ts of persuasion and vo lun tary appeals m a d e to the electorate by the governmen t (Stanbury 1986, 49). Whi le pol icy ins t ruments are tradi t ional ly less scrut in ized than pol icy ob ject ives, they are very important . There are m a n y diverse w a y s of conceptua l iz ing and examin ing instruments. First, Bruce D o e m , work ing wi th V ince Wi lson a n d later wi th Richard Ph idd, a r ranges pol icy inst ruments in te rms of the degree of coerc ion they entail. The authors ' concep tua l f ramework w a s well i l lustrated by Bruce D o e m a n d Richard Phidd in 1983: Figure 2.12 The Instruments of Governing I Exhor ta t ion I Regulat ion ( inc lud ing taxat ion) Self-Regulat ion Expendi ture Public Ownersh ip M i n i m u m DEGREES OF LEGITIMATE C O E R C I O N M a x i m u m Figure 2.1 por t rays the degrees of legit imate coerc ion involved in govern ing. It ar ranges the 2 D o e m and Phidd 1983, 111. 4 ins t ruments a long a c o n t i n u u m start ing wi th m i n i m u m coerc ion and extending to m a x i m u m c o e r c i o n . 3 There is pract ical ly n o coerc ion involved wi th self-regulat ion, a n d very little wi th exhor ta t ion , w h i c h " involves a n effort t o ensure suppor t and comp l iance t h r o u g h persuasion, d iscuss ion a n d vo lun tary app roaches" (Doern and Phidd 1983,111) . Taxat ion and regulat ion, o n the o ther h a n d , are m o r e coerc ive, for they entail the imposi t ion of government rules backed by state sanct ions. Finally, publ ic ownersh ip is cons idered to be the most coerc ive a n d interventionist po l icy ins t rument avai lable to m o d e r n government . This is part icular ly true w h e n a private c o m p a n y is nat ional ized. A r rang ing po l icy inst ruments systematical ly f r om least coerc ive to most coerc ive is useful for analyt ical pu rposes . The var ious fo rms and degrees of legi t imate coerc ion are not mere ly m e a n s or techn iques . They are ends in themselves. Thus, it is impor tant to be able to j u d g e h o w m u c h coe rc ion gove rnmen t is using to meet its po l icy object ives. Whi le some po l icy p rob lems requi re unwaver ing g o v e r n m e n t c o m m i t m e n t in the fo rm of publ ic enterpr ise, most d o not. Doern a n d Wi lson t o o k the preced ing analysis one step fur ther in 1974 by crystal l iz ing it into a theory . They general ized about instrument use over t ime by c o n c l u d i n g that "pol i t ic ians (especial ly the col lect ive cabinet) have a s t rong tendency to respond to po l icy issues (any issue) by m o v i n g success ive ly f rom the least coerc ive govern ing ins t ruments to the most coerc ive" (Doern a n d Wi lson 1974, 339) . They pred ic ted that government wou ld first respond t o a new issue by creat ing a s tudy, e n g a g i n g in consu l ta t ion , or ut ter ing a b road s tatement of intent in a speech . Second ly , p rov ided that the issue was still o n the agenda , pol i t ic ians w o u l d make distr ibut ive expendi tures. Thirdly, they w o u l d implement a larger redistr ibutive p r o g r a m m e , leaving the regulat ion of the po l icy sector as a final op t ion . Doern and Wi lson also c la imed that their theory w a s re in forced by the pol i t ical c i r cumstances of federal ism as the least coerc ive inst ruments cou ld be uti l ized w i th greater const i tu t ional ease and certainty. 3 D o e r n et al. 's theory w a s inspired by Lowi 's theory o n the central i ty of c o e r c i o n in pol i t ics. See Lowi (1964) and (1972). 5 A d e c a d e later, Doern and Ph idd themselves all but reject the theory. T o o m a n y quest ions cannot be empir ical ly answered. W h e n is a pol icy issue "new," for instance? Do events, dec is ions, and nondec is ions precede the dec is ion to spend m o n e y or regulate? And h o w long d o e s it take for the hypothes ized behaviour to unfold? The t w o authors also agree wi th W.T. Stanbury 's analysis that "pol i t icians t o o readily pract ise the adage that ' there ought to be a law' and easily reach for the regulatory poli t ical gun first" (Doern and Phidd 1983 ,129) . The fact that a theory stressing coerc ion may not be capable of fo recast ing the pat tern of inst rument cho ice is unfortunate, but hardly fatal. Whi le governments everywhere shif ted f rom passive oil pol icies to act ive ones dur ing the decade, s o m e pursued the full fo rce of gove rnmen t intervent ion more than others, leading to impor tant di f ferences wor th scrut in iz ing. Thus c o m p a r i n g the dif ferent pol icy inst ruments dep loyed by o i l - impor t ing countr ies in the 1970s in t e rms of their coerc iveness is a fruitful exercise as will be s h o w n in Chapter Two. The second conceptua l iza t ion exp lored is that of Kenneth Woods ide . He refutes the assumpt ion built into the mode ls of m a n y po l icy inst rument theor ists that pol i t ic ians a n d off icials c a n c h o o s e f rom a m o n g the who le range of govern ing instruments. Whi le the full range of po l icy ins t ruments m a y be available for cons idera t ion and select ion in the cabinet, po l icy init iatives usually evolve a n d deve lop in depar tments a n d agenc ies where instrument cho ice is l imi ted by statute. For Woods ide , theor ies and f rameworks that stress the range of pol icy inst ruments tend t o ignore how issues get o n the a g e n d a , the nar row cho ice of ins t ruments available t o m a n y d e p a r t m e n t s and agencies, and past cho ice w h i c h suggests certa in p rob lems should be dealt w i th t h r o u g h the use of a speci f ic pol icy instrument. Polit ical and e c o n o m i c realities such as internat ional and domes t i c cr ises or concerns abou t the budgeta ry impl icat ions of adop t ing certain pol icy ins t ruments must also be emphas ized lest an unrealist ic sense of cho ice distort instrument cho ice analysis. W o o d s i d e also re-examines Doern and Phidd 's assert ion that di f ferent iat ing pol icy ins t ruments in te rms of coerc ion is analyt ical ly useful . In a partial ref inement of their t ypo logy , W o o d s i d e a rgues that di f ferent iat ing po l icy ins t ruments in this way fails to take into a c c o u n t that each 6 policy instrument itself can be used in a wide range of ways that involve differing degrees of coercion. The way that a particular policy instrument, coercive or uncoercive, will eventually be used after adoption will depend on its unique constituency or client. Furthermore, governments readily adapt the use of an instrument when the political power of the clientele or constituency of a policy shifts, or when a policy area changes over time. In sum, the political power of the clientele of a policy not only helps determine whether a "coercive" or "uncoercive" instrument will be chosen by government, but also the particular way in which any one policy instrument will be structured. Woodside is correct that careful attention ought to be paid to the specific form an instrument takes. However, the fact that public enterprise is generally much more coercive than suasion must, under no circumstances, be lost in the shuffle of detailed case studies. Governments that rely heavily on public enterprise are generally more coercive than those that do not. Therefore, Doern and Phidd's concept is more useful than Woodside suggests. Thirdly, Trebilcock writing on his own and with Hartle, Prichard and Dewees shifts the focus of analysis. He is a public choice theorist, and the basic tenet of public choice is that decision makers are utility maximizers whose behaviour is best explained in terms of the pursuit of their self-interest. Working within the constraints of the polity, decision makers choose whatever policy instrument furthers their own goals. While the vote-maximizing goal of the politician is implicit in Doern and Wilson's hypothesis - governments eschew unnecessarily coercive policies in order to maximize their popularity - Trebilcock et al. make the goal the cornerstone of their hypothesis (Woodside 1986, 781). In their analysis, political decision-makers "have only one ultimate objective in all policy decisions - promoting their prospects of election or re-election (vote maximization) and both the choice of interests or values to be advanced and the choice of instrument by which they are to be advanced will be evaluated by them against this benchmark" (Prichard 1983,16). The primary goal of Trebilcock et al. is to explain what instrument will be chosen in a particular context. They cite three key sets of variables. First, instrument choice is limited by 7 legal or const i tut ional constraint . Second , to the m a x i m u m extent possible, poli t ical dec is ion-makers adop t ins t ruments that confer benefits o n marginal voters, and impose costs o n infra-marg ina l , or part icular ly commi t ted , voters. Thi rd, rational dec is ion-makers take into cons idera t ion vo ter ignorance and dep loy pol icy instruments that magni fy the benefi ts of marginal voters , even exaggera t ing their size, whi le deprec ia t ing the pains borne by other voters (Trebi lcock, Hart le, Pr ichard et al . 1981,1-4). By ty ing the calculus of instrument cho ice unwaver ing ly to electoral cons idera t ions, Treb i lcock et al. 's theory shows cons is tency. It certainly has the potent ial to con t r ibu te to the discip l ine 's explanat ion of Canad ian oil po l i cy . 4 However , their a p p r o a c h is p rob lemat ic in that it " lacks a sufficient breadth of apprec ia t ion abou t the broader relat ions a m o n g inst i tut ions and a m o n g ideas, s t ructures and processes" (Doern and Phidd 1983 ,145) . The final inst rument cho ice theory to be assessed is that of P.. Kent Weaver , w h o has app l ied his theo ry t o a compara t ive analysis of Canadian and Amer ican rai lway pol icy. Weaver c i tes three fac tors w h i c h inf luence the cho ice of a part icular instrument: (1) the e c o n o m i c at t r ibutes of the ins t ruments , (2) the polit ical at tr ibutes of the inst ruments, and (3) the constra ints der ived f r o m the b roader pol i t ical sys tem. First, whi le conced ing that the different e c o n o m i c c i rcumstances that count r ies face help accoun t for instrument cho ice d ivergence a m o n g nat ions, Weaver states that e c o n o m i c at t r ibutes, in general , are an insufficient explanat ion of inst rument cho ice . He c o n t e n d s that gove rnmen ts can a lways c h o o s e a m o n g several pol icy inst ruments whatever the c i r cumstances , and that e c o n o m i c c i rcumstances are more likely to determine whether a government will in tervene than h o w it will intervene (Weaver 1985, 75). Polit ical at t r ibutes and constra ints - past cho ice , ideology, cos ts and benefi ts, and gove rnmen t inst i tut ions - are af forded m u c h more p rominence in the theory. They m a y inf luence whether the e c o n o m i c advantages and d isadvantages general ly l inked to an instrument app ly in a part icular case. For instance, are publ ic corpora t ions contro l led equal ly as well by all countr ies? Polit ical 4 S e e Chapter III, The Regulat ion and Taxat ion of the Oil Industry in Trebi lcock, Hart le, Pr ichard e t a l . (1981). 8 at t r ibutes may also determine what inst rument attr ibutes are cons idered legi t imate t o gove rnmen t and non-governmenta l dec is ion makers, and the abil i ty of opponen ts of a part icular inst rument to b lock its adop t ion (Weaver 1985, 77-78). The explanatory capabi l i ty of Weaver 's theory is impressive. In fact, all of the theor ies and typo log ies examined in this chapter shed l ight o n the po l icy ins t ruments p h e n o m e n o n . Whi le Doern and Phidd focus on coerc ion , and Treb i lcock et al. , electoral calculus, one thread runs th rough t h e m all. All of t h e m emphas ize the impor tance of d i f ferences in pol icy ins t ruments - "dif ferences bo th in te rms of the polit ical p rocess they engender , in the inc idence of the benefits they confer, in the level of coerc ion they imply and in their visibi l i ty to the general publ ic" (Woods ide 1986, 785). The existence of such di f ferences is precisely w h y s tudy ing pol icy inst ruments is so impor tant . N o t w o inst ruments are exact ly the same, and w h e n pol icy makers choose one over another, they usually d o so for a specif ic reason, mak ing the cho ice be tween inst ruments a polit ical dec is ion. W h y else wou ld pr ivat izat ion be inci t ing in f lammatory debate in so m a n y parts of the industr ial ized wor ld? Doern and Phidd 's t ypo logy fo rms the basis for Chapter T w o because of the essential d i f ference be tween Canadian and Amer ican oil pol icies. In order to meet similar secur i ty of supply object ives, Canada dep loyed the most coerc ive pol icy inst rument whi le the Uni ted States dep loyed less coerc ive pol icy instruments. The t w o authors ' t ypo logy p icks out this d i f ference immediate ly . Theor ies wil l play a more impor tant role in the thesis w h e n explanat ions are d i scussed in Chapter Three. Chapter 2 AMERICAN AND CANADIAN OIL POUCY INSTRUMENTS. 1973-77 9 The 1973 Arab oil e m b a r g o caused the emergence of an energy pol icy exp los ion in all o i l -impor t ing countr ies. Five central pol icy object ives - secure suppl ies, reasonable pr ices, increased domes t i c p roduc t ion , efficient use, and fair al locat ion - p reoccup ied all of the 130-odd count r ies wh ich impor ted oil. Whi le each coun t ry d id not give the exact same prior i ty to each object ive, a survey of energy pol ic ies of International Energy Agency (IEA) count r ies indicates that secur i ty of supp ly w a s the pr ime ob jec t ive of all na t ions . 5 The United K i n g d o m ' s energy ob jec t ives were "the prov is ion of adequate and secure suppl ies of energy, the efficient use of avai lable suppl ies and the at ta inment of these a ims at the lowest pract icable cost to the nat ion" (IEA 1977 ,161) , whi le the overall ob ject ive of the Danish energy pol icy in 1977 was to " reduce the high degree of d e p e n d e n c e o n impor ted energy, especial ly impor ted oil , wh ich accoun ted in 1973 for 9 1 % of total p r imary energy requi rements" ( I b id - 76). Since the most str iking c o m m o n a l i t y a m o n g o i l - impor t ing gove rnmen ts w a s their intense dr ive to improve short and m e d i u m te rm secur i ty of supply , the d iscuss ion of Amer i can and Canadian instrument cho ice wh ich fo l lows focuses o n inst ruments a d o p t e d t o meet this object ive. All of the industr ial ized impor ters, apart fo rm the United States, agreed o n the b road parameters of gove rnmen t involvement. Table 1 shows that in a lmost all of these countr ies, inc lud ing Japan , West Germany , France, Italy, Canada, Sweden, Benelux, and Britain, the poli t ical sys tem cons iders state enterpr ise as a legit imate publ ic pol icy too l . Most of these count r ies ' po l icy ins t ruments subsequent ly ranged f rom suasion to publ ic enterpr ise. Even West Germany , a coun t ry incl ined to use market ins t ruments whenever possible, created a s ta te-backed g roup , VEBA, in the mid-1970s in order to retain a m i n i m u m 25 per cent oil market share under d i rect nat ional cont ro l (Kemezis and Wi lson 1984, 50). i n t e r n a t i o n a l Energy Agency (1977). New surveys are released each year. Table 1 Publ ic Enterpr ise Shares of Selected Western Economies Percent of g ross f ixed Emp loyment as capital percent of Count ry fo rmat ion labor fo rce Austr ia 19.2 13.7 Belg ium 13.1 5.2 Canada 14.8 3.0 Denmark 8.3 3.4 France 14.0 7.3 Germany, Federal Republ ic of 10.8 7.2 Ireland 11.8 7.3 Italy 15.2 6.6 Japan 11.2 2.8 Nether lands 12.6 3.6 Spain 15.6 2.9 S w e d e n 15.3 8.2 United K i n g d o m 16.8 8.1 Uni ted States 4.4 1.5 Source : Weaver 1985, 7 1 . The unique coun t ry in the deve loped wor ld , w h i c h "bucked" the t rend of intervening in the oil sec to r w i th coerc ive instruments, was the Uni ted States. The pr incipal means of cont ro l left to the Amer i cans was regulat ion, and even fo rms of it w e r e restr ic ted. Hence whi le bo th Canada a n d the U.S. a d o p t e d m a n y similar pol icy inst ruments t o m a n a g e the oil crisis, inc luding suasion, d i rec t expendi tures, loans and guarantees, tax expendi tures, and regulat ion, Canada adop ted the m o s t coerc ive fo rm of po l icy instrument whi le the Uni ted States d id not. This is the "big fact." It is necessary t o descr ibe all of the oil pol icy ins t ruments d e p l o y e d by each count ry in o rder to ful ly apprec ia te the s igni f icance of this di f ference. Oil Pol icy Ins t ruments C h o s e n by U.S. Amer i can oil pol icy lacked cons is tency th roughou t the 1970s. Three admin is t ra t ions governed the Uni ted States du r ing the crisis. A Republ ican, Richard N ixon , was president until 1974. He w a s s u c c e e d e d by another Republ ican, Gerald Ford , w h o led the count ry until 1976 w h e n J i m m y Carter w o n the pres idency for the Democra ts . No t on ly were there three presidents, but the t w o 11 Republican presidents faced a Democratic Congress which disagreed with many of their energy policy initiatives. America's fragmented system of government simply made coherent energy policy very difficult to implement, allowing energy problems to drift. When Ford signed an energy bill in December, 1975, "it was much watered down, it compromised the issues and it did not show any cohesive energy plan" (Ghosh 1983, 173). Even Carter, who faced a "friendly" partisan Congress, had difficulty pushing through his energy program. Eighteen months after being sent to Congress, only half of his program became legislation in November 1978 (Goodwin 1981, 584). This was discouraging for many Washington policy makers who had worked tirelessly for years in search of a comprehensive energy policy: Shortages, dependence on insecure foreign sources, and startling increases in price convinced the majority of Americans that government should intervene in a comprehensive manner to direct the behavior of energy producers and consumers. With few exceptions after 1970, politicians, consumers, and business leaders shared a consensus that the United States needed a coherent national energy policy (Vietor 1984, 313). Yet a coherent oil policy seemed to be out of America's reach. In fact, Nixon, Ford, and Carter were influenced by different energy reports. Nixon was clearly influenced by a National Petroleum Council's multi-volume report, U.S. Energy Outlook. Months after its December 1972 release, he outlined a comprehensive national energy policy containing all but one of the Council's recommendations, the continuation of oil import quotas. Alternatively, Ford was influenced by the Federal Energy Administration's Project Independence Report published in 1974, and Carter was influenced by and helped design The National Energy Plan, a report released in April, 1977 by the Energy Policy and Planning group headed by Carter's Energy Secretary, James Schlesinger (Ibid., 314-15). American energy policy was clearly a complex matter throughout the 1970s, and many lengthy and insightful books describe the era well.6 Security of supply was the main policy objective of all three administrations. President Carter's National Energy Plan (NEP) recommended the following: Energy conservation and fuel efficiency, including a reduction in gasoline consumption by 10 per cent of its current level by 6Goodwin (1981); Kash and Rycroft (1984); Vietor 0984). 1985; the deve lopmen t of new energy technolog ies such as synfuels; and the subst i tu t ion of m o r e abundan t energy resources such as coal for those in comparat ive ly short supp ly s u c h as oil . For instance, coal w a s t o increase in p roduc t ion f rom roughly 700 mil l ion tons per year to over o n e bil l ion tons per year wi th in a decade (IEA 1977,167) . The NEP also p roposed rational p roduc t ion and pr ic ing pol ic ies t o encourage new produc t ion and to cont r ibu te to social equi ty. Carter 's NEP was clear ly the m o s t comprehens ive and most dar ing energy po l icy ever presented to the Amer i can people. In any event, unl ike other o i l - import ing countr ies, the Uni ted States con t inued to rely m o r e or less comp le te l y o n regulated private oil compan ies to fulfill its short , m e d i u m , a n d long- te rm requ i rements . Whi le the oil e m b a r g o certainly const i tu ted a genu ine e m e r g e n c y for the Uni ted States government , resul t ing in greater government involvement in the oil sector than had been the case s ince the S e c o n d Wor ld War, market solut ions were cons idered to be the m o s t p romis ing . Whi le Amer i cans d id not treat their oil compan ies as "just another chemica l company , " they felt that p roper ly regu la ted private compan ies cou ld increase domes t i c energy suppl ies by signif icant a m o u n t s w i th their impressive research, capital , and manager ia l resources (Kemezis and Wi lson 1984, 43). As a result, the pr ivate oil industry cont inued to thrive in the United States. The fact that all but t w o of the major oil c o m p a n i e s opera t ing wi th in the Uni ted States were A m e r i c a n - o w n e d a n d cont ro l led indicates how s t rong Amer ica 's oil industry was. Their ex is tence seemed assured as the federal government cont inued to grant t h e m "carte b lanche" explorat ion and p r o d u c t i o n r ights o n federal lands and of fshore t racts (Ibid., 41). W h e n publ ic distrust of the oil c o m p a n i e s peaked in the mid-1970s because of increasing prof i ts at a t ime of shor tage, the admin is t ra t ion s tood against Congress 's belief that it might be necessary or useful to break up the ma jo rs ( G o o d w i n 1981 , 514). In fact, radical Conservat ives pushed for more, less inhibi ted, pr ivate enterpr ise. The meri ts of private enterpr ise were s imply not ser iously quest ioned by government as they w e r e in m a n y o ther countr ies, a l though certain measures were ult imately taken to cont ro l the c o m p a n i e s . All three administrat ions agreed on a range of pol icy ins t ruments to reach the secur i ty of supp ly object ive. The fol lowing categor izat ion shows what pol icy inst ruments were d e p l o y e d by the Uni ted States f r o m 1973 to 1977. Ins t ruments are listed f rom least coerc ive to most coerc ive cons is tent wi th Doern and Phidd 's t ypo logy . Whi le a change of government d id not alter the po tpour r i of po l icy instruments a d o p t e d , it d id , in some cases, affect how each w a s ul t imately d e p l o y e d . First, suasion, part icularly "pure poli t ical leadership" suasion def ined as involv ing "the use of exhor ta t ion by pol i t icians to persuade ci t izens to alter their beliefs and ult imately their behav iour o n the basis of emot ional a n d / o r logical appea ls wi thout any explici t or implicit i nducements to d o so" w a s dep loyed by the United States gove rnmen t (Stanbury 1986, 73). Carter 's d ramat ic televised address t o the nat ion on April 18 ,1977 w a s the most vivid example of suasion dur ing the entire energy crisis. Carter to ld his fel low Amer icans that the deplet ion of domes t i c sources of oil and gas p o s e d an immense threat to Amer ican e c o n o m i c and poli t ical hegemony . He unvei led a Nat ional Energy Plan that evening wh ich he character ized as "the moral equivalent of war" (Vietor 1984, 259). A m o n g the NEP's many provis ions were vo luntary conservat ion measures to reduce the level of oil impor ts by one mil l ion barrels per d a y by 1985 (IEA 1977 ,167) . N ixon a n d Ford also appealed to Amer icans to decrease their c o n s u m p t i o n of oi l . In fact, President N ixon 's 1973 speech, in wh ich he w a r n e d that oil suppl ies w o u l d fall 10 per cent short of d e m a n d (Vietor 1984, 244), helped mot ivate 73 per cent of Amer icans to lower the tempera tu res in their h o m e s ; 62 per cent to use less electr ici ty in their homes, 62 per cent to dr ive more slowly, 41 per cent use their car less, and 8 per cent to jo in a car pool (Gal lup Poll, January 1974). Nevertheless, Carter 's o i l -conservat ion appeal was more passionate than either N ixon 's or Ford 's w a s , part icular ly w h e n he warned Amer icans that energy vulnerabi l i ty cou ld lead to "nat ional ca tas t rophe" (Vietor 1984, 259). Whi le Carter 's p lea was dr iven h o m e by the major psycho log ica l impac t of line ups at Amer ican gas p u m p s , the decl ine in U.S. oil c o n s u m p t i o n w h i c h fo l lowed 14 1978's peak of nearly 19 mil l ion barrels per day was due much more to the h igher pr ice of c rude oil and recession than t o admin is t ra t ion rhetoric (Ghosh 1983 ,6 ) . Secondly , a substant ia l a m o u n t of direct expendi tures was a l located t o the energy crisis. The N ixon administ rat ion sent several bills to Congress in Apri l , 1973, con ta in ing prov is ions for every th ing f rom tax credi ts for oil and gas explorat ion to the reorganizat ion of the government ' s energy and resources agenc ies . However , only a bill t o increase the research and deve lopment (R & D) budge t received congress iona l suppor t . The United States government , f rom Nixon th rough to Carter, sough t to underwr i te a massive p r o g r a m in energy R & D (Kash and Rycroft 1984,16) . The Ford admin is t ra t ion remained c o m m i t t e d to the degree of federal government involvement in energy research establ ished by its predecessor , a n d increased budget a l locat ions to conservat ion and coal research substantial ly. In fact , fund ing for solar energy pro jec ts leapt in 1976 by a w h o p p i n g 500 per cent (Goodwin 1981, 518). In addi t ion, there w a s so m u c h suppor t for synthet ic fuels in all th ree p o s t - e m b a r g o adminis t rat ions that po l icy "was not whether government should subsid ize deve lopment of synfuels, but rather, how fast and in w h a t manner" (Vietor 1984, 329). Synfuels p ro jec ts w o u l d have received even m o r e fund ing than w a s the case had Congress been as enthusiast ic abou t t h e m as the execut ive b ranch was , or subsequent ly , had the execut ive en joyed the prerogat ive to make energy po l icy o n its o w n as d o e s the execut ive in Canada. The Energy Conserva t ion and Product Act, wh ich passed in 1976, con ta ined provis ions for federal assis tance in the weather iz ing of homes . So d id the Nat ional Energy Conservat ion Pol icy Act passed two years later under a different president. This latter act a lso p rov ided for $100 mi l l ion for solar demons t ra t i on p rog rams in federal bui ld ings, and grants t o states for solar energy investments in schoo ls , hospi ta ls, and publ ic bui ldings (Goodwin 1981, 585) . Finally, the greatest a m o u n t of resources was al located to a Strategic Pet ro leum Reserve (SPR), establ ished in 1975. The purpose of the stockpi le was "to quel l pan ic and , if necessary, buy the t ime to react" in case of an emergency (Adelman 1982, 12). Under Fo rd , the SPR was to 15 conta in 500 mil l ion barrels of oil by 1982, but Carter p o s t p o n e d this date to the end of the 1980s and submi t ted plans to Congress a imed at doub l ing the ul t imate size to one bil l ion barrels (IEA 1977, 168). After mil l ions of dol lars had been spent o n the reserve f rom 1975 to 1978, the Car ter admin is t ra t ion m a d e an agreement wi th Saudi Arabia to s top buy ing oil for the s tockpi le in return for a p romise that a h igh rate of ou tput wou ld be main ta ined. This pol icy lasted for t w o years until Congress over rode the president and the fill r esumed. T h e Uni ted States government also made loans and guarantees to individuals, o rgan izat ions, a n d the oil c o m p a n i e s as part of its energy p rogram. In 1976, the Ford adminis t ra t ion requested a special loan guarantee author i ty of $2 bi l l ion f rom C o n g r e s s for synthet ic fuels research. It d id not.get it, but a Synfuels Corpora t ion was fo rmed w h i c h of fered loans and price guarantees to several pro jec ts (Goodwin 1981, 518). Later, w h e n Ford submi t ted a s imple request in January , 1976 for an extens ion of the Federal Energy Admin is t ra t ion 's life, Congress granted the necessary author izat ion only after secur ing federal assis tance t o encourage energy conservat ion o n a large scale (Ibid.. 540) . The tact ic p roved successfu l , and guarantees of up to $2 bil l ion were p rov ided for industry, state, a n d local gove rnmen t , small business, and nonprof i t inst i tut ions bo r row ing to conserve energy (Ibid.). Finally, Car ter 's Nat ional Conservat ion Pol icy Act made loans avai lable for conservat ion a n d solar energy investments in the residential sector. Suas ion , d i rect expendi tures, and loans and guarantees were all impor tant ins t ruments of the oil industry . However , a m o n g the indirect pol icy ins t ruments af fect ing oil p roduc t ion , tax po l icy w a s the mos t impor tant by far (Kemezis and Wi lson 1984, 145). This was true of all three admin is t ra t ions. Most subsidies for private compan ies were ef fected th rough the tax sys tem. In add i t ion , tax incent ives were embraced to encourage thermal eff iciency. Tax pol icy was al tered to increase oil p roduc t ion , but not to decrease oil c o n s u m p t i o n . A n analysis of tax pol icy should not lose sight of this because tax penalt ies on gas and oil usage had the potent ia l to cont r ibute immeasurab ly to the secur i ty of supply .object ive. Unfor tunate ly for 16 Amer i can pol icy-makers, taxat ion as a means of d e m a n d - m a n a g e m e n t was re jected poli t ical ly, and so little p rogress was ever made on this issue (Vietor 1984, 314). Tax pol icy is comp lex in every free enterpr ise democracy , and especial ly w h e r e a federal sys tem of government assigns different tax powers to different levels of government . The Uni ted States federal government imposes taxes on resource income and on the p r o d u c t i o n of resources. These latter ad va lo rem taxes are based on the vo lume of the resource p r o d u c e d t imes its average sale pr ice. The most important ad va lorem tax debated dur ing the oil crisis w a s the windfal l prof i ts tax imposed on the di f ference between the sales pr ice of a barrel of c rude and a base pr ice establ ished by Congress . Whi le N ixon , Ford , and especial ly Carter all favoured a windfal l prof i ts tax, Congress d id not pass one until 1980. In a c c o r d a n c e wi th his belief that the energy crisis w o u l d be best hand led t h r o u g h private enterpr ise, N ixon sent Congress a bill p rov id ing tax credi ts to the oil and gas industry. Whi le the measure offered the industry new incentives to explore and deve lop Amer ica 's energy resources, w h i c h w o u l d have brought the coun t ry c loser to its secur i ty of supp ly object ive, C o n g r e s s d id not coopera te w i th the president. Dif ferences between the two Republ ican pres idents a n d Congress prevented the adop t ion of a tax pol icy that w o u l d have dramat ica l ly increased exp lora t ion and p roduc t i on . Carter fared somewhat better. The Energy Tax Act passed by Congress in 1978 inc luded m a n y new taxes, tax credi ts, and tax expendi tures, such as a g raduated tax on gas-guzz lers and a substant ia l tax credi t for h o m e owners and bus inessmen w h o insulated their respect ive residential and non-resident ial bui ld ings. However , the cent rep iece of Carter 's NEP was the c rude oil equal izat ion tax and it was killed in the Senate's Finance Commi t tee . Had the legislat ion passed, it w o u l d have imposed wor ld market pr ices on consumers , p rov ided incent ives for oil c o m p a n i e s to increase p roduc t ion , and captured e c o n o m i c rents for the government . Finally, the oil deplet ion a l lowance, a tax expendi ture cos t ing $1.7 bil l ion in 1972 and w h i c h had served as an incent ive for oil explorat ion for nearly half a century , was abo l ished for large 17 producers in 1975 (Ibid., 226). As Richard Vietor astutely observes, it is "perhaps ironic that after c o n d o n i n g the dep le t ion a l lowance dur ing decades of domes t i c over -supply , Congress finally abo l ished it in a domes t i c supp ly crisis w h e n it might actual ly have served the nat ional interest for the very first t ime" (Ibid., 228). Tax pol icy was s imply not as consis tent w i th the secur i ty of supp ly object ive in Amer i ca as it cou ld have been, or as it was in other countr ies. Regulat ion w a s the pr incipal means of control l ing the oil market in the Uni ted States. In fact, whi le European count r ies and Canada util ized their N O C s to gather in format ion vital to the effective regulat ion of their oil industr ies, the United States relied o n in format ion d isc losure for such knowledge . Whi le this part icular regulatory act ion was harmless, the p rominence of regulat ion a m o n g pol icy inst ruments w a s not. Regulat ion was similar to tax po l icy in that it h indered efforts to secure oil supp ly by d a m p e n i n g oil explorat ion and deve lopment . In fact, apart f r o m fo regone p roduc t ion , d istr ibut ional effects, and general economic ineff iciencies, ref iners a lone might have spent over $500 mil l ion a year o n regulatory matters, and fuel-oil marketers spent $200 mil l ion (1 bid. . 258). Therefore, aside f r o m a requi rement under the Nat ional Energy Conservat ion Pol icy Act of 1978 that the Depar tment of Energy set m in imum eff ic iency s tandards for th i r teen categor ies of h o m e appl iances, the regulat ion of the oil sector was ext remely harmfu l . Oil regulat ion was s y n o n y m o u s wi th pr ice contro ls in the 1970s . 7 In fact, the fundamenta l poli t ical f ight in the Uni ted States was over their very existence (Ibid.. 196). N ixon and Ford o p p o s e d pr ice con t ro ls and Carter 's NEP r e c o m m e n d e d relaxing t h e m . However , impor tan t fact ions in the Democra t ic -con t ro l led Congress suppor ted price cont ro ls too th a n d nail. Therefore, d i rect federal cont ro l of c rude oil pr ices lasted f rom August 1971 t o January 1981 (Ibid., 236) . Whi le Congress was very ser ious abou t des ign ing a long- term energy pol icy before 1973, after that t umu l tuous year it "busied itself w i th f inding and enact ing sui table pun ishments for the party it identi f ied as mos t cu lpab le in the matter of shor tages and the crisis, namely the major oil 7 T h e story of oil pr ice cont ro ls is compl ica ted even w h e n l imited to crude-oi l p r ic ing. For a comprehens ive d iscuss ion of t h e m , see Chapter 10 "Equity versus eff ic iency: oil pr ice cont ro ls" in Vietor (1984). 18 compan ies " (Goodwin 1981, 397). All bills initiating f r o m the Whi te House to decon t ro l the pr ice of oil were defeated because, while Congress w o u l d d o little to reduce the power of the mul t inat ionals, it was unwi l l ing to al low oil compan ies to benefit f r o m the oil crisis at the expense of the poor . By p r o m o t i n g c o n s u m p t i o n and deterr ing the e c o n o m i c feasibi l i ty of exp lor ing for and p r o d u c i n g new reserves, pr ice cont ro ls reduced the d o m e s t i c supp ly of oil and st imulated impor ts . Whi le Richard Vietor d ist inguishes between ten different per iods of c rude oil pr ice cont ro ls be tween 1971 a n d 1980, the system essentially cons is ted of t w o tiers after August 1973: new oil (upper tier) and o ld oil ( lower t ier). Old oil was def ined as the 1972 vo lume of p roduc t ion f rom any proper ty p r o d u c i n g in that year, whi le new oil was p roduc t ion a b o v e that level and oil f r om leases that began p r o d u c i n g after 1972. The pr ice of o ld oil w a s cont ro l led (initially at the May 1973 level of $4.25 per barrel) whi le new oil, oil f r om str ipper wel ls (p roduc ing ten barrels or less a day) a n d "released" oil (a vo lume of o ld oil equal to new oil f r o m the same proper ty) cou ld be sold at any pr ice. N e w oil was ult imately contro l led after December 1975. Bo th N ixon , w h o had initially imp lemented pr ice cont ro ls in 1971 to f ight inf lat ion, and Ford o p p o s e d pr ice contro ls . In fact, President Ford 's energy p lan h inged on pr ice deregula t ion, a result of c o n c e r n in the oil industry that the explorat ion and p roduc t ion cos ts of Amer ican c rude were ou t runn ing the escalators appl ied to c rude pr ices. The si tuat ion w a s b e c o m i n g despera te : "Not on ly was the lower t ier pr ice foster ing well abandonmen t , or deter iorat ion of str ipper status, but the upper t ier pr ice was al legedly too low t o just i fy the cos ts of new wi ldcat exp lorat ion, d e e p of fshore dr i l l ing, or enhanced tert iary recovery" (Vietor 1984, 254) . The a b a n d o n m e n t of oil pr ice cont ro ls w a s an impor tan t e lement in reaching Amer ica 's secur i ty of supp ly object ive. Whi le c o m p l e t e a b a n d o n m e n t never occu r red , Ford 's Energy Conserva t ion and Produc t ion Act w a s passed in Augus t 1976, e x e m p t i n g str ipper-wel l p roduc t ion f rom pr ice con t ro ls and mod i fy ing the requ i rements for escalat ing the compos i te -p r iced c rude oil. Whi le Carter was not as o p p o s e d to oil pr ice cont ro ls as Ford , his NEP espoused rational p r o d u c t i o n and pr ic ing pol icies. His proposa ls inc luded a l lowing newly-d iscovered oil t o reach 1977 19 wor ld oil pr ices over a three year per iod. In April 1979, Carter a n n o u n c e d a p lan to gradual ly decon t ro l the pr ice of oil in a t w o year t ime per iod f rom June 15, 1979 to Sep tember 30, 1981 (Kash 1984 ,193) . Ronald Reagan ul t imately accelerated the process. In conc lus ion , the pr incipal means of contro l l ing the oil industry in the 1970s w a s regulat ion. This w a s because the United States government rejected both mixed and publ ic enterpr ise as a pol icy instrument. S o m e Amer icans obv ious ly shared the view of their western allies that the creat ion of an N O C was appropr ia te government pol icy. The C o n s u m e r Federat ion of Amer ica (CFA) act ively suppor ted the possib le fo rmat ion of a federal oil and gas corpora t ion as d id publ ic power , electr ic c o - o p , labour, l iberal fa rm, and c o n s u m e r const i tuent organizat ions. C o n s u m e r advoca te Ralph Nader sugges ted that s u c h a corpora t ion be set up "as a TVA-like yardst ick against w h i c h the per fo rmance of pr ivate oil c o m p a n i e s cou ld be measured" (Vietor 1984, 209). However , govern ing elites fai led to share his enthus iasm. Proposals in favour of an N O C were made th rough the usual legislative channels . Several bills were in t roduced in Congress , publ ic hear ings were held, and papers were pub l ished o n the ques t ion (United States 1981 , 1). However , n o leading pol i t ic ian cou ld be found to "run w i th " the idea. No president advoca ted the adop t ion of an N O C , and Congress, general ly, s h o w e d little interest in p roposa ls for an N O C , a federal .o i l - import ing a g e n c y or even a sys tem of nat ional char ter ing of oil compan ies . Still, key Congress ional f igures, like the late Senate Energy C o m m i t t e e Cha i rman Henry Jackson , m a d e Amer ican pol icy makers acute ly aware that other wes te rn gove rnmen ts were m o v i n g t o w a r d d i rect oil purchas ing . J a c k s o n himself in t roduced legislat ion to create five independent , g o v e r n m e n t - o w n e d energy deve lopment corpora t ions , one for each energy source. Whi le a modi f ied vers ion of the bill was eventual ly passed, creat ing five co rpo ra t ions under the Energy Research and Deve lopment Corpora t ion , noth ing look ing remote ly similar to an N O C was in the of f ing. The fact that neither polit ical party advoca ted the creat ion of an N O C was crit ical. If any par ty were to have been in favour of an N O C , it wou ld most l ikely have been the Democra ts , and w h e n President Ford asked the Democrat ic -cont ro l led Congress to d raw up an energy bill of its o w n after refusing to pass his, it d id so wi thout any ment ion of an N O C . One th ing that the Uni ted States government d id was reorganize itself to better deal w i th the oil crisis, incorpora t ing s o m e of the funct ions delegated to N O C s in other countr ies. For instance, an off ice of Energy Data and Analysis was created in 1973 and , at N ixon 's request, g iven addi t ional powers t o col lect industry-related informat ion f rom the private compan ies . One year later, the Energy Reorganizat ion Act was passed, d ismant l ing the A tomic Energy C o m m i s s i o n , establ ished in 1946, and creat ing t w o new agenc ies : the Energy Research and Deve lopment Admin is t ra t ion (ERDA) and the Nuclear Regula tory Commiss ion (NRC). Other major organizat ional modi f icat ions fo l lowed, the mos t impor tant be ing the establ ishment of the Depar tment of Energy (DOE) in 1977. DOE was g iven responsibi l i ty for most federal energy-related activit ies. Thus, whi le the United States gove rnmen t was wi l l ing to increase the stature of energy wi th in the wal ls of its o w n bureaucracy , publ ic enterpr ise w a s consis tent ly rejected by one adminis t rat ion after the other. In the final analysis, the Uni ted States was determined to meet its secur i ty of supply ob ject ive us ing as little state intervent ion as possible. As a c o n s e q u e n c e , its range of po l icy ins t ruments marshal led to slay the energy d r a g o n was relatively narrow. Amer i can pol icy makers insisted all a long that a regula ted, private industry was the most effective route to oil self-rel iance, and they "stuck t o their guns." Oil Pol icy Inst ruments Chosen b y Canada Canad ian oil po l icy w a s bo th more consistent and more comprehens ive than Amer ican oil pol icy. Canad ian cons is tency and comprehens iveness can be at t r ibuted to Canada 's par l iamentary sys tem of gove rnmen t w h i c h is more central ized than Amer ica 's president ial system, and t o the fact that on ly one par ty a n d one leader ruled Canada th roughput the mid-1970s. The overall ob ject ive 21 of Canad ian oil po l icy dur ing the 1973-77 per iod, as determined by this one government , was "energy sel f - re l iance": 8 Self-rel iance means reducing the vulnerabi l i ty of Canadians to arbi t rary changes in pr ice or p ro longed cur ta i lments in supply. It means supp ly ing Canadian energy requi rements f r o m domes t i c resources to the greatest extent pract icable and tak ing all appropr ia te ac t ions to pro tec t Canadians against interrupt ions in the supply of energy w e cont inue to import . It is not a st rategy of self-suff iciency at any price, but recognises that the pol ic ies to be a d o p t e d have cos ts as well as benefits and that a balance that takes into accoun t the e c o n o m i c , social and environmental aspirat ions of Canadians must be mainta ined (I.E.A. 1 9 7 7 , 6 7 ) . In a c c o r d a n c e wi th this object ive, the federal government ' s 1973 report , An Energy Pol icy for  Canada : Phase I. r e c o m m e n d e d the encouragement of energy resource deve lopment , the expor t of energy suppl ies only under specif ic terms, and the acquis i t ion of fore ign energy suppl ies where s u c h w a s economica l l y feasible. While Canadian pol icy makers dep loyed a w ider range of po l icy ins t ruments than their southern counterpar ts to meet the secur i ty of supp ly object ive, pr ivate enterpr ise remained very important . In bo th pre- and post-1973 eras, oil c o m p a n i e s func t ioned in C a n a d a as the p redominan t energy explorers, d is t r ibutors, and marketers wi thout fear of be ing nat ional ized. The nat ion 's energy requirements were tradit ional ly met by private enterpr ise. As late as 1973, the government -he ld share of the oil and gas industr ies s tood at less than one per cent (Pratt 1 9 8 1 , 97) . In cont rast to the Amer ican industry, the hundreds of f i rms w h i c h p r o d u c e d oil in Canada w e r e fore ign- and predominant ly Amer i can -owned , but this m a d e little d i f ference to Canad ian publ ic pol icy pr ior to the crisis. Canadian capital markets were general ly t o o weak to s u p p o r t a d o m e s t i c industry capable of explor ing for and p r o d u c i n g oil in the a m o u n t s Canad ian g o v e r n m e n t s d e e m e d necessary, so private c o m p a n i e s of all or ig ins were encouraged to d o business in Canada . 8 R o b e r t McRae dist inguishes between t w o Canad ian energy pol icy p r o g r a m s in the 1973-77 pe r iod : (1) The self-suff iciency pol icies in p lace f rom 1974 to 1976; and (2) the self-rel iance pol ic ies con ta ined in the 1976 federal governrhent energy d o c u m e n t . The first po l icy set out to achieve f r e e d o m f r o m d e p e n d e n c e upon foreign pr ices at any price. It was replaced when self-suff iciency w a s d e e m e d imposs ib le . Whi le the events of 1973 inspired the federal government to re-evaluate its pro-pr ivate enterpr ise posi t ion, the government dec ided not to chal lenge the fundamenta l p o w e r of the industry by nat ional iz ing one of its m e m b e r s . The biggest threat to the private oil industry w a s the creat ion of Petro-Canada, and the Minister of Energy, Mines and Resources, Dona ld M a c d o n a l d , stated that private compan ies shou ld cons ider the format ion of an N O C as a governmenta l initiative favour ing private enterpr ise (Cestre 1977, 26). After all, Pet ro-Canada was not c reated to replace private oil compan ies , but to a d d t o their s t rengths by explor ing oil in areas of the coun t ry where private compan ies cou ld not af ford to g o o n their own . In the final analysis, a n d "ow ing to the cont ro l of the private f i rms over the vast major i ty of the product ive apparatus, the ma jo r sources of technolog ica l and geolog ica l in format ion, and the major capital pools , the private oil sector reta ined a great deal of its power" (Doern and Toner 1985,154-155) . Despite g o v e r n m e n t ' s in t rus ion into the industry, the industry was still pr imari ly privately owned t h r o u g h o u t the 1973-77 per iod (Ibid.). The real s tory of Canadian inst rument cho ice, however, concerns the increased rel iance o n regulat ion and tax pol icy to meet pol icy object ives, and the concomi tan t use of publ ic enterpr ise after Pet ro-Canada was created in 1975. These three pol icy inst ruments were used extensively by the Canad ian government . Suas ion, d i rect expendi tures, loans and guarantees, a n d equi ty ownersh ip were dep loyed by the government as wel l , but to a lesser extent. Canada was c lear ly eager to take advan tage of every pol icy ins t rument available to it t o meet its object ives as w a s the case of m a n y o ther countr ies dur ing the turbu lent era. A categor izat ion of pol icy inst ruments similar to that appear ing in the previous sect ion fo l lows. First, the Government of Canada dep loyed suasion. As in the United States, a type of suas ion used part icular ly of ten was "pure pol i t ical leadership" suasion. In February, 1975, the federal g o v e r n m e n t announced an energy conservat ion p r o g r a m des igned to lower the rate of g r o w t h in c o n s u m p t i o n . The p r o g r a m inc luded vo luntar ism in the industrial sector to dec rease energy use by 12 per cent (I.E.A. 1977, 70), and w a s suppor ted by an intensive publ ic in format ion p r o g r a m . The federal government dep loyed a more targeted f o r m of suas ion by issuing "New Principles for International Business," a set of vo luntary guidel ines for fo re ign subsidiar ies. The guidel ines stressed the need for the mult inat ionals to undertake more research and deve lopment in Canada , to publ ish pert inent f inancial in format ion regularly, and to give Canad ians the oppor tun i t y to buy shares in Canad ian subsidiar ies (Doern and Toner 1985, 500). A final example of the use of suas ion conce rns the main tenance of f r iendly relations w i th the oil p roducers . The federal gove rnmen t wen t to great lengths to t ry to persuade the oil compan ies to preserve Canada 's historic share of the compan ies ' wo r ldw ide pool of oi l . Suasion was subsequent ly used in m a n y different ways . Fewer d i rect expendi tures in the fo rm of grants and subsid ies were m a d e than might have been the case had Pet ro-Canada not been fo rmed. The Canad ian government chose to fund domes t i c dr i l l ing pr imar i ly t h rough general operat ing subsid ies paid to Pet ro-Canada and t h r o u g h tax expendi tures. Regardless, several p rograms were f inanced d i rect ly by the federal government . These inc luded $1.4 bi l l ion in grants over seven years for the insulat ion of exist ing bui ld ings (I.E.A. 1977, 70) and m o n e y for research and deve lopment of al ternat ive energy resources such as $40 mil l ion for R & D o n the oil sands (Doern and Toner 1985, 498) a n d "sizable subsidies" to opera te a synthet ic oil (syncrude) plant in Alberta (Helliwell, Verleger, Mitchel l et al. 1982, 22). Finally, the CHIP p r o g r a m of h o m e insulat ion provided up to $1,000 in grants for residential energy savings (Kemezis and Wi lson 1984, 204). Loans and guarantees were also sparse. In fact, the gove rnmen t m a d e its b iggest loan guarantee - $1 bi l l ion - t o its o w n oil company , Pet ro-Canada. The pol icy inst rument was not entirely neg lec ted as a w a y to alter the behaviour of private enterpr ise, however . For example , in January 1974, O t tawa a n n o u n c e d that it wou ld provide pr ivate c o m p a n i e s w i th loans cover ing 50 per cent of the cons t ruc t ion costs to bui ld energy in terconnect ions be tween regions. Nevertheless, the use of loans paled in c o m p a r i s o n to other instruments, s u c h as the use of tax expendi tures, as a w a y to meet Canada 's secur i ty of supply object ive. The tax sys tem was signif icantly modi f ied after 1973. Under the assumpt ion that g o v e r n m e n t as owner of the resource had a right to a por t ion of the new weal th being generated by oil pr ice hikes, the tax sys tem adminis ter ing the oil industry was "intensif ied" (Ibid., 145). In N o v e m b e r 1974, the Minister of Finance, J o h n Turner, announced that provincial royalt ies o n natural resources w o u l d n o longer be deduct ib le expenses under the federal corpora t ion i ncome t a x . 9 In add i t ion , a var iable expor t tax o n c rude oil and p roduc t w a s levied to insure that lower Canad ian p r ices w o u l d not induce special d e m a n d for Canadian oil in the Uni ted States. Tax expend i tu res became an important instrument of the government . Corpora te i n c o m e tax expend i tu res hovered well over 10 per cent as a p ropor t ion of total budge ta ry expend i tu res th roughou t the 1970s, ow ing in part to selective tax measures in the oil and gas industr ies (Stanbury 1986, 55). The government imp lemented an oil deple t ion a l lowance for c o m p a n i e s exp lor ing for oil and gas in lands outs ide provincial boundar ies , namely in the Arct ic reg ions and off the east coast . "Super deplet ion" enabled c o m p a n i e s t o immediate ly wr i te off 200 per cent of exp lora tory expendi tures over $5 mil l ion per well against resource income (Hell iwell, Ver leger, Mitchel l et a l . 1982, 23). This single tax write-off cost the government hundreds of mi l l ions of dol lars each year in lost revenue, inc luding $765 mil l ion in 1979, mak ing it an impor tan t ins t rument of government in te rms of f inancial c o m m i t m e n t (Stanbury 1986, 56). As it h a p p e n e d , m a n y of the inducements to explorat ion prov ided for in the tax sys tem were offset by regulat ion. The prol i ferat ion of regulat ions on both levels of government t ransferred the energy sector into one of the most heavily regulated in Canada (Cestre 1977 ,14) . The pre-1973 era s tands in stark contrast . A c c o r d i n g t o T h o m p s o n and Crommel in , the Canada Oil and Gas Land Regulat ions of 1961 , w h i c h existed until the 1970s, gave the oil industry "carte b lanche" as oil c o m p a n i e s were a l lowed to wr i te the regulat ions themselves (Thompson and Crommel in , 22). The regu la tory f ramework that w a s ult imately adop ted resulted in "a resource 'g ive-away' unparal le led in any 9 A 25 per cent federal " resource-al lowance" reduced corpora te taxes by a rough ly c o r r e s p o n d i n g amoun t just one year later (Helliwell, Verleger, Mitchell et al. 1982, 22) . coun t ry in modern t imes" (Ibid.). Regulat ions actual ly encouraged the c o m p a n i e s to sit on their long- te rm permits and wait for rises in the pr ice of oil t o start dri l l ing at a t ime w h e n oil pr ices were r ising less than inflat ion. After 1973, the regulatory w e b fac ing oil c o m p a n i e s th i ckened substantial ly, caus ing further d is incent ives to explorat ion when pr ices w o u l d normal ly have sent exp lora tory budgets skyrocket ing . The oil export tax was useful because it redirected Canada 's dw ind l ing energy suppl ies to domes t i c markets. More important ly , it was necessary because the gove rnmen t f roze the Canad ian wel lhead price for convent ional oil in m i d - 1 9 7 3 1 0 in order to fight inf lat ion. McRae labels the 1973-80 per iod as "an age of p ro tec t ing oil and gas consumers , as the Canad ian oil pr ice wen t f r o m being higher to be ing lower than the wor ld pr ice" (McRae 1985, 50). This was the m o s t signi f icant change m a d e to Canada 's regulatory sys tem, and perhaps the most harmfu l , for it had the un in tended consequence of s lowing exp lora tory act ivi ty and p roduc t ion at a t ime w h e n such act iv i ty was vital. Canada 's pr ices were kept at 70 per cent of wor ld levels (Kemezis and Wi lson 1984, 122). In another regulatory move w h i c h s lowed explorat ion, the federal gove rnmen t t igh tened oil exp lorat ion provis ions for fore ign investors. This ac t ion caused several to redirect their assets to less regulated countr ies such as Brazil ( Ibid.. 122). Whi le regulat ion, on balance, was inconsistent w i th the secur i ty of supp ly ob jec t ives, the imposi t ion of eff iciency s tandards w a s not. The federal government c o o p e r a t e d w i th the provincial governments in imp lement ing a comprehens ive p r o g r a m of energy conservat ion w i th the hope of reduc ing the g rowth of energy use to 2 per cent each year until approx imate ly 1990 (I.E.A. 1977, 70). If the p rog ram were able to concent ra te o n oil , the government pred ic ted that Canada cou ld ult imately be a small net expor ter of oil instead of a fairly substantial importer . In February 1976, the federal government a n n o u n c e d its intent ion to impose eff iciency s tandards for au tomob i les , 1 0 T h e government d id not actual ly impose pr ice contro ls in 1973, but fo rewarned oil c o m p a n i e s that pr ice increases w o u l d lead to inquir ies under the Combines Invest igat ion Act. In Apri l 1975, the Pet ro leum Adminis t ra t ion Act w a s a d o p t e d , g iv ing the federal cabinet the ul t imate author i ty over oil and gas pr ic ing that it had been seek ing (Doern 1975, 500). appliances, and buildings thus making regulation a tool of enhancing security of supply as well as a hindrance. The section on American oil policy effectively stopped at regulation because the two most coercive policy instruments - mixed and public enterprise - were not deployed. In contrast, these two instruments, particularly the latter, became vital components of Canadian oil policy in the 1970s. The Canadian government felt that the oil crisis, in general, and the security of supply objective, in particular, necessitated unwavering government commitment in the form of full intervention into the marketplace. Mixed enterprise is considered to be a legitimate tool of government intervention in Canada. The fact that the federal government had an equity interest in 126 mixed enterprises in 1983 illustrates this well (Stanbury 1986, 69). The government's first equity ownership in the oil industry came in 1967 when it gained 45 per cent of the common equity stock and controlling interest in Panarctic Oil. Panarctic was originally formed by small Canadian independent companies to undertake risky gas and oil exploration in the high Arctic, a task which could only continue with the financial backing of the Canadian government. By the mid-1970s Ottawa was participating in the oil industry through a majority interest in the Canadian Development Corporation and minority interests in frontier exploration, tar sands, and heavy crude projects (Goodermote and Mancke 1983, 75). In addition, a Syncrude package was renegotiated with Imperial Oil. Canada-Cities Service, and Gulf Canada in 1974, which made the federal government an equity partner and rescued the Syncrude oil sands project from underinvestment (Doern and Toner 1985, 499). The mixed enterprise clearly became a valuable means for government to influence the direction and performance of the oil industry. However, the government's equity interests in oil companies were assumed under Petro-Canada after 1976, rendering mixed enterprise an important policy instrument, but one more precisely categorized under the rubric of public enterprise. Public enterprise is a traditional instrument of Canadian policy makers to meet objectives, and in 1977, one year after Canada's NOC started operations, the federal government owned and cont ro l led 366 corpora t ions (Stanbury 1986, 61). Public enterpr ise is the most coerc ive po l icy inst rument avai lable to government . Consequent ly , Petro-Canada's mandate was far b roader than a n y o ther under tak ing d iscussed in this chapter . Canada 's Minister of Energy, Mines a n d Resources, Dona ld Macdona ld , expla ined its impor tance in the House of C o m m o n s in March , 1975: Bill C-8, to establ ish a nat ional pe t ro leum company. . . is a most impor tant e lement in the Government ' s long- te rm p lann ing t o secure adequate suppl ies of energy t o meet our nat ional needs. It is f i rmly roo ted in the basic object ives of our energy and resources pol ic ies wh ich are, to insure for Canad ians adequate and reliable suppl ies at reasonable pr ices, as well as a direct share in the weal th wh ich deve lopment of our resources generates.. . W e are conv inced that the national interests now require a signi f icant degree of Federal publ ic enterpr ise in the oil and natural gas area... The Government d o e s not feel assured that the private sector c a n be relied u p o n to mobi l ize all of the e n o r m o u s a m o u n t s of capital wh ich will be required to secure energy deve lopment consonan t w i th Canad ian needs over the longer te rm (Cestre 1977 ,1 ) . The c o m p a n y w a s to b e c o m e fully in tegrated, "perhaps mult inat ional in its opera t ions , w i th the right to enter into a large var iety of energy-re lated activit ies, f inancial a r rangements , a n d o ther co rpo ra te agreements" (Goodermote and Mancke 1983, 75). Its manda te inc luded three social ob jec t ives. First, po l icy makers felt that Canada cou ld not rely solely u p o n private industry t o ach ieve coun t ry -w ide self-rel iance in oi l , and so f o r m e d Pet ro-Canada to increase domes t i c suppl ies of oil a n d gas . Shor t ly after its incept ion, Pet ro -Canada became one of the most active c o m p a n i e s to exp lore in the front iers and nonconvent iona l areas, supp lement ing private c o m p a n i e s w h i c h had sh ied away f r o m invest ing in certain areas despi te tax incentives. While Pet ro -Canada w a s not p revented by law f rom pursu ing d o w n s t r e a m operat ions such as refining and d is t r ibut ion, m o r e than 90 per cent of its capital expendi tures were devo ted to front ier explorat ion and Sync rude deve lopment in 1976 (Halpern, Plourde, and Waverman 1988,16) . Pet ro-Canada 's s e c o n d object ive w a s to increase Canadian part ic ipat ion in the oil and gas industry. The c o m p a n y w a s to enhance Canad ian ownersh ip by under tak ing jo int ventures w i th smal l Canadian-cont ro l led compan ies . After spend ing roughly $4 bil l ion of the taxpayers ' m o n e y to acqu i re fore ign-contro l led c o m p a n i e s be tween 1975 and 1983, fore ign ownersh ip of the Canad ian oil indust ry w a s reduced f rom 90 per cent to less than 65 per cent (Goodermote and M a n c k e 1983, 77). Petro-Canada 's th i rd ob ject ive w a s to provide the government w i th a "w indow o n the industry." A c c o r d i n g to the Depar tment of Energy, Mines and Resources, an N O C cou ld prov ide "more accura te and t imely in format ion (than private industry) wi th regard t o the extent and cos ts of the Canadian resource base" (Canada 1976, 27). The Canadian gove rnmen t was anx ious to ascer ta in the nature of its f ront ier resources in order to improve pol ic ies a i m e d at the oil sector. A l though it served a valuable service for several years, Pet ro-Canada's use as a w i n d o w o n the industry w a s made redundant w h e n another pol icy instrument was a d o p t e d under 1980s National Energy P rog ram, the Pe t ro leum Moni to r ing Agency. Overal l , an N O C was created in 1975 to add to the oil industry 's "capac i ty of d iscover ing and p r o d u c i n g the coun t ry ' s oil and gas reserves, thus enabl ing Canada to b e c o m e self-suff icient in oil earlier a n d for a longer per iod than w o u l d otherwise be the case" (Halpern, P lourde, and W a v e r m a n 1988 ,11) . Pet ro-Canada w a s clearly the heart of Canada 's pos t -embargo oil pol icy, and of fered Canadians symbo l ic assurance that the federal government was solv ing the nat ion 's oil supp ly p rob lems to the best of its abil i ty. Its creat ion extended the range of po l icy ins t ruments dep loyed by the Canadian gove rnmen t f rom the least coerc ive to the most coerc ive . Whi le pr ivate enterpr ise remained the main ac to r in the oil industry, the scope and breadth of pub l ic enterpr ise w a s impressive. 29 Table 2 Instrument Suasion (A) COMPARATIVE SUMMARY OF AMERICAN AND CANADIAN OIL POLICY INSTRUMENTS, 1973-77 United States Carter characterized NEP as "moral equivalent to war." Exhortations to consarv* energy under Carter were st frequent as those to reject drugs under Reagan. Canada Used in a number of ways, including an intensive public information campaign advocating energy conservation, and a set of voluntary guidelines for foreign subsidiaries. Direct Expenditures (A) The U.S. government, from Nixon to Carter, sought to underwrite a massive program in energy R&D. Also, hundreds of millions of dollars were allocated to a Strategic Petroleum Reserve. $1.4 billion in grants over seven years was allocated for the insulation of existing buildings, as were millions of dollars for R &D. Loans & Guarantees (A) Up to $2 billion in loans were provided to groups to conserve energy. Negligible. Tax Policy (C) Among the indirect policy instruments affecting oil production, tax policy was the most important by far. Most subsidies for private companies were effected through the tax system. In addition, the oil depletion allowance was abolished for large producers in 1975. Significant tax expenditures were made, including an oil depletion allowance which cost the government hundreds of millions of dollars in lost revenue each year. At the same time, the tax system administering the oil industry was intensified. Regulation (C) Mixed Enterprise (B) Direct federal control of crude oil prices lasted throughout the decade. This reduced the domestic supply of oil and stimulated imports by promoting consumption and deterring the economic feasibility of exploring for an producing new reserves. None. The energy sector became one of the most heavily regulated after 1973. Most importantly, Ottawa froze the Canadian wellhead price for conventional oil in mid-1973, keeping prices at 70 per cent of world levels. Petro-Canada assumed the government's equity interests in oil companies in 1976, rendering mixed enterprise an important policy instrument, but one more precisely categorized under public enterprise. Public Enterprise None. No president and no political party (B) advocated the adoption of an NOC, and Congress showed little interest in propos-als for an NOC, a federal oil-importing agency, or even a system of national chartering of oil companies. Petro-Canada, established in 1975, was the heart of Canada's post-embargo oil policy. It had three mandates: to increase domestic supplies of oil and gas. to increase Canadian participation in the oil industry, and to provide government with a "window on the industry." Key A = More important in U.S. B = More important in Canada C = Equally important in both countries 0 = Non-existent 1 = Not important 2 = Important 3 = Very Important Chapter 3 REASONS FOR POLICY INSTRUMENT DIVERGENCE The overr id ing di f ference between Canadian and Amer i can oil pol icy ins t ruments w a s that C a n a d a created a national oil c o m p a n y (Petro-Canada) whi le Amer ica cont inued t o rely o n pr ivate c o m p a n i e s to reach similar goals. Three factors help to expla in, to vary ing degrees , this speci f ic d i f ference, as well as the di f ference be tween the scope of publ ic enterprise in the t w o count r ies . They are (1) di f ferences in ideology, (2) market factors, and (3) di f ferences in gove rnmen t Inst i tut ions. The remainder of the thesis Is devo ted to examin ing each factor In detai l . Before p roceed ing , however, it should be noted that the ideological and gove rnmen t s t ructure explanat ions are best descr ibed as core explanat ions, or ones wh ich help explain all gove rnmen t pol icy. In fact, bo th are c o m m o n l y used to explain the d ivergence in the overall s c o p e be tween Amer i can and Canadian publ ic enterpr ise. Whi le it w o u l d be impossib le to explain the d i ve rgence be tween Canadian and Amer ican oil po l icy w i thou t examin ing their ideologies a n d pol i t ical inst i tut ions, it is crit ical when analyz ing a part icular e c o n o m i c sector in a part icular area t o f o c u s o n shor t - term and sector-speci f ic factors. This is what the e c o n o m i c a rgument does . Part I: Di f ferences in Ideo logy /Po l i t i ca l Cul ture  In t roduc t ion Energy pol icy is not insulated f r o m a nat ion's ideology. Acco rd ing to Ian Barbour et al . w h o w r o t e Energy and Amer ican Values, "a review of the pol icy debates [in the Uni ted States] will show that ideological considerat ions play at least as impor tant a role as... other factors in shap ing and const ra in ing pol icy decis ions" (Barbour 1982, 58). Fur thermore, "National at t i tudes abou t the p roper role of gove rnmen t in energy deve lopment , a n d the fundamenta l issue of whe ther energy shou ld be cons ide red a publ ic g o o d or an ob jec t of pr ivate explo i tat ion vary greatly f r o m c o u n t r y to c o u n t r y (Kemezis and Wi lson 1984, 37). Canada is similar to many other countr ies in bel iev ing that there is a role for the state to play in the p roduc t ion and d is t r ibut ion of oil resources. The Uni ted States is bent by a different ideological d ispos i t ion. The Dif ference in Ideo logy Between C a n a d a and the Uni ted States Ideo logy is a lways a factor in major p ieces of legislat ion for publ ic pol icy is never m a d e in a v a c u u m . Many academics , inc luding Gabriel A l m o n d , suggest that the poli t ical p rocess is " e m b e d d e d " in the polit ical cu l tu re / ideo logy , w i th the result that "att i tudes and beliefs indiv iduals ho ld regard ing government and pol i t ics will at every step inf luence the interact ion that takes p lace a m o n g the e lements of the polit ical process" (D ickerson a n d Flanagan 1982, 190). N o t w o count r ies share the exact same polit ical cul ture. The fact, then , that Canadians and Amer icans v iew the role of the state dif ferently is neither surpr is ing nor unusual . Ph i losophers have debated the role of the state for centur ies, c o n s e r v a t i v e s 1 1 genera l ly ag ree ing w i th w h a t A d a m Smi th said t w o hundred years a g o : A c c o r d i n g t o the sys tem of natural l iberty the sovere ign has only three dut ies to a t tend to ; three dut ies of great impor tance, indeed, but plain and intelligible to c o m m o n unders tand ing : first, the du ty of p ro tec t ing the soc iety f rom the v io lence a n d invas ion of other independent societ ies; secondly , the du ty of protect ing, as far as possib le, every m e m b e r of the soc iety f rom the injust ice or oppress ion of other m e m b e r s of it, or the d u t y of establ ishing an exact admin is t ra t ion of jus t ice; a n d , thirdly, the du ty of e rec t ing a n d mainta in ing certain publ ic w o r k s and certa in publ ic insti tut ions (quoted in Leichter a n d Rodgers 1984,12) . Smal l "c" conservat ives believe that government ' s role in the e c o n o m y shou ld be l imi ted t o p rov id ing cond i t ions for an effective and free e c o n o m y . They are against most cases of pub l ic enterpr ise because publ ic enterpr ise means that gove rnmen t b e c o m e s more than just a referee oversee ing e c o n o m i c activity. Liberals, o n the other h a n d , v iew government as an ind ispensab le fo rce for ach iev ing the "good society." A c c o r d i n g to Ar thur M. Schlesinger, Jr., 'The h is tory of governmenta l intervent ion has been the h is tory of the g r o w i n g ineffectiveness of the pr ivate Conservat ism used here and elsewhere refers to classical l iberal ism. conscience as a means of social control. The only alternative is the growth of the public conscience, whose natural expression is the democratic government" (Ibid., 15). Given this analysis, the more conservative a country is, the more likely it will reject public enterprise as a policy instrument of the state. If it can, then, be proven that Americans are more conservative than Canadians, one could partially explain the differences in instrument choice of the two countries. Both Canada and the United States share federal systems of government, affluent economies existing within the common economic framework of modern capitalism, and vast geographic expanses. Yet, Americans have embraced free enterprise liberalism much more consistently than Canadians, or any other nation for that matter. American society is distinguishable from all others by its stress on the individual: 'The American attachment to Locke is 'absolutist and irrational.' Democratic capitalism is the American way of life; to oppose it is to be un-American" (Horowitz 1966, 155). The ideology is pervasive throughout the policy-making arena, and is one reason why the United States employs the least amount of public enterprise of any western, industrialised country. Public enterprise accounts for 4.4 per cent of gross fixed capital formation in the U.S. compared with an average of 13.1 per cent in western nations. The figure for Canada is 14.8 per cent (Weaver 1985, 71). Ideological content in Canada is clearly more diverse. While free enterprise liberalism may be the most valued belief system, toryism and socialism are important forces which have contributed to Canadian political culture since its founding. Hartzian analysis, which argues that the key to understanding the ideological development of the Canadian and American societies is each society's point of departure from Europe in the preceding centuries, suggests that while "the United States is the perfect bourgeois fragment, the 'archetype' of monolithic liberalism unsullied by tory or socialist deviations, English Canada is a bourgeois fragment marred by non-liberal 'imperfections' -a to ry ' t ouch , ' and there fore a socialist ' touch ' " (Horowi tz 1 9 6 6 , 1 4 8 ) . 1 2 Therefore, the ideologica l c l imate in Canada is m o r e conduc ive to the creat ion of publ ic enterpr ise than that f ound in Amer ica . Ideo logy a n d Oil Pol icy Whi le the Canad ian oil industry was privately o w n e d until 1973, the possibi l i ty of state intervent ion was a lways present. S tephen Bailey's observat ion that "the birth of a publ ic po l icy is... the result of the impact of seminal ideas on strategic persons at prop i t ious t imes" is astute (Bailey 1950, 38). The emergence of an N O C was propi t ious after 1973 for several reasons, inc lud ing the fact that it w a s consistent wi th publ ic op in ion. Publ ic at t i tude is a lead ing indicator of pol i t ical cul ture. In May 1973, w h e n the oil crisis was in its infancy, a Gal lup Poll revealed that Canadians were c o n c e r n e d that U.S. energy shor tages might affect d e m a n d for Canad ian suppl ies. For ty-e ight per cent bel ieved that the t ime had c o m e for the nat ional izat ion of the coun t ry ' s oil and gas resources, c o m p a r e d w i th 36 per cent w h o thought that private enterpr ise shou ld cont inue to cont ro l these resources (Gallup Poll , May 16 ,1973) . Ten m o n t h s later, t w o pol ls indicated that Canad ians clearly favoured the creat ion of an N O C . W h e n asked whe ther they app roved or d i sapproved of the idea, 62 per cent said they approved , 15 per cent d i sapproved , and 23 per cent d id not k n o w (Gal lup Pol l , February 13 ,1974) . The p ropor t ion of Canad ians app rov ing of such a fo rmat ion is impressive, and w o u l d not have been so h igh had pub l ic enterpr ise been less accep tab le /pa la tab le to the Canadian psyche. Canadians also a p p r o v e d of o ther intervent ionist e lements of fo rmer p r ime minister Trudeau 's December , 1973 fuel pol icy, inc lud ing an extens ion of a freeze o n oil and gas pr ices until the end of the 1974 heat ing season (75 per cent ) , the extens ion of the oil pipel ine to Mont rea l (75 per cent) , and a large federal capi ta l expend i tu re for research and deve lopment of al ternat ive energy resources (74 per cent) (Gal lup Poll, February 13, 1974). 1 2 H . D . Forbes p inpo in ts several weaknesses in the Har tz -Horowi tz interpretat ion of Cand ian ideo logy w h i c h are w o r t h exp lor ing. See Forbes (1987). The ideological core of the nat ion was not so "left," however, that Canadian pol icy makers w o u l d ser iously cons ider nat ional iz ing the entire industry. In 1975 w h e n asked abou t his gove rnmen t ' s intent ion to create an N O C , the Minister of Energy, Mines and Resources, Dona ld M a c d o n a l d stated that the Liberals d id not in tend t o fo l low a social ist path that w o u l d favour the nat ional izat ion of the private sector. He subsequent ly sugges ted to private c o m p a n i e s that they cons ider the N O C ' s creat ion as a governmenta l initiative favour ing private enterpr ise (Cestre 1977, 26). Amer i can pol icy makers faced a different ideological envi ronment . In the same w a y that Eu ropean nat ions m a y never m o v e to a p redominant ly private sector, the Uni ted States, bar r ing an unl ikely shift in ideological persuas ion, may never be capab le of sett ing up an N O C . N o pol i t ical c o n s e n s u s exists wh ich encourages government involvement in the oil business. A c c o r d i n g to Kemezis a n d Wi lson w h o recent ly comp le ted an in-depth compara t ive analysis of po l icy in o i l -impor t i ng countr ies, Amer ica 's un iqueness lies: ...in the w a y that energy is owned in the Uni ted States and the w a y the poli t ical sys tem handles it. Virtually nowhere else in the wor ld can a ci t izen w h o f inds oil , coa l , or natural gas o n his p roper ty take immed ia te possess ion of the resource as he sees fit or lease it t o an energy c o m p a n y wi th on ly minimal interference by the government . In a lmost all other countr ies subsoi l resources are automat ica l ly cons idered state p roper ty (Kemezis and Wi lson 1984, 40). The Uni ted States government imposes taxes o n resource income, thereby di rect ly benef i t t ing f r o m the exp lora t ion for and deve lopment of resources o n Amer ican soil . Yet the d i f ference in o w n e r s h i p laws (which were m o l d e d by ideo logy themselves) has created a unique w a y of look ing at the oil industry. As such , there is little doub t that the count ry will cont inue to d e p e n d o n the free enterpr ise sys tem for its energy supply indefinitely. In fact, the only successfu l a t tempts by A m e r i c a n gove rnmen ts to create national oi l , gas, or coal compan ies have been dur ing war t ime or in c o n j u n c t i o n w i th mil i tary-related act ions (Ibid.. 41). Oil p roduc t ion cont inues to be "a t o u c h s t o n e of the f ree enterpr ise ideology," and suggest ions by liberal democra ts and t rade un ions in the 1970s t o d is rupt the market system at a t ime w h e n its s t rengths were felt to be needed most w e r e met by s t r o n g oppos i t ion . The nat ional izat ion of oil never even became an issue wi th the Amer i can publ ic . Polls are an excel lent ind icator of what does (and does not) const i tute a polit ical issue, and whi le Canadians were asked whe ther they approved or d isapproved of the creat ion of an N O C by leading pol lsters (62 per cent in favour, 15 per cent against) , Amer icans were not. Never theless, v iews o n business and e c o n o m i c s were sol ic i ted f r o m col lege students in 1975, Inc luding whe the r they favoured or o p p o s e d government ownersh ip in var ious industries. Forty-eight per cent favoured government ownersh ip in the oil industry, 50 per cent were opposed , and 2 per cent had no op in ion . In contrast , 34 per cent favoured government ownersh ip in the te lephone industry, 30 per cent in bank ing , a n d on ly 18 per cent in the au tomob i le industry (Gal lup 1978, 495) . In any case, the operat ions of the private oil compan ies d id not g o unques t ioned , and Amer icans d id not absolve f r o m b lame for the oil crisis. A February, 1974 poll revealed that 25 per cent of Amer icans though t that the oil compan ies were responsib le for the energy crisis, c o m p a r e d w i th 23 per cent w h o b lamed the Nixon adminis t rat ion, and 15 per cent w h o felt c o n s u m e r s w e r e to b lame (The Gal lup Poll Index, February 1974, 4). In a similar pol l c o n d u c t e d in Canada in August , 1973, 36 per cent of Canadians said that oil c o m p a n y m a n a g e m e n t pol ic ies were to b lame for gas and oil shor tages in the U.S. (Gallup Poll, August 22, 1973). Yet p roposa ls t o nat ional ize the industry or break the power of the giant energy c o m p a n i e s m a d e little headway in Amer ica . This w a s "because it was not obv ious that they w o u l d have any posit ive effect on the immed ia te p rob lem, but also because they cut against the grain of convent iona l ideologica l conv ic t ion" (Barbour 1982, 59). Ideo logy and Polit ical Part ies The inf luence of ideo logy o n the po l icy-making process is part icular ly s igni f icant w h e n one takes into a c c o u n t ideo logy 's impact o n polit ical part ies. Parties are m o l d e d by the electorate they serve. Consequent ly , Amer ican pol i t ical part ies, in aggregate , are m o r e conservat ive than their Canad ian counterpar ts . As a result of the dominance of classical l iberal ism in the Uni ted States, and the d ivers i ty of ideological content in Canada, "Canada has, and the Uni ted States lacks, a viable social ist t radi t ion and party and a popular belief that the state must play an act ive role in soc ie ty in addi t ion t o an arbi t rat ing one" (Weaver 1985, 79). Different part ies art iculate different pol icy preferences whe ther they be sl ight d i f ferences or those of a more fundamenta l nature. Hence unless a count ry 's electorate is ext remely h o m o g e n e o u s in its v iews, part ies ough t to make a di f ference in the type of po l icy enacted. Several studies under taken in the last ten to fifteen years demons t ra te that, ho ld ing everyth ing else constant , socialist governments tend to create m o r e publ ic co rpora t ions than l iberal or conservat ive gove rnmen ts in industr ial ized nat ions. David C a m e r o n is one of m a n y analysts t o c o n c l u d e that "whether a nat ion's government was general ly cont ro l led by Social Democra ts (and their leftist allies), or by non-left ist part ies, provides a s t rong c lue t o the relative degree of change in the s c o p e of the publ ic e c o n o m y " (Cameron 1978, 1252). An excel lent w a y to test the l inkage be tween social ist governments and publ ic enterpr ise Is t o c o m p a r e the role of publ ic enterpr ise in Canad ian prov inces. Prov inces const i tu te dist inct poli t ical arenas enabl ing one to c o m p a r e pol icy pat terns across several polit ical systems. Fur thermore, four out of ten prov inces to date have been governed by social ist governments - Quebec , Man i toba , Saska tchewan, and Bri t ish C o l u m b i a - mak ing ideological c o m p a r i s o n possible. A recent s tudy by Statist ics Canada ranked each of the ten prov inces by their rate of e m p l o y m e n t by gove rnmen t enterpr ises relative to total e m p l o y m e n t and found that gove rnmen t e m p l o y m e n t levels are highest in Saskatchewan, B.C., and Man i toba , wi th f igures of 3.4, 2.6, and 2.4 per cent respect ively (Economic Counc i l of Canada 1986,10) . These statist ics are especial ly useful in that they a c c o u n t for di f ferences in size, and therefore impact , o n the e c o n o m y of c r o w n corpora t ions across prov inces. They suggest that the l inkage be tween ideology and publ ic enterpr ise is s t rong, someth ing w h i c h Marsha A. Chandler con f i rms in her art icle, "State Enterpr ise and Part isanship in Provincial Polit ics." Using a party-pol i t ics m o d e l , 1 3 Chandler systematical ly c o m p a r e s the inst rument cho ice pat tern of provincial governments contro l led by non-left part ies. Chandler 's ca tegory of lef t-wing part ies inc ludes the N e w Democra t i c Party and the Parti Quebeco is . Non-lef t part ies are all o thers that c o m p e t e in provincial elect ions (Liberal, Progressive Conservat ive, Union Nat ionale, and Socia l Credi t ) . H o w m u c h , then, does the mode l explain? Chandler f i rst d o c u m e n t s the number of c r o w n corpora t ions created by bo th leftist a n d n o n -leftist governments between 1920 and 1979. The results are part icular ly impressive w h e n o n e takes in to accoun t the number of years left-wing part ies have fo rmed provincial gove rnmen ts relative to non-left part ies. For instance, sixteen of twenty-s ix c r o w n corpora t ions in Brit ish Co lumb ia w e r e created by the prov ince 's sole left-wing government , w h o s e tenure in off ice lasted only three a n d one half years. Twenty- four of twenty-seven c r o w n corpora t ions in Saskatchewan were c rea ted by that prov ince 's leftist par ty (note that most were created in the 1940s and '50s, leaving little for non-left part ies to create in later years), and most of Mani toba 's c r o w n corpora t ions were c rea ted by the CCF-NDP - seven of twelve (Chandler 1982, 720). Hence whi le non-left gove rnmen ts have created three quar ters of all provincial c r o w n corpora t ions , "in each of the three prov inces in w h i c h there has been a CCF or NDP government , the left have created more c r o w n co rpora t ions than all o ther part ies c o m b i n e d . This record of the CCF-NDP is even more str ik ing w h e n w e cons ider that regardless of how long they were in power, they a lways created more publ ic enterpr ises than the rest of the parties" (Ibid.. 719). The leftist Parti Quebeco is in Q u e b e c has been the only anomaly . Yet every government in Quebec has been dr iven by nat ional ist ic goa ls to use state intervent ion, and once economic and nationalist ic d imens ions are separated f rom publ ic 1 3 T h e party-pol i t ics mode l "is based o n the premise that pol i t ical part ies have an independent effect o n pol icy cho ice. It assumes that d ivergent pol icy priori t ies of poli t ical part ies result in d ivergent pol icy outputs . These different pol icy priorit ies are based on ideological d is t inc t ions a m o n g part ies or di f ferences in each party 's const i tuent g roup. For even if part ies fail to e s p o u s e di f ferent pol ic ies, it is assumed that their act ions as governments will reflect d i f ferences in their sou rces of suppor t " (Chandler 1982, 715). 38 ownership there is evidence that the PQ has acted consistently with other left governments (Ibid In order to ensure that the relationship between ideology and the growth of public enterprise is not spurious, Chandler determines whether or not left-wing governments have risen to power in times that were relatively more conducive to create crown corporations. Her conclusion is negative. Statistics clearly indicate that left-wing governments have created a disproportionately high fraction of crown corporations in both the 1940s, when times were not conducive to such development, and in the 1970s, when times were conducive (Ibid.. 722). Ideology is clearly a factor. Nothing makes this fact clearer than where Chandler computes the rate of establishment of crown corporations for each province between 1961 and 1979. The rate of establishment by non-left governments is higher in only one province, Quebec, but here there is less than a ten per cent difference. On the other hand, several of the other nine provinces show a striking difference between the two categories. In B.C., left governments have created, on average, 5.3 crown corporations per year, compared to the .44 rate of their non-left counterparts, and the respective figures for Saskatchewan are 1.14 and .14 (Ibid.. 720). These figures, which show "that the left-of-centre parties [in Canada] have created crown corporations at a rate that is almost treble that of the combined non-left parties," supports my general conclusion that ideology plays a very real role in the formation of public enterprise (Ibid.. 721). If socialist parties were as great an electoral force in the United States as they are in Canada, the party-politics model would predict the role of public enterprise in both countries to be more similar than is presently the case. A final comment on the current trend to "privatize" public enterprises should be made, for privatization, too, indicates the strength of both ideology and party politics in predicting public policy. Given the preceding argument, one would expect governments who sell off government corporations to be distinctly non-left. As it happens, the most conservative government in the Western world at present, the Conservative Government of Great Britain, has already reduced the 721). size of Bri tain's publ ic ly o w n e d commerc ia l sector by about 40 per cent s ince c o m i n g to power in 1979 (U.K. 1987, 1). In fact, Laux and Molot single out ideo logy as Thatcher 's pr ime mot ivat ional fo rce in pr ivat izat ion (Laux and Molot 1988, 1 7 5 ) . 1 4 In addi t ion, the most conservat ive provincial government in Canada at present is the Social Credit Government of Brit ish Co lumb ia , and it a n n o u n c e d "a sweep ing privatization p rog ram" in October , 1987 (Vancouver Sun 1987, A1). Oppos i t ion to "pr ivat izat ion" f rom "the left" has been str ik ing in bo th Britain and B.C., suggest ing that a government ' s dec is ion to "privatize" is as m u c h a mat ter of ideo logy as is its dec is ion to "go into business." Oil Pol icy a n d Party Poli t ics Oil po l icy shou ld not be anomalous. Like most publ ic pol icy, it should be shaped by party pol i t ics. The Republ ican Party was in power in the Uni ted States du r ing the oil crisis, as was the Liberal Party in Canada. Did they make a di f ference t o the dec is ion to cont inue relying on private enterpr ise or to create a n NOC? Had their rivals been in power - the Democra t i c a n d Progressive Conservat ive Part ies respect ively - wou ld national po l icy have been any different? The initial dec is ion to create Petro-Canada in 1973 w a s more embro i led in the part isan batt les of the d a y than usual . The Liberal Party, Canada 's centr ist party, had fo rmed a minor i ty government in 1972 wi th the suppor t of the New Democra t i c Party (NDP), Canada 's leftist party. Both part ies had a history of creat ing publ ic corpora t ions , and the suppor t of an N O C wou ld not have run against the gra in of either party 's ideological pos i t ion. However , the NDP's inf luence o n events in D e c e m b e r 1973 insured that the fo rmat ion of an N O C was a Liberal priori ty. The NDP threatened to w i thdraw its suppor t f r om the minor i ty Liberal government if its d e m a n d s t o pursue a more nationalistic energy pol icy, inc lud ing the creat ion of an N O C , were not met. W h e n the Conservat ive Party tabled a no-con f idence mo t ion schedu led for a vo te by the House of C o m m o n s o n December 10 ,1973, the gove rnmen t w a s fo rced to capi tu late to NDP d e m a n d s 1 4 l n State Capi ta l ism: Public Enterprise in Canada. Laux and Molot a rgue that s o m e count r ies are mot iva ted by ideo logy to privatize, such as Britain, Germany , and Hol land, whi le others are ob l igated by f iscal constra ints to d o so, such as Italy, S w e d e n and Spain. or face a general e lect ion the fo l lowing February. O n December 6, Pr ime Minister T rudeau out l ined p roposa ls for a new national energy pol icy t o be in t roduced in the next par l iamentary session. The proposa l p rov ided for the establ ishment of an N O C . The no-conf idence m o t i o n w a s defeated. Whi le the NDP of ten takes credi t for Petro-Canada's existence, the par ty inf luenced on ly the t im ing of the dec is ion t o create an N O C . The threat of par l iamentary defeat, at mos t , re inforced a dec is ion al ready taken by. the Liberals, and the Liberals d id not hesitate to a d o p t the nationalist energy pol icy after obta in ing a par l iamentary major i ty in 1974 (Pratt 1981, 108). Whi le individual m e m b e r s of the NDP dist inguished themselves f r o m the Liberals by advoca t ing the nat ional izat ion of a ma jo r subsidiary like Imperial Oil , d is t inct ions be tween the NDP's "Fabian-or iented ph i losophy of government p lanning and publ ic ownersh ip and the neo-Keynesian in tervent ion ism of the govern ing Liberals became increasingly academic" after 1973 (Ibid.. 98). The main rivals to Liberal power, in any case, were the Conservat ives, a n d they o p p o s e d the dec is ion . Had the Conservat ives governed th roughou t the 1970s - they lost the 1972 elect ion to the Liberals by t w o seats - Petro-Canada wou ld not have been c reated: The Conservat ives.. . s t rong ly o p p o s e d Petro-Canada's creat ion, a rgu ing that it was an unnecessary and inefficient intrusion of the state into the e c o n o m y . The Conservat ives mounted a filibuster at the committee stage during the parliamentary passage of the Petro-Canada Act. Their intense disl ike of Pet ro-Canada must not be underes t imated , as four years later they wou ld ignore the s t rong publ ic suppor t Pet ro-Canada had deve loped and make its "privat izat ion" the centerp iece of a short- l ived c a m p a i g n to r e d u c e state involvement in the e c o n o m y (Doern and Toner 1985,140) . Even t h o u g h the Conservat ives have tradit ional ly accep ted state enterpr ise in o ther sectors of the e c o n o m y , their posi t ion on the creat ion of an N O C in the mid-1970s w a s unequ ivoca l ly negat ive. Thus , the c reat ion of Petro-Canada cannot be adequate ly expla ined wi thout reference to par ty pol i t ics and the fact that the Liberals governed dur ing the oil crisis. Party pol i t ics w a s also a fac tor in shap ing Amer ican oil pol icy. Yet nei ther the Republ ican nor Democra t i c Party advoca ted the creat ion of an N O C . Fur thermore, no N O C w a s created even t h o u g h the t w o major part ies contro l led the pres idency in the 1970s. Whi le the Liberals and Conservat ives d is t inguished themselves by their s tance on the fo rmat ion of an N O C , the deba te 41 between Republ icans a n d Democra ts focused on the role of government regulat ion. Presidents N ixon and Ford pushed for deregu la t ion in areas of oil pol icy, whi le their Democra t i c successor , J i m m y Carter, s t rengthened s o m e aspects of regulat ion in the oil industry. Hence , the fact that Canada adop ted an N O C whi le the Uni ted States d id not was really more a result of basic ideo logy than its of fshoot , electoral pol i t ics. The broad poli t ical consensus wh ich exists in Amer ica limits the range of po l icy op t ions o p e n t o part ies w h o h o p e to acqu i re or mainta in power . While Democra ts d raw d ispropor t ionate ly f rom labour, and Republ icans d r a w d ispropor t ionate ly f rom business interests and professionals, Democra t ic identif iers are on ly sl ightly more "left" than Republ icans (Dye a n d Zeigler 1981 , 232) . The thrust of party ideo logy subsequent ly differs hardly at all. Therefore, it is not surpr is ing that the creat ion of an N O C failed to reach the agenda of either party. In any case, Republ icans have a less sanguine v iew of the role of the state. A s tudy publ ished in 1974 found that part isan var iables such as the st rength of the l iberal w i n g of the Democra ts in Congress a n d Democra t i c cont ro l of the pres idency clear ly inf luences the g r o w t h of Amer ican government (Cameron 1978, 1248). President N ixon con t inued the Republ ican t radi t ion of favour ing private enterpr ise over government intervention w h e n in response to the 1973 oil cr isis he p roposed to terminate a 14-year-old oil impor t quota sys tem. The president a lso asked Congress t o ex tend tax credi t prov is ions t o the oil and gas industry t o prov ide it w i th new incent ives t o explore and deve lop Amer ica 's oil and gas resources (Evans 1976, 30). The president 's pol ic ies ref lected the fact that the Republ icans cou ld cour t business and industrial interests a m o n g their const i tuency, and were hence the "real" advocates of free enterpr ise l iberal ism. By the end of February 1975, another Republ ican president, Gerald Ford , and a Democra t ic Congress could not agree u p o n an energy pol icy. The Democra ts were asked to d raw up a bill of their o w n . They d id so w i thou t any ment ion of an NOC. Whi le the D e m o c r a t s wanted to impose an excess prof i ts tax o n large oil compan ies , and sought greater gove rnmen t cont ro l over oil pr ices and oil c o m p a n i e s , their approval of the market sys tem, and hence the general parameters of Republ ican pol icy, was clear. In s u m , Presidents N ixon and Ford were determined to let the oil compan ies p r o d u c e a n d dist r ibute oil f ree of substant ial government regulat ion fo l lowing the Arab oil shock of 1973. By a n d large they were successfu l . While regulat ion increased s o m e w h a t w h e n a Democra t ic pres ident w a s e lec ted in 1976, the Democra ts had no intention of creat ing an N O C as their ideological Canad ian cous in had d o n e in June, 1975. While the d i f ferences be tween Republ ican and Democra t i c oil po l ic ies w e r e not negl igible and ought to be recogn ized, party pol i t ics d id not determine whe ther o r not an N O C wou ld be created because bo th part ies were against the idea. As such , part ies c lear ly mat tered m o r e above than below the for ty-n inth paral lel. S u m m a r y There m a y be no coun t ry in the wor ld that resembles Amer i ca more closely in mind and spirit than C a n a d a . Yet the t w o countr ies ' ideologies are suff iciently dif ferent to cause d ivergence in publ ic po l icy . Whi le free enterprise l iberal ism is pervasive t h r o u g h the Amer ican po l icy -mak ing arena, it is a c c o m p a n i e d by two others in Canada - to ry i sm and socia l ism. Consequent ly , w h e n secur i ty of oil supp ly e m e r g e d as a salient issue in the 1970s, the Canad ian polit ical sys tem w a s m u c h m o r e recept ive to the idea of an N O C than its Amer i can counterpar t was. The fact that the fo rmat ion of an N O C was not espoused by either of the major poli t ical part ies in the Uni ted States, yet it was adop ted by wha t the eminent pol i t ical scientist, Reginald Whi taker , refers to as "the Government Party" in Canada, is pa ramount . While ideo logy may not be a suff ic ient exp lanat ion for the dif ference between Canad ian and Amer i can oil pol ic ies, ow ing to the ex is tence of other causal factors, it is a necessary one. Part II E c o n o m i c / M a r k e t Factors  In t roduct ion M a n y e c o n o m i c histor ians are of the v iew that the di f ference in pol icy ins t ruments c h o s e n by Canada and the Uni ted States can be expla ined primari ly through d i f ferences in e c o n o m i c c i rcumstances . Canada has c h o s e n publ ic enterpr ise as a pol icy instrument because its nat ional market is relatively small , and because private capital has been inadequate t o meet the d e m a n d s of Canadians. The United States, on the other hand, ow ing to its industrial s t rength , has been able to rely on private enterpr ise to d o pract ical ly everything. Hence the d i f ference. T h e e c o n o m i c c i rcumstances of the oil industry in the mid-1970s presents an interest ing case s tudy. The Arab oil e m b a r g o in 1973 precipi tated a wor ldw ide shift by gove rnmen ts f r o m passive to act ive energy pol ic ies, yet each nat ion 's oil industry was unique (Kemezis and Wi lson 1984, 3) . Impor tan t variables inc luded whe ther the industry was government - or pr iva te ly -owned, and whether it w a s domest ica l ly - or fore ign-cont ro l led. For instance, if fore ign-based mul t inat ionals are less rel iable than domes t i c compan ies in a national emergency , the reasons beh ind C a n a d a ' s a d o p t i o n and Amer ica 's reject ion of an N O C b e c o m e more t ranslucent. The E c o n o m i c A rgumen t The e c o n o m i c a rgument rests on e c o n o m i c determin ism. It v iews Amer i can and Canad ian pol i t ic ians as dec ided ly pragmat ic . C D . H o w e o n c e stated that the main cr i ter ion for c h o o s i n g pr ivate or publ ic enterpr ise is "which can best serve the need of the publ ic of Canada" (Musolf 1959, 24). Amer icans, too , have a p p r o a c h e d publ ic enterprise pragmat ical ly , t h o u g h deba te over pr ivate versus publ ic enterpr ise is rarely peaceful . Both countr ies ' general reservat ions abou t c reat ing publ ic corpora t ions are cap tu red in a statement made by former Canad ian Pr ime Minister Louis St. Laurent: "I th ink w e are all most happy w h e n free enterpr ise does wha t is requi red to be d o n e a n d publ ic author i t ies d o not have to intervene" (Ibid.). E c o n o m i c history has b e c k o n e d Canad ian author i t ies to the call of d u t y far more f requent ly than it has b e c k o n e d thei r Amer i can counterpar ts . The industrial s t rength of the United States since the mid-1800s has been well d o c u m e n t e d and need not be substant iated at any length here. Amer ica has clearly been an engine of internat ional capi ta l ism for over a century, af fording it the luxury of a p rocess of capital accumula t ion w i th relatively little state suppor t . Certainly there have been instances where private enterpr ise cou ld not meet the needs of Amer ican cit izenry, and where an infusion of publ ic funds w a s needed. The creat ion of the Tennessee Valley Author i ty (TVA) in the Amer ican south in the 1930s depress ion era is an excel lent example. In general , however , e c o n o m i c c i rcumstances have not necessi tated as m u c h state intervent ion in the Uni ted States as they have in Canada. The poo l of private capital Amer i can capital ists cou ld d raw on, and the relatively lower risks a c c o m p a n i e d by capital out lay d u e to such factors as economies of scale, have a l lowed Amer ica to deve lop wi thout the "social izat ion of risk" so necessary in Canada. Canadian e c o n o m i c c i rcumstances have s imply not been conduc i ve to the free whee l ing market e c o n o m y en joyed b y m a n y Amer icans. One example conce rns the absorp t ion of the Nor th West C o m p a n y of Mont rea l by the Hudson 's Bay C o m p a n y in 1821. The fur t rade deser ted Montrea l , leaving the prosper i ty of Canada 's largest city dependent on h o w effectively it cou ld c o m p e t e for the t rade of hinter land wi th the other metropol i tan centres o n the At lant ic seaboard and the Gulf of Mexico. Montreal 's survival depended on the state's wi l l ingness to const ruc t a low-cost t ranspor t route - that is, infrastructure - a l lowing Montrealers to market their g o o d s compet i t ive ly . The e c o n o m i c history of Canada since the mid-1800s has revolved a round the cons t ruc t ion and main tenance of similar infrastructure pro jects wh ich private investors were unwi l l ing, or unable, to take on . The most f a m o u s example of the interventionist a p p r o a c h a d o p t e d by Canadian gove rnmen ts w a s the bui ld ing of a t ranscont inenta l railway. The Canadian gove rnmen t wan ted a t ranscont inenta l line for nationalist ic, pol i t ical , and economic reasons. However , in order to c o m p e l agreement f rom private ent repreneurs to bui ld one, it had to offer t h e m generous c o m p e n s a t i o n . As such , the costs 45 of a t ranscont inenta l rai lway and other forms of infrastructure were original ly borne by gove rnmen t in Canada . In oversee ing const ruc t ion of the Canadian Pacif ic Railway, the federal gove rnmen t w a s respond ing to a specif ic, pract ical p rob lem of e c o n o m i c integrat ion w i th wha t appeared to be the most pract ical so lut ion. Had private entrepreneurs been wil l ing and able to bui ld the CPR o n their o w n , gove rnmen t intervent ion wou ld not have been necessary. Whi le e c o n o m i c progress w o u l d not have o c c u r r e d in Canada wi thout private enterprise, "the responsibi l i ty for creat ing a nat ional e c o n o m y and the cond i t ions in wh ich it could survive lay wi th the state" (Easterbrook a n d Watk ins 1967, 209). Free enterpr ise l iberalism has a lways been a dominan t idea in the Canad ian pol i ty, but Canad ians have never had the oppor tun i ty to fo l low the free enterpr ise path as rel igiously as have their sou thern ne ighbours . Three related fac tors explain Canada 's e c o n o m i c reasons for publ ic enterpr ise. First, the regional nature of Canada 's polit ical e c o n o m y is ext remely important . Canadian capital was unable t o c o n q u e r Canad ian g e o g r a p h y alone, wi th or w i thout mak ing a profi t . Capital ists therefore t e n d e d to ignore or avoid certa in tasks wh ich benef i ted the regions, such as the bui ld ing of the t ranscont inenta l rai l road, canals, and other types of infrastructure. Whi le central Canada was a ma jo r benef ic iary of infrastructure deve lopment because it opened up new, capt ive markets for its manu fac tu red g o o d s , the regions wou ld have remained in isolat ion had the s t rong c o m m u n i c a t i o n a n d t ranspor ta t ion l inks m a d e possible by publ ic enterpr ise never been deve loped . Second ly , the psycho log ica l and pract ical impl icat ions of shar ing a border w i th the wor ld ' s most d y n a m i c nat ion have p rompted successive Canad ian governments to pursue col lect ivist pro jects . On ly b y w o r k i n g wi th private enterpr ise cou ld the state ensure its po l i t i co -economic sovereignty. The overal l ob ject ive of Sir J o h n A. Macdona ld 's Nat ional Pol icy w a s "to prevent absorp t ion by the Uni ted States and to bui ld a nat ion state that cou ld gu ide its o w n e c o n o m i c dest iny, and assert its i n d e p e n d e n c e f rom bo th the mother count ry and the Uni ted States, wi th in l imits no more restr ict ive than t h o s e necessar i ly appl icable to an e c o n o m y dependen t on staple expor ts for its overseas earnings" (Ibid.). The National Pol icy, Canada's blueprint for a nat ional ly- integrated e c o n o m i c st ructure, has n o counterpar t in the Uni ted States. Thirdly, there are several sectors of the Canadian e c o n o m y where private enterpr ise will never venture. Government has substant ial f lexibil ity in adopt ing publ ic enterpr ise in such cases. This is because in areas where government does not have to c o m p e t e w i th private enterpr ise, there are nei ther concent ra ted beneficiaries nor cost-bearers. Private sector compet i to rs are not iceably absent f rom certain sectors of the Amer ican economy, such as urban mass transit and publ ic hous ing , but the Canadian e c o n o m y fares considerably worse. Wi thout state intervent ion, there w o u l d p robab ly be less aircraft manufactur ing and no nuclear power plant manufac tu r ing in Canada. Whi le m u c h of the infrastructure has already been put in p lace, g e o g r a p h y and a relatively sparse popu la t ion ensure that the weakness of Canadian capital markets will con t inue to have an effect on types of pol icy inst ruments chosen. For instance, the recent ly instal led facil it ies to mine and expor t B.C. coa l , whatever their merits or shor tcomings, w o u l d p robab ly never have been built had it not been for the initiative and suppor t of the B.C. Government . Thus Herschel Hard in 's c la im that Canada always has been and probably always will be a publ ic enterpr ise count ry is a reasonable c la im. In any case, it w o u l d be interesting to see h o w pragmat ic Amer icans have been t o w a r d the c o n c e p t of publ ic enterpr ise when their capital markets were temporar i l y weak. The e c o n o m i c a rgument w o u l d be s t rengthened if it cou ld be p roven that under similar e c o n o m i c c i rcumstances Amer icans and Canadians have op ted for the same govern ing instrument. The creat ion of the Tennessee Valley Author i ty (TVA) in the dep ths of the 1930s e c o n o m i c depress ion prov ides us wi th an excel lent case s tudy to test this hypothes is . The TVA is a publ ic author i ty w h i c h w a s created t o p lan and develop the entire Tennessee river basin, one of the most impover ished reg ions of the Amer i can south. Whi le many o p p o n e n t s of TVA, s u c h as private power compan ies , d isgrunt led senators, and President Dwight D. Eisenhower, have b randed the TVA as "creep ing socia l ism," in te rms of its mandate it has been a success, and at one point was the b iggest electr ici ty generat ing sys tem in the United States (Walsh 1978 ,109) . The ma in point to 47 clarify is w h y TVA was created in the first p lace, and it seems that e c o n o m i c s had a large part to play. Before and after the s tock market crash wh ich ushered in the Great Depress ion, TVA's p roponen ts based their a rgument on the fact that the South was in despera te need of e c o n o m i c deve lopment . Private enterpr ise was not deve lop ing the region qu ick ly e n o u g h , especial ly in the 1930s w h e n such deve lopment was d e e m e d crit ical g iven the despera te e m p l o y m e n t s i tuat ion. In descr ib ing the pro jec t to reporters in February 1933, Roosevel t expla ined that the author i ty w o u l d create 200,000 j o b s in the Valley, someth ing private initiative cou ld never hope to achieve (Hargrove and Conk in 1983, 23). The or ig ins of the TVA, like those of most government pro jects , had poli t ical over tones. Hav ing been asked to explain the polit ical ph i losophy under ly ing the TVA bill, President Frankl in D. Roosevel t r esponded , "It's neither f ish nor fowl , but whatever it is, it will taste awful ly g o o d to the peop le of the Tennessee Valley" (Walsh 1978, 27). Government intervent ion was w e l c o m e d by m a n y Amer i cans in the "dirty thirties." Many businesses a n d c o n s u m e r s in the region suppor ted the TVA, regardless of their unfet tered al legiance to the free enterpr ise sys tem. This w a s because the publ ic author i ty reduced their power rates. W h o else cou ld br ing low-pr iced electr ici ty to low-densi ty areas a n d to modes t consumers? Publ ic enterpr ise b e c a m e the clear pol icy inst rument c h o i c e of p ragmat ic pol i t ic ians w h o sought to give the electorate what it w a n t e d . In conc lus ion , the failure of the market in Amer ica p r o m p t e d the Uni ted States Government t o re-evaluate the mer i ts of publ ic enterpr ise as its Canadian counterpar t has been fo rced to d o o n a cont inual basis s ince the 1800s. There was certainly little that pr ivate ent repreneurs cou ld d o to deve lop the Tennessee river basin after 1929, wh ich part ly explains w h y the d iehard o p p o n e n t s of publ ic power had b e c o m e a shr ink ing minor i ty by the early 1930s. As Paul Conk in makes clear in his d iscuss ion of the intellectual and polit ical roots of TVA, leasing a r rangements w o u l d p robab ly have appea led to the ideological pr inciples of such opponen ts , but were unrealist ic in a deepen ing depress ion (Hargrove and Conk in 1983, 21). This left publ ic enterpr ise as the only v iable al ternat ive. State intervent ion w a s the only w a y that the despera te reg ion w o u l d be deve loped , just like Canada 's t ranscont inenta l rai lway w o u l d never have been built w i thout state fund ing . A n d so e c o n o m i c c i rcumstances seem to have p layed a role In determin ing w h e n and w h e r e publ ic enterpr ise has appeared o n the Nor th Amer i can landscape. Canada 's Fore ign-Owned versus Amer ica 's Domest ica l ly -Owned Oil Indust ry The e c o n o m i c a rgument prov ides cons iderab le insight to the general quest ion of w h e n gove rnmen ts adopt publ ic enterprise. Fur thermore, a derivative of the a rgument he lps explain w h y Canada d id and Amer i ca d id not dep loy publ ic enterpr ise in the oil industry. Canada 's capital markets have historical ly been unable to sustain a v ibrant oil industry. Consequent ly , the indust ry has been domina ted by fo re ign-owned f i rms. Thus whi le capital was not part icular ly scarce, nei ther w a s it Canadian, leading Canadian po l icy makers to v iew oil po l icy dif ferently f r o m their Amer i can counterpar ts . In 1973, over 91 per cent of the industry 's assets, and over 95 per cent of its sales, were a c c o u n t e d for by fo re ign-owned mult inat ionals (Laxer 1975, 65). In contrast , fo re ign investment in the Amer i can energy sector remained smal l relative to total domest ic investment and signi f icant ly less than Amer ican investment in the energy sectors of fore ign count r ies (U.S. 1978, 3) . Whi le fore ign investment in U.S. pet ro leum w a s $5.9 bi l l ion in 1976 (Ibid.). U.S. investment in the pe t ro leum industry of fore ign countr ies w a s approx imate ly five t imes that number , or $30 bil l ion (Ibid.. 7) . In fact, Amer icans were responsib le for 80 per cent of fore ign ownersh ip in Canada 's oil industry (Laxer 1975, 65). Conversely, on ly 9.5 per cent of foreign ownersh ip in U.S. pe t ro leum or ig inated f rom Canada in 1975 (U.S. 1978, 19). The oil industry, then, represented a typical "e lephant and mouse" scenar io in Canad ian-Amer ican relations. Oil is not the on ly industry in Canada w h i c h is fo re ign-owned. Many industr ies fall under similar c i rcumstances, and this fact has had ramif icat ions for Canada 's publ ic sector . Fore ign capital t r ip led its share of cont ro l over Canadian industry between 1914 and 1960, m o v i n g f r o m one-f i f th to an as tound ing three-f i f ths of total investment (Wil l iams 1986, 80). Fur thermore , three-f i f ths of Canada 's manufac tu r ing and min ing sectors was fo re ign-owned by 1968 (Ibid.. 103). Foreign ownership has led to the nationalization of certain sectors of the economy for two reasons. First, many Canadians have cited economic, political, and even cultural problems stemming from the lack of domestic corporate control. Secondly, Kent Weaver explains that foreign-based firms have relatively weak leverage on the Canadian political system. Public attitudes may favour patriation of a foreign firm, and domestically-owned firms rarely view the nationalization of foreign-owned firms as a precedent to be extended to them (Weaver 1985, 84). Hence, at the same time that Canada's weak capital markets encouraged government enterprise, the much needed flow of capital from abroad, and particularly from the United States, has ironically resulted in the same encouragement. The moderate decline in foreign investment in Canada since the late 1960s as a proportion of total investment can clearly be attributed, at least in part, to government takeovers (Williams 1986,103). The American oil industry was unique to the world in one important respect at the time of the Arab oil embargo: the multinationals who dominated the market were domestically-based. Hence while all the other industrialised oil-importing countries, including Canada, longed to reduce the role of the multinationals in national energy matters, the support of American elites for them was unwavering. Apart from the ideological reasons cited to back private enterprise, Americans viewed the situation pragmatically and found that they would have the most to lose of all industrialised nations if the multinationals were replaced by NOCs. 'The United States, which alone had the ability to curb the power of the multinationals, was relatively well served by them," and so did nothing to alter the basic market system (Kemezis and Wilson 1984, 11). The U.S. multinationals had initially entered Canada with full encouragement and pecuniary incentives from both levels of government. By controlling, among other things, the purchase price of crude oil originating from the Middle East and South America, it seemed perfectly natural for the major oil companies to manage Canada's oil industry, too (Strachan 1983/1984, 144). Times changed. By 1973, private oil companies had not only lost their hegemony over the market to OPEC, but were no longer considered by most industrialised nations as capable of securing future energy needs.15 The stakes rose, and those who controlled the supply of the vital resource (private companies or NOCs apart from the oil-exporting countries themselves) were in an increasingly powerful bargaining position to dictate the terms of its future availability to oil-importing countries. Consequently, direct action by government to ensure a secure supply of oil was undertaken by all importing countries, including direct contacts and diplomatic actions to maintain friendly relations with producers, and what amounted to "diplomatic relations with the international oil companies to maintain as much as possible their share of the companies' worldwide pool of oil and force local subsidiaries of the majors to act in the national interest of the host country" (Kemezis and Wilson 1984, 62). Many countries felt that NOCs could secure their supply of oil and, moreover, that the foreign-controlled subsidiaries could not. A February 1974 poll revealed that only 31 per cent of Canadians felt confident that the multinational oil companies would act in Canada's interest as opposed to 52 per cent who did not feel confident (Gallup Poll, February 1974). In a world of uncertainty where future cut-backs in world oil production was (and still is) a distinct possibility, Canadians would have felt much more secure had their oil industry been 100 per cent domestically-owned. Whether the suspicions held by Canadians and their government that oil company subsidiaries lacked the autonomy and bargaining power to assure security of supply in the event of a serious shortfall in world supplies were rational is difficult to judge. However, Doern and Toner argue that Gulf Canada's "parent U.S. company totally dominated the decision-making power of its subsidiary" (Doern and Toner 1985, 130). One can assume that this was the natural relationship between all the oil companies. Yet in an era of global markets, would "home market governments" really be able to persuade multinationals to remain faithful in times of crisis, and abandon other clients in the process? This 1 5For an excellent, positive assessment of the costs and benefits of creating NOCs to secure oil supplies, see Chapter 7, "An Importing Entity," in United States (1981). 51 scenario actually materialized in 1979 when the Iranian cutoff caused oil shortages in many countries. When one of Exxon's customers in Europe experienced a serious shortfall, the multinational instructed its Canadian subsidiary, Imperial Oil, to redirect an oil shipment headed for Canada to Europe. The Canadian government had no input into the decision. Clearly, if Canada were ever to suffer a serious shortfall, Imperial could redirect supplies to Canada from another country. This possibility was consistent with Exxon's 1974 policy to rationalize the system in times of crisis (Strachan 1983/1984, 148). Nevertheless, the above case shows that "there is no guarantee that Canada's national interests will be primary for a foreign private company" (U.S. 1981, 41). The only way that such a diversion could have been prevented would have been had Petro-Canada been in control. In any case, Ottawa's lack of control over the distribution policies of the multinationals, the no-arm's length arrangement between them and their Canadian subsidiaries, and the sensitivity of subsidiaries to powerful pressures from 'home market governments' greatly concerned Canadians and their policy makers (Pratt 1981,103). Canadians perceived that the foreign nature of the oil industry was a problem, and perceptions are-realities in politics. Their concern translated into pressure to create Petro-Canada. Thus, Canada's weak industrial base must bear some indirect responsibility for the creation of yet another public enterprise. The United States' faith in the system was not so shaken. This was particularly true of American policy makers. As each nation anxiously envisioned its supertankers dodging political obstacles en route to port, Americans could at least recognize the captain. The United States simply did not have to face the real or perceived problems associated with dealing with foreign subsidiaries. The historical industrial strength of the nation had assured them of that. Summary The economic argument posits that the choice of instrument in a particular sector of the economy will be strongly influenced by economic variables and circumstances. A derivative of this argument helps to explain the difference in Canadian and, American oil policy instruments, Canada's w e a k industr ial base w a s largely responsib le for a 90 per cent fore ign ownersh ip rate in the Canadian oil industry, whi le Amer ica 's st ronger base resulted in its oil industry be ing predominant ly domest ica l ly -cont ro l led (Goodermote and Mancke 1983, 77). Most of the mul t inat ionals were based in Amer ica . Ergo, Amer icans had more to lose than any other count ry , inc lud ing Canada, by nat ional iz ing part or all of its oil industry. The fact that a key manda te of Pet ro -Canada was to increase Canadian par t ic ipat ion in the oil and gas industry suggests , at the very least, that Canad ian pol icy makers bel ieved that the foreign nature of its indust ry posed a p rob lem. Part III Dif ferences in Government Inst i tut ions  In t roduct ion Each coun t ry has its o w n unique set of polit ical institutions. Even a m o n g industr ial ized western nat ions the s t ructure of government varies greatly, a l lowing s o m e gove rnmen ts to pursue pol ic ies w h i c h others cannot pursue. The rules of the game matter in pol i t ics as they d o in all t ypes of social in teract ion, and Canada 's par l iamentary sys tem faci l i tates the c reat ion of publ ic co rpora t ions whi le Amer ica 's presidential system does quite the oppos i te . In 1975 w h e n Ot tawa w a n t e d t o create an N O C it w a s able to d o so quite easily. Whi le neither par ty in Wash ing ton w a n t e d or a t tempted s u c h creat ion, it wou ld have had a t o u g h t ime pass ing the necessary legislat ion if it had . Canada 's Par l iamentary versus Amer ica 's Presidential Sys tem of Gove rnmen t The st ructures of government are sufficiently diverse in the t w o nat ions to help explain w h y the t w o gove rnmen ts emphas ize different pol icy instruments. The d is t ingu ish ing character ist ic of the Amer i can sys tem is decentra l ized power and st rong checks a n d ba lances, and this has had an e n o r m o u s impact o n the nat ion's po l icy-making process. The fact that the execut ive and legislative b ranches of gove rnmen t are separated tends to curb the abil ity of poli t ical elites to pursue specif ic pol ic ies. The President s imply d o e s not have as m u c h contro l over the Uni ted States government , inc lud ing the bureaucracy , as d o his fore ign counterpar ts over the g o v e r n m e n t s of their countr ies. This fact has compelled at least three presidents - Roosevelt, Truman and Nixon - to appoint commissions to advise them on how they could strengthen their position. Canada's system of parliamentary government places the government in a much more favourable position. The executive and legislative branches are fused together forming a single, unified government. Apart from the House of Commons there is a second legislative chamber, the Senate. However, its role has traditionally been weak, unobstructive, and relatively inconsequential. Therefore, the prime minister and his cabinet can control the government apparatus much more effectively than can their American counterparts; "the tight linkage between the cabinet and the governing party in the House of Commons, party discipline in the Commons, and dominance by a single house within the legislature allow the executive much more freedom to obtain measures it desires and block those it opposes" (Weaver 1985, 82). Public Enterprise and the Structure of Government The difference in structure of the two governments is important for two reasons. First, it is much easier for a Canadian executive to create a public corporation than for an American executive to do the same. Second, Canadian governments enjoy greater control over their public corporations once they have been created. Both points are vital. Support by government officials for public enterprise may tip the balance in favor of that instrument, and it is clearly less in the interests of American officials (Congress, the administration, and bureaucrats) than Canadian officials to support public enterprise for the two reasons given (Ibid.. 82). The proliferation of public enterprises in Canada has often been blamed on the ease with which Canadian governments are able to create them. The most obvious way that governments may create them is by seeking a special act of incorporation through Parliament, as was general practice from the Second World War to the late 1960s. Affording Parliament the opportunity to either pass or reject a bill to create a crown corporation is consistent with the view that "Ultimate control over the policy and direction of a public industry must be exercised by Parliament as representatives of the community in general" (Hanson 1962,34). Government bills - those that are i n t roduced in the House of C o m m o n s by the government - rarely have t roub le pass ing w h e n , as is of ten the case, the govern ing party cont ro ls a major i ty of House seats. That is the nature of the par l iamentary system. Once the Government of Canada has dec ided that it wan ts to create publ ic enterpr ise "XYZ," such creat ion is, for all intents and purposes, a "fait accompl i . " As if this were not easy enough , Canad ian legislation permi ts a minister to create a c r o w n corpora t ion wi thout par l iamentary approva l under the Canada Business Corpora t ions Act . Governments have taken advantage of this me thod five t imes (Canada 1979, 333). Fur thermore, the Roya l 'Commiss ion Report on Financial Management and Accountabi l i ty stated that there is no "automat ic provis ion for ensur ing that Parl iament has an oppor tun i ty to scrut in ize the letters patent in wh ich , presumably , there is a s tatement of purposes, object ives, and the relat ionship of the Government to the corpora t ion" (Ibid.). Canad ian legislat ion also permi ts a minister to establ ish c r o w n corpora t ions as subsidiar ies of exist ing c r o w n corpora t ions under the statutes govern ing that f i rm. This part icular p iece of legislat ion helps to explain w h y over 400 nominal c r o w n co rpora t ions existed in 1980 c o m p a r e d wi th only 54 formal ly l isted in the schedules of the Financial Admin is t ra t ion Act (Tupper 1981, 36). Wi thout a system of separat ion of powers , the size of publ ic enterpr ise has been able to g r o w uninhib i ted. The diff icult ies wh ich an Amer ican president encounters w h e n a t tempt ing to create a publ ic corpora t ion , on the other hand, are signif icant. The Amer ican sys tem of decent ra l ized power and s t rong checks and balances, w i th its m a n y ve to points, offers opponen ts of p r o p o s e d legislat ion m a n y oppor tun i t ies to b lock it. Fur thermore, nat ional izat ion general ly offers dif fuse benef i ts to the popu lace at large, whi le impos ing concent ra ted benefits o n specif ic segments of that popu lace. Therefore, the latter g roup has m u c h more incentive to get involved in the pol icy m a k i n g p rocess than the fo rmer g roups , as explained by Mancur Olson 's " logic of col lect ive act ion" : o ther th ings be ing equal , the larger the number of individuals or f i rms that w o u l d benefi t f r om a col lect ive g o o d , the smal ler the share of the gains f rom ac t ion in the g r o u p interest that will accrue to the individual or f i rm that under takes the act ion. Thus, in the absence of selective incentives, the incent ive for g roup ac t ion d imin ishes as g r o u p size increases, so that large g roups are less able to act in their c o m m o n interest than small ones (Olson 1982, 31). In fact , the d is t r ibut ion of costs and benefits inf luences where publ ic enterpr ise will be a d o p t e d . The sectors of the United States e c o n o m y in wh ich publ ic enterpr ise act ivi ty is concen t ra ted are the credi t and insurance sectors because the benef ic iar ies of such act ivi ty are wel l o rgan ized , and because there are no potential compet i to rs or losers. For instance, the interests of banks are served by the Federal Deposi t Insurance Corpora t ion (FDIC), a fact w h i c h assures the banks ' depos i to rs that the federal government , rather than some c o n s o r t i u m of insurance compan ies , is insur ing their depos i ts . A second example is prov ided by the Gove rnmen t Nat ional Mor tgage Assoc ia t ion (Ginnie Mae) w h o s e creat ion in 1968 "relieved the pr ivate sector ( formerly mixed ownersh ip) Federal Nat ional Mor tgage Associat ion of m u c h of the bu rden of suppor t ing hous ing for l ow- income groups" (Weaver 1985, 82). Hence the accep tance or re ject ion of publ ic enterpr ise will o f ten d e p e n d on whe ther those interests wh ich have a concent ra ted stake in inst rument cho ice either embrace or o p p o s e state intervent ion. Pressure g roups and state governments place the highest hurd les in f ront of a president. The power w ie lded by pressure g roups in Wash ing ton is truly immense , m u c h s t ronger than that w ie lded in Canada. Pressure g r o u p s usually target their lobby activi ty at m e m b e r s of Congress because they k n o w that c o n g r e s s m e n must pander to local concerns if they are t o survive future elect ions. The fact that the poli t ical career of a c o n g r e s s m a n often depends o n h o w m u c h m o n e y he c a n personal ly raise enhances the inf luence of part icularly weal thy lobb ies , such as the oil industry. The president a lso encounters state resistance, especial ly if a state feels that the president 's plan to nat ional ize a cer ta in industry will impinge on regional ju r isd ic t ion. Federal ism in the Uni ted States prevents the nat ional government f rom pursu ing its ob jec t ives as s t rongly as it might o therwise. Canada is a federal count ry too , but the nature of its conf l ic t be tween nat ional and subnat ional gove rnmen ts has had a different effect. Leaders at b o t h the federal and provincial levels of government have tradi t ional ly used publ ic enterpr ise to a d v a n c e their o w n e c o n o m i c deve lopmen t at the expense of the other level of government (Ibid.. 83). This has been part icular ly t rue of the energy f ield. S u c h an incent ive for government ownersh ip d o e s not exist south of the border where the states are more numerous, and w h e r e in tergovernmenta l conf l ict is less acu te . U o y d Musol f sums up the general a rgument by c o n t e n d i n g that "Public enterpr ise is a l imi ted ins t rument of U.S. national government because of... rel iance o n decentra l ised, pluralist ic dec is ionmak ing , ref lect ing the existence of federal ism, separat ion of legislative and execut ive powers , w e a k poli t ical part ies, and powerful interest g roups" (Musolf 1984,1) . The president of the Uni ted States is unable to create as many government co rpora t ions as his counterpar ts a b r o a d . The f ragmented nature of Amer ican gove rnmen t a lso l imits the extent to w h i c h publ ic off icials can cont ro l publ ic enterpr ises relative to their Canad ian counterpar ts : Canad ian government leaders are more l ikely than U.S. leaders to feel that they c a n cont ro l publ ic enterpr ises once they have establ ished them. Commi t tees in the Canad ian House of C o m m o n s lack the expert ise, i ndependence , staff suppor t , and prest ige of their U.S. counterpar ts and are therefore incapable of issuing rival c o m m a n d s to the enterpr ise once it is in place. Because power in the U.S. federal government is highly f r a g m e n t e d , leaders in bo th the execut ive and legislature might fear that a publ ic enterpr ise will inevitably s u c c u m b to poli t ical intervent ion by the o ther b ranch and to interest g r o u p c la ims that neither government nor the enterpr ise will have the a u t o n o m y to resist. T h u s one of the major e c o n o m i c advantages of pub l ic enterpr ise, cont ro l , may not hold in pract ice. (Weaver 1985, 83). Whi le it is perfect ly clear w h o cont ro ls corpora t ions in Canada - the Crown, whether it takes the f o r m of the minister in charge or, more general ly, the cabinet - it is not a lways clear w h o con t ro ls pub l ic co rpora t ions in the Uni ted States: "Because the founders never envis ioned a bureaucrat ic government , the place of the federal bureaucracy in the const i tu t ional scheme is a m b i g u o u s " (Nachmias and Rosenb loom 1980, 48). One th ing is clear, however . The Government Corpora t ion Cont ro l Act requires that all federal publ ic enterpr ises by c reated by statute. This means that all ac ts t o nat ional ise must be sanct ioned by the legislative b ranch , Congress . Corpora t ions receive d i rect ion f rom bo th the legislat ive and execut ive b ranches of Amer i can government . S u c h d i rect ion c a n be frustrat ing for all part ies conce rned . A recent Amt rak (Nat ional Rai lroad Passenger Corporat ion) president c la imed that "Amtrak m a n a g e m e n t is, and shou ld be, d i rect ly responsib le to the Congress for car ry ing out its lawful responsibi l i t ies" even t h o u g h the Depar tment of Transpor ta t ion th inks and acts o therwise (Musolf 1984,1) . As it happens, C o n g r e s s d o e s cont ro l most of the federal bureaucracy t h r o u g h its power over budget mak ing . Congress also 57 governs the procedures by w h i c h agenc ies and corporat ions arrive at dec is ions t h r o u g h a process of legislative oversight. The president 's most impor tant means of control l ing the bureaucracy is his abi l i ty to make appo in tmen ts to bureaucrat ic agenc ies . He has approx imate ly 3,800 pos i t ions t o fill (Nachmias and R o s e n b l o o m 1980, 50). Yet those m e n and w o m e n w h o m he appo in ts m a y not recogn ize his author i ty . This w a s evident w h e n the cha i rman of TVA refused to answer President Roosevel t 's inquir ies in 1938, insist ing that he was responsib le only to Congress (Musolf 1984, 6) . Whatever cont ro l the United States president d o e s have over his "bureaucrat ic jungle," it pales in c o m p a r i s o n w i th the power w ie lded by the Canad ian pr ime minister. It cou ld be a rgued that the pol i t ic izat ion of the Amer ican bureaucracy , a n d the neutral i ty of its Canadian counterpar t , a f fords the president and his secretar ies signif icant ly m o r e inf luence over the d i rect ion of the bureaucracy . However , the p reced ing analysis sugges ts that this is not the case. Finally, what makes the ques t ion of cont ro l so frustrat ing for Amer ican off icials is the role that l o b b y g roups play in the runn ing of government agencies and corpora t ions . Daniel Patr ick Moyn ihan quips that European observers d o u b t whether the United States "is really governed at all" (Wilson 1987, 36). Surely the p o w e r held by var ious interest g roups a d d s t o their pe rcep t ion , for their inf luence in how governmen t corpora t ions are run is f requent ly cons iderab le . Specif ical ly, m a n y cl ient g roups have a power fu l vo ice in the relevant Congress ional c o m m i t t e e s and subcommi t tees , w h i c h weakens the cont ro l of the corpora t ions ' or agenc ies ' c reators signif icantly. The secretaries, undersecretar ies, and assistant secretaries appo in ted by the pres ident "s imply d o not have the polit ical c lout to d o m i n a t e their agencies.. . Indeed, their agenc ies of ten d o m i n a t e t h e m " Qbid., 57). In conc lus ion , the main incent ive for a government to intervene in sec tors of the e c o n o m y is to inf luence its d i rect ion. Where the st ructure of government weakens the oppor tun i t y for such inf luence, it fo l lows that publ ic off icials will be less anxious to create publ ic co rpo ra t ions than they will o therwise be. There is empir ica l ev idence to suppor t this, c la im. The publ ic enterpr ise share of Western e c o n o m i e s wh ich have par l iamentary gove rnmen ts are not only fairly consistent wi th o n e another, but are all higher than that of the United States (as is shown in Table 1). Publ ic enterpr ise a c c o u n t s for 4.4 per cent of gross f ixed capital fo rmat ion in the U.S., c o m p a r e d wi th 19.2 per cent in Austr ia , 13.1 per cent in Belg ium, 15.3 per cent in Sweden, and 16.8 per cent in the Uni ted K i n g d o m . The non-U.S. count ry wi th the lowest f igure is Denmark (8.3 per cent) (Weaver 1985, 71). Oil Policy and Government Institutions The theory w h i c h posi ts that government insti tut ions affect publ ic pol icy is consis tent wi th a cross-nat ional statist ical survey. The structure of government clearly inf luences the scope of publ ic enterpr ise in any g iven coun t ry . Yet it is not necessari ly a con t r ibu to ry factor in the dec is ion to create every specif ic pub l ic enterprise. Did it affect either Canada 's dec is ion to create an N O C in the mid-1970s, or Amer ica 's "decis ion" not to? The Liberal gove rnmen t had no diff iculty passing legislat ion to create Pet ro-Canada on July 10, 1975 wi th its major i ty of seats in the House of C o m m o n s . After the enabl ing legislat ion received Royal Assent later that mon th , Petro-Canada set up co rpora te headquar ters in Calgary t o start opera t ions o n January 1,1976. Whi le the Conservat ives had m o u n t e d a f i l ibuster to try to halt passage of the Pet ro-Canada Act , and threatened to w i n d d o w n Pet ro-Canada a n d sell it in who le or part shou ld they w i n the next e lect ion, Liberal success In creat ing an N O C was never in doub t . Be ing at the he lm of a par l iamentary system a l lows a major i ty government to create pract ical ly any publ ic co rpora t ion that it wants. If separat ion of powers had existed in Canada as it d o e s in the Uni ted States, and the Conservat ives had cont ro l led either the legislative or execut ive b ranch of government , Pet ro-Canada wou ld not have been created. The Conservat ives m a y a lso have been able t o prevent passage of a bill to create an N O C th rough a U.S. Senate-style f i l ibuster w h i c h takes 60 per cent of m e m b e r s to overr ide (Dye and Zeigler 1981, 382). O n e reason the Liberal government was keen to establ ish Pet ro-Canada was that it knew it cou ld cont ro l Pet ro -Canada in the months and years ahead . Whi le the Canadian government m a y suffer f r o m a p rob lem of accountabi l i ty ( though it is n o w less of a p rob lem than it was ten years a g o o w i n g to the Financial Administ rat ion Act of 1979 and the efforts of the Audi tor General 's of f ice), cabinet has the ult imate say in the course of ac t ion fo l lowed by the corpora t ion . Fur thermore , the idea of creat ing an N O C was g iven full suppor t by officials in the Depar tment of Energy, Mines a n d Resources (E.M.R.). They knew that they, a n d they alone, wou ld cont ro l the pub l ic co rpora t ion . In addi t ion, their unrivalled say in how Pet ro-Canada w o u l d be run w o u l d ex tend their jur isd ic t ion into that of other depar tments : In add i t ion to extending Ot tawa 's cont ro l over the energy industr ies, the new state c o m p a n y w o u l d increase E.M.R.'s author i ty in the vast federal terr i tories nor th of the 60th parallel - an area run like a co lony by a paternal ist ic Depar tment of Indian Affairs and Nor thern Deve lopment (I.A.N.D.)... M a c d o n a l d and his advisors were open ly crit ical of the exist ing nor thern oil and gas regulat ions - w h i c h were admin is tered by I.A.N.D. - a n d a rgued that as part of the overhaul of the land tenure sys tem in the Nor th , the new C r o w n oil c o m p a n y must be given preferential r ights to federal lands. All unal located or sur rendered Crown reserves in the Nor th a n d of fshore cou ld , for example , be of fered to the state c o m p a n y for first refusal in order to accelerate exp loratory w o r k and to force the large pr ivate oil compan ies either to w o r k their lands or g ive them up (Pratt 1981, 108). Amer ican po l icy makers were dec ided ly less enthusiast ic abou t creat ing an N O C than w e r e their Canad ian counterpar ts . Power is so dif fuse in that count ry that pred ic t ing w h o w o u l d have had ul t imate con t ro l over an N O C w o u l d have been diff icult. Fur thermore, power of ten shifts f r o m one depar tmen t to another , or f rom the Oval Off ice to Congress, over a publ ic co rpora t ion 's l i fet ime. Therefore, the fact that a s t rong p r o - N O C lobby d id not material ize wi th in gove rnmen t is no t surpr is ing. H a d a s t rong movement favour ing an N O C e m e r g e d , it w o u l d have faced a redoub tab le oppos i t i on . By all accounts , the Amer i can oil l obby w a s and is an ext remely influential fo rce o n Capi to l Hill. They make considerable hay out of the Amer i can sys tem of government , and have t radi t ional ly been able to rely o n oi l-r ich states to send e n o u g h Senators to W a s h i n g t o n to susta in a f i l ibuster o n anyth ing that signif icantly threatens their industry. Gove rnmen t relat ions wi th the major c o m p a n i e s play a ma jo r role in the dec is ion -mak ing p r o c e s s of all o i l - impor t ing nations. The relat ionship is part icular ly cosy in the Uni ted States (Kemezis and Wi lson 1984, 80). Only once was the creat ion of an N O C c lose to b e c o m i n g an Amer i can reality, a n d the causal factor leading to the short life span of the Pet ro leum Resources Corpora t ion (PRC) dur ing Wor ld War T w o was the ability of the mul t inat ionals to ve to the government ' s initiative. Merrie Gilbert Klapp, w h o argues in The Sovere ign Ent repreneurs that the degree of government involvement in the oil industry is determined by the relative poli t ical oppos i t i on of mult inat ional and private domes t i c g roups to state a u t o n o m y in oi l , c o n t e n d s that "whether the U.S. government shou ld be act ively involved in the internat ional p r o d u c t i o n and d is t r ibut ion of oil was an issue o n w h i c h U.S.-based mult inat ionals and d o m e s t i c Independents had the final say [in 1943]" (Klapp 1987,184) . The U.S. government was vulnerable to shortages in oil supp ly dur ing the war, part icular ly as its o w n reserves w e r e prov ing inadequate to meet domest ic d e m a n d (Ibid.). The U.S. feared b e c o m i n g a net impor ter of oil and sought direct control over new reserves in the Middle East, part icular ly Saudi Arabia. In 1943 the Secretary of the Interior and pe t ro leum admin is t ra tor for war, Haro ld Ickes, p roposed that an N O C (the PRC) be created to buy out S tandard Oil of Cal i fornia's (Socal) and Texaco 's entire cont ro l of Saudi oil. The t w o oil c o m p a n i e s agreed to the p roposa l after w inn ing concess ions f rom the government , paving the w a y for the establ ishment of the PRC in 1943. The mult inat ionals not inc luded in the deal were vehement ly o p p o s e d to the PRC because they sought contro l of reserves in the Middle East themselves. In add i t ion , Smal l Independents comp la ined because the PRC threatened to f lood the domest ic market w i th Midd le Eastern oil . Bo th g r o u p s lobb ied hard and effectively against the PRC, and wi th direct pressure f r o m Congress and the state of Texas, the PRC was d isso lved. The efforts of the depar tments of State, Interior and the Navy to be a u t o n o m o u s had been overwhe lmed. The United States gove rnmen t has resigned itself to a pol icy of taxat ion and regulat ion ever since. After 1973, the oil indust ry w a s less able to convince government of the benef i ts of an al l-pr ivate oil industry. If pr ior t o 1973 oil po l icy w a s " formulated and imp lemen ted by pol i t ical subsys tems that more of ten than not p r o m o t e d or generously a c c o m m o d a t e d the interests of major energy producers , " o ther g r o u p s represent ing environmental ists and c o n s u m e r s b e c a m e increasingly act ive after the Arab embargo , compl ica t ing dec is ion-mak ing in the process (Chubb 1983, 249). O n e such g roup , the Consumer Federat ion of Amer ica (CFA), act ively suppor ted the possible fo rmat ion of a federal oil and gas corporat ion as d id publ ic power , electr ic co -op , labour, liberal fa rm, and c o n s u m e r const i tuent organizat ions (McFar land 1976, 97) . A CFA Energy Task Force launched before the O P E C pr ice increase in March, 1973, c o n c l u d e d that whi le there is noth ing inherent ly evil abou t the profit incentive, "where the p roduc t is as essential to nat ional wel l -being and secur i ty as energy, at least part of the count ry 's effort t o prov ide it ough t to be mot ivated by Amer ica 's securi ty, and the needs of the publ ic" (Ibid.. 98). Given the belief that energy shor tages m a y exist for decades , it was felt that Amer ica needed an energy -p roduc ing organizat ion mot iva ted purely by nat ional needs. In spi te of its concent ra ted efforts, the p ro -NOC l o b b y was unable to out musc le the oil industry. The industry 's ent renched posi t ion and high stakes in the U.S. energy sys tem had mot iva ted it t o b e c o m e one of the most effective l obby g r o u p s Capi to l Hill had ever seen. Its s t rength w a s fo rmidab le as proven by the implementa t ion of a h ighly favorable tax sys tem. A dep le t ion a l lowance "was a bonanza for the industry w h i c h had resulted f rom years of heavy lobby ing a n d the lack of an effective anti-oil oppos i t ion" (Kemezis and Wi lson 1984, 43). It lasted until 1975 w h e n a surge in oil profi ts m a d e it look too excessive even for Republ ican C o n g r e s s m e n . Canad ian oil compan ies also lobb ied their gove rnmen t to spurn calls for an N O C . Despi te repeated gove rnmen t assurances that they wou ld benefit f r o m the creat ion of Pet ro-Canada, "Some e lements of the industry were bitterly o p p o s e d to [its arrival on the scene] . . . and virtually all private sec tor interests cr i t ic ized the idea of giv ing Pet ro-Canada preferential r ights" (Doern and Toner 1985, 141). The industry fought Pet ro-Canada too th and nail, yet the government refused to capi tu late. In contrast to their Amer ican counterpar ts , Canad ian oil lobby is ts face a s t ructure of g o v e r n m e n t w h i c h requires dynami te to penetrate o n c e Cabinet has m a d e up its m ind . Even t h o u g h there w a s little p r o - N O C lobby ing to counter on Par l iament Hill (unless one counts the "quiescent 62 lobbying" of 62 per cent of Canadian voters who approved of the federal government's proposal to create an NOC) (Gallup Poll, February 16, 1974), the industry's efforts ended in failure. Summary The structures of government are sufficiently diverse in the two nations to help explain why the two governments adopted different oil policy instruments after 1973. The Canadian government wanted to create an NOC and was able to do so. U.S. presidents, on the other hand, were powerless throughout the 1970s to enact into law any comprehensive oil policy, with or without provisions for an NOC. The role of Congress in oil policy was equal to that of the executive in final decision-making powers from 1974 onwards. Therefore no one in American government had decisive power to push energy programs through. Unless a catastrophe had forced the government to take direct control of oil reserves and markets, it would have been extremely unlikely that Congress and the executive would have ever agreed that the creation of an NOC was either in the nation's interest, their electoral interests, or their empire-building interests. The argument can be strengthened if one considers the following hypothetical situation. The ideological biases of the two nations are reversed. Canadians largely oppose the creation of an NOC, while Americans support it. If so, efforts by an American government to create an NOC would probably have been blocked by the oil industry, ending in failure, while a Canadian government would have succeeded in creating one. The Canadian cabinet might have suffered some electoral consequences, but a well-controlled and inherently flexible policy instrument would have been at its disposal. The impact of the structure of government on policy is clear. CONCLUSION Until 1973, Canad ians and Amer icans both relied o n the private sector t o prov ide the coun t ry ' s oil a n d gas requ i rements f rom domes t i c and fore ign sources. Aside f rom the Canad ian federal gove rnmen t ' s role in fund ing the u n e c o n o m i c sect ion of the Trans-Canada natural gas pipel ine in 1956, and its involvement in the explorat ion for hyd roca rbons in the eastern Arct ic Is lands in the late 1960s, neither the provincial nor federal governments par t ic ipated d i rect ly in oil or gas. In fact, the government -he ld share of these industr ies s tood at less than one per cent as late as 1973 (Pratt 1981 , 97). Amer i can federal and state governments , t oo , left private enterpr ise to make energy dec is ions, in tervening on ly du r ing an emergency or w h e n d o m e s t i c ant i t rust legis lat ion w a s v io la ted ab road by the oil c o m p a n i e s (Ibid.. 60). Both countr ies, then, c h o s e private enterpr ise over o ther pol icy ins t ruments avai lable to them th roughou t the p re -embargo era. In the mid-1970s, the energy crisis w a s at the t o p of the pol i t ical agenda . Op in ion pol ls revealed that 21 per cent of Canad ians (The Gal lup Poll Index, M a y 1974, 29) , and a s tunn ing 46 per cent of Amer i cans (The Gal lup Poll Index. February 1974, 1) felt that the energy crisis was the t o p p r o b l e m fac ing their count ry . This fact fo rced bo th gove rnmen ts to respond act ively to the s i tuat ion and to reassess their po l icy opt ions. The first pu rpose of th is thesis w a s t o c o m p a r e Amer ican a n d Canad ian oil po l icy ins t ruments be tween 1973 and 1977. After cons iderab le debate, Ot tawa a n n o u n c e d that it w o u l d create an N O C as wel l as imp lement o ther national ist measures. Wash ing ton , o n the other hand , dec ided that the nat ion w o u l d con t inue to rely indefinitely o n private enterpr ise, t h o u g h it fai led to adop t a coheren t oil po l icy of any sort for years ow ing to inf ight ing be tween Congress a n d the admin is t ra t ion. Whi le o ther industr ial ized countr ies took the Canadian route, the United States refused "to adapt to shifts in the international oil sys tem by c h a n g i n g its o w n w a y s of deal ing w i th the outs ide wor ld o n energy" (Kemezis and Wi lson 1984, 46). It s tood a lone. The di f ference be tween these two nat ions ' po l icy ins t ruments is w o r t h y of our at tent ion. Pol icy ins t ruments are at the heart of the po l icy-making process . Wi thout t hem, po l icy object ives cou ld not be met. Whi le pol icy object ives may wel l be a "sexier" poli t ical c o m m o d i t y f rom the pol i t ic ian's s tandpoin t , the cho ice between instruments is cr i t ical , part icular ly as they range f r o m be ing non-coerc ive to d racon ian in measure. Given the s igni f icance of po l icy inst ruments, it is impor tan t to de te rmine why , in a part icular s i tuat ion, one inst rument is favoured over another. The ques t ion is part icular ly ser ious in the case of Canad ian a n d Amer i can oil po l icy for the most coerc ive po l icy inst rument avai lable to gove rnmen t w a s on ly a d o p t e d by Canada. If bo th count r ies had a d o p t e d publ ic enterpr ise, yet on ly one had taken advantage of loans and guarantees, the d i f ference w o u l d be neither str ik ing, nor part icular ly impor tant . This one was , w h i c h justif ies the s e c o n d purpose of the thesis. Wha t expla ins the d ivergence between Amer ican a n d Canad ian oil po l icy ins t ruments be tween 1973 and 1977? Chapter Three presents three possib le explanat ions: the di f ference in ideo logy, market fac tors , and government insti tut ions. Each is plausible. Fur thermore, each has previously been used successfu l ly to explain the scope of publ ic enterpr ise in var ious countr ies. Wh ich , then , best expla ins the di f ference in Canadian and Amer ican oil po l icy inst ruments? In a sentence, the ideolog ica l exp lanat ion does . The ideologica l a rgument posi ts that ideo logy is a lways a factor in ma jo r p ieces of legis lat ion. Fur thermore, no t w o count r ies share precisely the same pol i t ical cul ture. Amer ica 's ideo logy is dec ided ly m o r e conservat ive than Canada 's . In fact, "publ ic ownersh ip - whether in the sense of j ' soc ia l ism' o r in the sense of the government ' s sett ing up o r tak ing over major industrial c o n c e r n s - has never been o n the Amer ican polit ical agenda" (King 1973, 302). Hence whi le an N O C was ul t imately a d o p t e d in Canada, it never came c lose to reach ing the Amer ican dais. Amer ica , typical ly , a d o p t e d other, less coerc ive inst ruments to deal w i th the oil crisis. I deo logy is invariably ref lected in a nat ion's party sys tem. It is t h r o u g h part ies that v is ionary ideo logy is crystal l ized into substant ive pol icy. The fact that neither of Amer ica 's ma ins t ream part ies advoca ted the creat ion of an N O C , whi le Canada's historical ly fo rmidab le Liberal Party d id , is proof. An N O C lay only on the f r inge of the Amer ican polit ical sys tem in the 1970s. Fur thermore , barr ing a calami ty in the oil industry or a shift in Amer i can ideo logy , it will l ikely s tay there. In sum, ideo logy is a necessary fac tor in explaining the oil po l icy d ivergence , t h o u g h not a sufficient one, ow ing to the ex is tence of o ther explanat ions. The e c o n o m i c a rgument is the s e c o n d of the three explanat ions. It pos i ts that count r ies w i th weaker industrial bases are more likely to c h o o s e publ ic enterpr ise than those w i th fo rmidab le industr ial bases. This is because impor tant aspects of the e c o n o m y get neg lec ted in count r ies w h e r e private enterpr ise is weak. This market fai lure impels, if not inspires, g o v e r n m e n t t o intervene, and private enterpr ise has tradi t ional ly been weaker in Canada than it has been in the Uni ted States. A derivat ive of the e c o n o m i c a rgument helps to explain w h y Canada a d o p t e d an N O C in the mid-1970s w h e n the Uni ted States d id not. Canada 's oil industry was p redominan t l y fo re ign -owned because the a m o u n t s of investment capital needed to develop the oil indust ry c o u l d not be genera ted internally. Conversely, Amer ica 's industry was overwhe lming ly domes t i ca l l y -owned . Therefore, whi le an Amer ican N O C w o u l d have had to c o m p e t e wi th h o m e - b a s e d mul t inat ionals, Canada 's N O C w a s the only oil c o m p a n y w h o s e pr ime loyalty lay w i th the Canad ian people . Hence , a s t rong national ist ic p resence seemed to be m o r e necessary in Canad ian oil f ie lds than in Amer i can f ields. At the very least, this w a s the percept ion of pol icy makers in the t w o count r ies , and percep t ions are realities in pol i t ics. In sum, e c o n o m i c c i rcumstances and p r a g m a t i s m were impor tant an tecedents to Canada 's c reat ion of Pet ro-Canada in 1975, and to Amer i ca ' s con t inued rel iance on private enterpr ise. Finally, the di f ferences be tween Canadian and Amer ican government inst i tut ions is very helpful in expla in ing w h y the t w o count r ies ' oil pol ic ies d iverged. The general a r g u m e n t is that s o m e count r ies ' inst i tut ions foster publ ic corpora t ions , just as others have the o p p o s i t e effect. Canada 's par l iamentary sys tem is an example of the former , whi le Amer ica 's president ia l sys tem is a n example of the latter. Two reasons explain why. First, it is m u c h easier for a Canad ian than an Amer ican execut ive to create a pub l ic corpora t ion . Secondly , Canad ian off icials en joy greater contro l over their publ ic corpora t ions o n c e they have been created, w h i c h gives t h e m incentive to initially create t h e m . It is diff icult to test the s t rength of this a rgument because no one of stature in Wash ing ton 's labyr inth act ively pushed for an N O C . Still, the Canad ian g o v e r n m e n t set out t o create an N O C after December 1973, and c a m e across no obstacles. O n the o ther hand , United States presidents and congressmen were unable to legislate comprehens ive oil po l icy th roughou t the 1970s. Presumably , had there been substant ial suppor t for an N O C in Wash ing ton , passing enact ing legislat ion wou ld have been very diff icult, perhaps impossib le , t o achieve, part icular ly in light of the fo rmidab le oppos i t i on of the oil industry. Energy pol icy dr i f ted in Amer ica th roughou t the 1970s even t h o u g h legislat ion for someth ing as radical as the c reat ion of an N O C w a s never in t roduced. In conc lus ion , the ideological a rgument is a necessary, t h o u g h insufficient, explanat ion for the d ivergence in Canad ian a n d Amer ican instrument cho ice . The fact that Canadians and Amer icans v iew the role of gove rnmen t differently mattered greatly. 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Canad ian Journa l of  Poli t ical Sc ience l 9 ( D e c e m b e r ) : 775-93. 73 APPENDIX ill C H A P T E R P - l l C H A P I T R E P -11 An Act to establish a national petroleum Loi creant une societe nationale des petroles company S H O R T T I T L E T1TRE A B R E G E Short title 1. This Act may be cited as the Petro- I. Loi sur la Societe Petro-Canada. 1974- T i t r e . i b r e j t Canada Act. 1974-75-76, c. 61, s. 1. 75-76, ch. 61, art. 1. I N T E R P R E T A T I O N D E F I N I T I O N S " B o i c d " Definition! 2. In this Act, "Board" means the Board of Directors of the Corporation; ^.P°£ , I O N" "Corporation" means Petro-Canada estab-" lished by section 4; " M i n i j i e r " "Minister" means such member of the Queen's Privy Council for Canada as is designated by the Governor in Council as the Minister for the purposes of this Act. 1974-75-76, c. 61, s. 2. 2. Les definitions qui suivent s'appliquent a Definitions la presents loi. «Conseil» Le Conseil d'administration de la • C o m e i i . Societe. tministre» Le membre du Conseil prive de la ; - m i n i , '"*„ Reine pour le Canada charge par le gouver- M " " " e r neur en conseil de I'application de la presente loi. •Societe* La Societe Petro-Canada constitute -Societe. par Tarticle 4. 1974-75-76, ch. 61, art. 2. "Corpora,,**-P U R P O S E O F A C T 3 . The purpose of this Act is to establish within the energy industries in Canada a Crown owned company with authority to explore for hydrocarbon deposits, to negotiate for and acquire petroleum and petroleum prod-ucts from abroad to assure a continuity of supply for the needs of Canada, to develop and exploit deposits of hydrocarbons within and outside Canada in the interests of Canada, to carry out research and development projects in relation to hydrocarbons and other fuels, and to engage in exploration for, and the production, distribution, refining and marketing of, fuels. 1974-75-76, c. 61, s. 3. O B J E T D E L A L O I 3 . La presente loi a pour objet de creer, dans ° b i e l le secteur de la production energetique au Canada, une societe d'Etat, habilitee a recher-cher les gisements d'hydrocarbures, negocier et conclure I'achat de petrole et de produits pet ro-llers a l'etranger afin d'assurer la permanence des approvisionnements au Canada, mettre en valeur et exploiter dans I'interet du Canada des gisements d'hydrocarbures tant au Canada qu'a l'etranger, effectuer des travaux de recher-che et de developpement concernant les hydro-carbures et tous autres combustibles et se lancer dans la prospection, la production, la distribution, le raflinage et la commercialisa-tion des combustibles. 1974-75-76, ch. 61, art. 3. 74 Chap. P-ll Petro-Canada INCORPORATION 4. There is hereby established a corporation, to be known as Petro-Canada, consisting of those persons who, from time to time, compose the Board. 1974-75-76, c. 61, s. 4. CONSTIUTION 4. Est constitute une personne morale, desi-gnee sous le nom de Petro-Canada et composee des personnes qui en forment le Conseil. 1974-75-76, ch. 61, art. 4. Constitution de la Sociele CAPITAL 5 . (1) Subject to sections 22, 24 and 26, (a) the authorized capital of the Corporation shall not exceed five billion. Five hundred million dollars; (b) the common shares of the Corporation shall each have a par value equal to one hundred thousand dollars; and (c) six thousand common shares of the Cor-poration shall be deemed to have been issued and paid for on June 29, 1982. (2) The Minister shall subscribe for the common shares of the Corporation and the amount of each subscription shall be paid out of the Consolidated Revenue Fund at such times as the Corporation may require and the Minister of Finance may approve. (3) In subscribing for any share under sub-section (2), the Minister may pay out of the Consolidated Revenue Fund such amount in addition to the par value thereof as the Gover-nor in Council may from time to time prescribe in respect of the share. (4) The aggregate of amounts paid under subsections (2) and (3) shall not exceed four billion, nine hundred million dollars. (5) The common shares of the Corporation are not transferable and shall be registered in the books of the Corporation in the name of the Minister and held by him in trust for Her Majesty in right of Canada. 1974-75-76, c. 61, s. 5; 1980-81-82-83. c. 105, s. 1. CAPITAL 5 . (1) Sous reserve des articles 22. 24 et 26 : C l P ' " ' ™ ' ° " " a) le capital autorise de la Sociele ne doit pas depasser cinq milliards cinq cents mil-lions de dollars; b) les actions ordinaires de la Societe doi-vent avoir chacune une valeur au pair egale a cent mille dollars; c) six mille actions ordinaires de la Societe sont reputees avoir etc emiscs et liberies le 29 juin 1982. (2) Le ministre souscrit les actions ordinaires Souscription de la Societe. Le montant de chaque souscrip-tion est pa ye sur le Tresor aux dates qu'ap-prouve le ministre des Finances a la demande de la Societe. (3) Le ministre peut payer sur le Tresor, en Somme j . . r . r , . . . . additionnelle sus de la valeur au pair des actions qu il sous-crit, la somme addilionnelle que le gouverneur en conseil present a eel egard. (4) Le montant global verse au titre de la L i m i , e souscription visee aux paragraphes (2) et (3) ne doit pas depasser qualre milliards neuf cents millions de dollars. (5) Les actions ordinaires de la Societe sont inalienables. El les sont inscrites dans les livres de la Societe au nom du ministre. qui en est fiduciaire pour le compte de Sa Majeste du chef du Canada. 1974-75-76, ch. 61, art. 5; 1980-81-82-83, ch. 105, art. I. Action* inalienables OBJECTS, POWERS AND DUTIES 6 . The objects of the Corporation are (a) to engage in exploration for and the development of hydrocarbons and other types of fuel or energy; (b) to engage in research and development projects relating to fuel and energy resources; OBJETS, POUVOIRS ET FONCTIONS 6 . La Societe a pour objet: a) de faire de la prospection pour rechercher et mettre en valeur des sources de combusti-ble ou d'energie, et notamment d'hydrocar-bures; b) d'effectuer des travaux de recherche et de developpement concernant les ressources en combustibles et en energie; Objets Societe Petro-Canada Chap. P-Il (c) to import, produce, transport, distribute, refine and market hydrocarbons of ail descriptions; (d) to produce, distribute, transport and market other fuels and energy; and (e) to engage or invest in ventures or enter-prises related to the exploration, production, importation, distribution, refining and mar-keting of fuel, energy and related resources. 1974-75-76, c. 61, s. 6. 7. The Corporation may do such things as it deems expedient for or conducive to the fur-therance of the objects of the Corporation, within and outside Canada, and, without restricting the generality of the foregoing, the Corporation may (a) carry on any other business that may seem to the Corporation capable of being conveniently carried on in connection with its business or calculated directly or indirectly to enhance the value of or render profitable any of the property or rights of the Corporation; (b) acquire and undertake all or any of the assets, business, property, privileges, con-tracts, rights, obligations and liabilities of any other person who is carrying on any business that the Corporation is authorized to carry on, or who possesses property suit-able for the purposes of the Corporation; (c) apply for or acquire any patents, patent rights, copyrights, trade-marks, formulae, licences, concessions and the like, conferring any right to use, or any secret or other information as to, any invention that seems capable of being used for any of the purposes of the Corporation, or the acquisition of which seems calculated directly or indirectly to benefit the Corporation, and use, exercise, develop or grant licences in respect of, or otherwise turn to account, the property, rights or information so acquired; (</) enter into partnership or into any arrangement for sharing of profits, union of interests, cooperation, joint adventure, recip-rocal concession or otherwise, with any other person carrying on or engaged in or about to carry on or engage in any business or trans-action that the Corporation is authorized to carry on or engage in, or any business or c) d'importer, de produire, de transporter, de distribuer, de raffiner et de commercialiser les hydrocarbures de toutes sortes; d) de produire, de distribuer, de transporter et de commercialiser d'autres combustibles et d'autres sources d'energie; e) de s'engager ou d'investir dans des opera-tions ou des entreprises ayant un rapport avec I'exploration, la production, 1'importa-tion, la distribution, le raffinage et la com-mercialisation de combustibles, d'energie et de ressources connexes. 1974-75-76, ch. 61, art. 6. 7. La Societe peut faire, au Canada et a P 0 " " 0 ' 1 I'etranger, ce qu'elle juge utile a la realisation de ses objets. Elle peut, notamment: a) exploiter toute entreprise qui lui semble compatible avec la sienne ou de nature a accroitre directement ou indirectement la valeur de tout ou partie de ses biens ou droits ou a les rendre profitables; b) acquerir et prendre a sa charge la totalite ou une partie de l'actif, de I'entreprise, des biens, privileges, contrats, droits, obligations et passif de toute autre personne exploitant une entreprise que la Societe a 1'autorisation d'exploiter, ou possedant des biens appro-pries aux fins de la Societe; c) demander, acquerir des brevets d'inven-tion, droits de brevets, droits d'auteur, mar-ques de fabrique ou de commerce, formules, licences, concessions et autres choses de meme nature, conferant quelque droit d'utili-sation ou livrant des secrets ou autres rensei-gnements au sujet d'une invention qu'il semble possible d'utiliser pour I'une quelcon-que de ses fins, ou dont I'acquisition parait de nature a lui profiler directement ou indi-rectement, et utiliser, exercer, mettre en valeur ou faire valoir autrement les biens, droits ou renseignements ainsi acquis, ou accorder des licences a cet egard; d) s'associer ou conclure des conventions, notamment des conventions de partage des benefices, de fusion d'interets, de coopera-tion, de participation, de concessions recipro-ques, avec toute autre personne qui fait ou est sur le point de faire soit des affaires ou une operation que la Societe a 1'autorisation de faire, soit des affaires ou une operation qui peuvent etre faites de facon a profiler directement ou indirectement a la Societe; et preter des fonds a une telle personne, en Chap. P-ll Petro-Canada transaction capable of being conducted so as directly or indirectly to benefit the Corpora-tion, and lend money to, guarantee the con-tracts of, or otherwise assist any such person; (f) acquire and hold shares, debentures or other securities of any other corporation having objects altogether or in part similar to those of the Corporation, or carrying on any business capable of being conducted so as directly or indirectly to benefit the Corpora-tion, and sell or otherwise deal with the same; (J) enter into any arrangements with any government or authority that seem conducive to the attainment of the objects of the Corpo-ration and obtain from any such government or authority any rights, privileges and concessions, and carry out, exercise and comply with any such arrangements, rights, privileges and concessions; (g) establish and support, or aid in the es-tablishment and support of, associations cal-culated to benefit employees or former employees of the Corporation, or the depend-ants or connections of those persons, and make payments towards insurance in respect of those persons; (h) subscribe or guarantee money for chari-table or benevolent objects, or for any exhibi-tion or for any public, general or useful object; (/') promote any corporation for the purpose of acquiring or taking over any part of the property and liabilities of the Corporation, for any other purpose that seems directly or indirectly calculated to benefit the Corpora-tion; (/') acquire, hold, sell, lease, exchange or otherwise deal with any real and personal property and any rights or privileges that the Corporation thinks necessary or convenient for the purposes of its business; (k) construct, improve, maintain, work, manage, carry out or control any works and conveniences that seem calculated directly or indirectly to advance the interests of the Corporation, and contribute to, subsidize or otherwise assist or take part in the construc-tion, improvement, maintenance, working, management, carrying out or control thereof; (/) lend money to persons having dealings with the Corporation, or with whom the Cor-poration proposes to have dealings, or to any garantir les contrats ou lui venir en aide de quelque autre facon; e) acquerir et detenir des actions, obligations ou autres valeurs d'une autre personne morale dont les objets sont en totalite ou en partie semblables aux siens ou qui fait des affaires pouvant etre faites de facon a profi-ler directement ou indirectement a la Societe, et les vendre ou autrement en disposer; J) conclure, avec . tout gouvernement ou toutes autorites, des arrangements qui paraissent favorables a la realisation de scs objets et obtenir, de ces gouvernements ou autorites, des droits, privileges et concessions; mettre en ceuvre ces arrangements et conces-sions et exercer ces droits et privileges, et s'y conformer; g) etablir et maintenir ou aider a etablir et a maintenir des associations de nature a profi-ler a ses employes ou a ses anciens employes, a leurs parents ou aux personnes a leur charge, et effectuer des paiements d'assuran-ces a I'egard de ces personnes; h) souscrire ou garantir des fonds a des fins de charite ou de bienfaisance, ou pour toute exposition ou a toute fin publique, generate ou utile; i) . lancer une personne morale en vue d'ac-querir ou de prendre a sa charge quelque partie des biens et du passif de la Societe ou pour toute autre fin qui parait de nature a profiler directement ou indirectement a la Societe; j) acquerir, detenir, vendre, louer, echanger tous biens meubles et immeubles et tous droits ou privileges qu'elle estime necessaires ou utiles pour ses affaires ou en disposer de quelque autre facon; k) construire, ameliorer, entretenir, mettre en service, administrer, executer ou contrdler les ouvrages et commodites qui paraissent de nature a favoriser directement ou indirecte-ment ses interets et contribuer a leur cons-truction, amelioration, entretien, mise en ser-vice, administration, execution ou contrdle, les subventionner, ou autrement y aider ou y prendre part; /) preter des fonds a des personnes qui trai-tent avec elle ou avec lesquelles elle se pro-pose de trailer, ou a toute autre personne morale dont elle detient un certain nombre d'actions; Societe Petro-Canada Chap. P - l l other corporation any of whose shares are held by the Corporation; (m) draw, make, accept, endorse, discount, execute and issue promissory notes, bills of exchange, bills of lading, warrants and other negotiable or transferable instruments; (n) sell or dispose of any part of the under-taking of the Corporation for such consider-ation as the Corporation thinks fit; (o) apply for, secure, or acquire by grant, legislative enactment, assignment, transfer, purchase or otherwise and exercise, carry out and enjoy any charter, licence, power, au-thority, franchise, concession, right or privi-lege that any government or authority or any corporation or other public body may be empowered to grant, and pay for, aid in and contribute toward carrying the same into effect, and appropriate any of the Corpora-tion's debentures and assets to defray the necessary costs, charges and expenses there-of; (p) procure the registration and recognition of the Corporation in any foreign country or place, and designate persons therein accord-ing to the laws of such foreign country or place to represent the Corporation and to accept service for and on behalf of the Cor-poration of any process or suit; (q) remunerate any other person for services rendered, or to be rendered, in placing or assisting to place, or guaranteeing the plac-ing of, any debentures or other securities of the Corporation; (r) raise and assist in raising money for, and aid by way of bonus, promise, endorsement, guarantee or otherwise, any other corpora-tion with which the Corporation may have business relations or any of whose shares, debentures or other securities are held by the Corporation, and guarantee the performance or fulfilment of any contracts or obligations of any such corporation or of any other person with whom the Corporation may have business relations, and in particular guaran-tee the payment of the principal of and inter-est on debentures or other securities, mort-gages and liabilities of any such corporation; (s) adopt such means of making known the products of the Corporation as seem expedi-ent; (t) distribute to the shareholders of the Cor-poration in kind, specie or otherwise, any ni) tirer, faire, accepter, endosser, escomp-ter, executer et emettre des billets a ordre, lettres de change, connaissements, warrants et autres effets negociables ou transferases; n) vendre ou aliener une partie de son entre-prise pour la contrepartie qu'elle juge adequate; o) demander, obtenir ou acquerir par octroi, disposition legislative, cession, transfert, achat ou autrement, et utiliser toute charte, pcrmis, licence, pouvoir, autorisation, fran-chise, concession, droit ou privilege, qu'un gouvernement, une autorite, une personne morale ou quelque autre organisme public peut accorder, ainsi qu'effectuer des verse-ments, fournir de I'aide ou des contributions en vue de leur donner effet, et affecter une partie de ses obligations et de son actif au paicmcnt des frais, charges et depenses necessaires a cet egard; p) faire enregistrcr et reconnaitre la Societe dans tout pays ou lieu etranger, et y designer des personnes, en conformite avec les lois de ce pays ou lieu, pour la representer et rece-voir la signification de toute assignation ou poursuite pour elle et en son nom; q) rcmunerer une autre personne pour servi-ces rend us ou a rend re, quant au placement, a la participation au placement ou a la garantie du placement de ses obligations ou autres valeurs; r) prclcvcr ct contribucr a prelcver des fonds pour toute autre personne morale, avec laquelle elle peut avoir des relations d'affai-res ou dont elle detient des actions, obliga-tions ou autres valeurs, et I'aider au moyen de bonis, promesses, endosscments, garanlies ou autrement, et garantir l'execution des contrats ou obligations de cette personne morale, ou de toute autre personne avec laquelle elle peut avoir des relations d'affai-res, et, en particulier, garantir le paiement du principal et des interets des obligations ou autres valeurs, des hypotheques et du passif d'une telle personne morale; s) prendre les moyens qui paraissent appro-pries pour faire connaitre ses produits; r) partager entre ses actionnaires, en nature, en especes ou autrement, ses biens ou son actif, y compris tout produit de la vente ou de I'alicnation de I'un quelconque de ses biens et, en particulier, d'actions, obligations ou autres valeurs de toute autre personne 78 Pelro-Camilla Chup. I'-11 property or assets of the Corporation includ-ing any proceeds of the sale or disposition of any property of the Corporation, and in par-ticular any shares, debentures or other securities of or in any other corporation belonging to the Corporation or of which it may have power to dispose, if such distribu-tion, apart from the provisions of this para-graph, would have been lawful if made in cash; (u) establish agencies and branches; (v) invest and deal with the moneys of the Corporation; (w) apply for, promote and obtain any stat-ute, ordinance, order, regulation or other authorization or enactment that seems cal-culated directly or indirectly to benefit the Corporation, and oppose any proceeding or application that seems calculated directly or indirectly to prejudice the interests of the Corporation; (x) take or hold mortgages, hypothecs, liens and charges to secure payment of the pur-chase price, or for any unpaid balance of the purchase price, of any part of the property of the Corporation of whatever kind sold by the Corporation or any money due to the Corpo-ration from purchasers and others, and sell or otherwise dispose of such mortgages, hypothecs, liens and charges; (y) carry out all or any of the objects of the Corporation and do all or any of the things set out in this section as principal, agent, contractor or otherwise, either alone or in conjunction with others; and (z) do all such things as are incidental or conducive to the attainment of the objects and the exercise of the powers of the Corpo-ration. 1974-75-76, c. 61, s. 7; 1984, c. 31, s. 14. morale lui appartenant, ou qu'eile peut alie-ner, a la condition que ce partage, indepen-dammerit du present alinea, eiit ete licite s'il avait ete effectue cn especes; u) etablir des agences et des succursalcs; v) placer et gerer ses fonds; H>) demander, favoriser et obtenir les lois, ordonnances, decrets, ordres, reglements ou autres automations ou dispositions legislati-ves ou reglementaires qui paraissent de nature a lui profiler directement ou indirec-tement; et faire opposition a toute procedure ou demande qui parait de nature a nuire directement ou indirectement a ses interets; x) prendre ou detenir des hypotheques, pri-vileges et charges en vue de garantir le paie-ment du prix d'achat ou du solde impaye du prix d'achat de toute partie de ses biens, de quelque nature, qu'eile a vendus, ou de toute somme qui lui est due par des acheteurs et autres debiteurs et vendre ou autrement alie-ner ces hypotheques, privileges et charges; y) realiser tout ou partie de ses objets et faire tout ou partie des choses enumerees au present article a litre de commettant, de mandataire, d'entreprencur ou autrement, soit seule, soit conjointement avec d'autres; z) faire toutes les autres choses qui sont accessoires ou nccessaires a la realisation de ses objets et a l'exercice de ses pouvoirs. 1974-75-76, ch. 61, art. 7; 1984, ch. 31, art. 14. Effect of approval of certain commitments 8. Where the Governor in Council, on the recommendation of the Minister, the President of the Treasury Board and the Minister of Finance, has approved a commitment by the Corporation that is a guarantee by the Corpo-ration, the approval constitutes the authority for the commitment and all expenditures by the Corporation that arise out of the guarantee. 1980-81-82-83, c. 105, s. 2. 8. Lorsque le gouverneur en conseil, sur £ f r e , d « . . . , j > - j . j I approbation recommandation du ministre, du president du i c c e r l t l M Conseil du Tresor et du ministre des Finances, engagements a approuve un engagement de la Societe sous forme de garantie, cette approbation enterine I'engagement et toutes les depenses faites par la Societe suite a la garantie. 1980-81-82-83, ch. 105, art. 2. 79 Sociele Pelro-Canada Chap. P-II Board of Directors Members Vacancy Re-appoint-menl Remuneration Expenses' BOARD OF DIRECTORS 9. (1) There shall be a Board of Directors of the Corporation consisting of the Chairman of the Board, the President of the Corporation and nol more than thirteen other persons. (2) Each of the directors, other than the Chairman of the Board and the President of the Corporation, shall be appointed by the Minister, with the approval of the Governor in Council, to hold office during pleasure for such term, nol exceeding three years, as will ensure, as far as possible, the expiration in any one year of the terms of office of not more than one-half of the directors. (3) Where the office of a director becomes vacant during the term of the director appoint-ed thereto, the Governor in Council may appoint a director for the remainder of the term. (4) A director may, on the expiration of his term of office, be re-appointed to the Board. (5) A director shall be paid by the Corpora-tion such remuneration as is fixed by the Gov-ernor in Council. (6) A director shall be paid by the Corpora-tion reasonable travel and living expenses incurred by him while absent from his ordinary place of residence in the course of his duties as a director. 1974-75-76. c. 61, s. 8; 1980-81-82-83, c. 105. s. 3; 1984. c. 31, s. 14. C O N S E I L D A D M I N I S T R A T I O N 9. (1) Est cree le Conseil d'administration de Conseil , c, . . . . . . . , d'admimstra-la societe, compose d au plus quinze personnes, t J o n dont le president du Conseil et le president de la Societe. (2) Les administrateurs, sauf le president du Mandat Conseil et le president de la Societe, sont nommes a titre amovible par le ministre, avec ['approbation du gouverneur en conseil, pour des mandats respectifs de trois ans au maxi-mum, ces mandats elani, dans la mesure du possible, echelonnes de maniere que leur expi-ration au cours d'une meme annee touche au plus la moitie des administrateurs. (3) Lorsque la charge d'un administrateur v « a n c e * devient vacante au cours de son mandat, le gouverneur en conseil peut nommer un autre administrateur pour le reste de ce mandat. (4) Le mandat d'un administrateur est Renouveiiement renouvelable lorsqu'il vient a expiration. ' m a n ' (5) La Societe verse aux administrateurs la Remuneration remuneration fixee par le gouverneur en conseil. (6) La Sociele defraie les administrateurs indemnity des depenses de dcplacemenl et de scjour entrainees par I'accomplissement hors de leur lieu ordinaire de residence, des fonctions qui leur sont confiees. 1974-75-76, ch. 61, art. 8; 1980-81-82-83, ch. 105, art. 3; 1984, ch. 31, art. 14. Chairman Presiding at meetings Absence of Chairman Remuneration C H A I R M A N OF THE BOARD 10. (I) The Chairman of the Board shall be appointed by the Governor in Council to hold office during pleasure for such term as the Governor in Council deems appropriate. (2) The Chairman shall preside at all meet-ings of the Board and shall perform such other duties and exercise such powers as are imposed on or assigned to the Chairman under the by-laws of the Corporation or by resolution of the Board. (3) Where at any meeting the Chairman is absent, one of the directors present thereat who is chosen so lo act by the directors present shall preside and has the powers of the Chairman. (4) The Chairman shall be paid by the Cor-poration such remuneration as may be fixed by President du Conseil Presidence des reunions PRESIDENT DU CONSEIL 10. (1) Le gouverneur en conseil nomme a titre amovible le president du Conseil pour le mandat qu'il estime indique. (2) Le president du Conseil preside les reu-nions du Conseil d'administration. En outre, il exerce les autres fonctions et il dispose des pouvoirs que lui attribucnt les reglements admi-nistratis de la Societe ou les resolutions du Conseil. (3) Lorsque le president du Conseil n'assiste Absence du , . . , . • • . president du pas a une reunion, les administrateurs presents conseil choisissent 1'un d'entre eux pour la presider; cet adtninisiraicur dispose alors des pouvoirs du president du Conseil. (4) La Societe verse au president du Conseil Remuneration la remuneration que fixe le gouverneur en con-80 Chap. P - l l Petro-Canada the Governor in Council. 1974-75-76, c. 61, s. 9; 1984, c. 31, s. 14. seil. 1974-75-76, ch. 61, art. 9; 1984, ch. 31, art. 14. President Salary Duties P R E S I D E N T O F T H E C O R P O R A T I O N 11. (1) The President of the Corporation shall be appointed by the Governor in Council to hold office during pleasure for such term as the Governor in Council deems appropriate. (2) The President shall be paid such salary by the Corporation as is fixed by the Governor in Council. (3) The President shall perform such duties and exercise such powers as are imposed on or assigned to the President under the by-laws of the Corporation or by resolution of the Board. 1974-75-76, c. 61, s. 10; 1984. c. 31, s. 14. P R E S I D E N T D E L A S O C I E T E 11. (1) Le gouverneur en conseil nomme a ^ j " " , ' 0 " d u titre amovible Ie president de la Societe pour le p f ' mandat qu'il estime indique. (2) La Societe verse au president le traite- Traitement ment que fixe le gouverneur en conseil. (3) Le president exerce les fonctions et il dispose des pouvoirs que lui attribuent les regle-ments administratifs de la Societe ou les resolu-tions du Conseil. 1974-75-76, ch. 61, art. 10; 1984, ch. 31, art. 14. Fonctions H E A D O F F I C E Head office n. The head office of the Corporation shall be at such place in Canada as may be desig-nated by the Governor in Council. 1974-75-76, c. 61, s. 11. S I E G E S O C I A L 12. Le siege social de la Societe est fixe au Siege social Canada, au lieu designe par le gouverneur en conseil. 1974-75-76, ch. 61, art. 11. Powers of directors and by-laws A D M I N I S T R A T I O N O F C O R P O R A T I O N 13. The Board of Directors of the Corpora-tion shall administer the affairs of the Corpora-tion in all things and make, or cause to be made, for the Corporation any description of contract that the Corporation may by law enter into, and the Board of Directors may make by-laws for (a) the administration, management and control of the property and affairs of the Corporation; (b) the functions, duties and remuneration of all officers, agents and employees of the Corporation; (c) the appointment or disposition of any committees created for the purposes of the Corporation; (d) the declaration and payment of divi-dends; (e) the time and place For the holding of meetings of the Board, the quorum at those meetings and the procedure in all things at those meetings; and (/) the conduct in all other particulars of the affairs of the Corporation. 1974-75-76, c. 61, s. 12; 1984, c. 31. s. 14. G E S T I O N D E L A S O C I E T E 13. Le Conseil gere les affaires de la Societe. Pouvoirs des . , r . , , , , i admimstrateurt II passe ou fait passer pour le compte de la e l r i g | e m c n i , Societe les contrats qu'elle est legalement habi- administratifs litee a conclure. Le Conseil peut prendre des reglements administratifs concernant: a) la direction, la gestion et la surveillance des biens et des affaires de la Societe; b) les fonctions, les obligations et la remune-ration de tous les dirigeants, mandataires et employes de la Societe; c) la nomination et la dissolution des comites crees pour servir les fins de la Societe; d) la declaration et le versement des dividendes; e) les date, heure et lieu des reunions du Conseil, le quorum et la procedure lors de ces reunions; J) la direction, a tous autres egards, des affaires de la Societe. 1974-75-76, ch. 61. art. 12; 1984, ch. 31, art. 14. 81 Sociele Petro- Canada Chap. P - l l B O R R O W I N G P O W E R S P O U V O I R S D E M P R U N T Borrowing powers Approval Delegation of powers Bills and notes 14. (1) When authorized by by-law, the Board of Directors of the Corporation may (a) borrow money; (b) limit or increase the amount to be borrowed; (c) issue debentures or other securities of the Corporation; (d) pledge or sell such debentures or other securities for such sums and at such prices as may be deemed expedient; and (e) notwithstanding section 100 of the Financial Administration Act, secure any such debentures, or other securities, or any other present or future borrowing or liability of the Corporation, by mortgage, hypothec, charge or pledge of all or any currently owned or subsequently acquired real and per-sonal property of the Corporation, and the undertaking and rights of the Corporation. (2) No debentures or other securities of the Corporation shall be issued pursuant to a by-law under this section unless the issuance of the debenture or other security has first been approved in the manner set out in the by-law. (3) Any by-law under subsection (1) may provide for the delegation of such powers by the Board to such officers or directors of the Corporation to such extent and in such manner as may be set out in the by-law. (4) Nothing in this section limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation. 1974-75-76, c. 61, s. 13; 1980-81-82-83, c. 105, s. 4; 1984, c. 31, s. 14. 14. (1) Lorsque les reglements administra- Pouvoirs tifs I'y autorisent, le Conseil d'administration d' mP r u n < peut: a) empruntcr des fonds; b) limiter ou augmenter le montant d'un emprunt; c) emettre des obligations ou d'autres valeurs mobilieres de la Societe; d) donner en gage ou vendre ces obligations ou autres valeurs mobilieres pour les sommes et aux prix qu'il juge avantageux; e) par derogation a Particle 100 de la Loi sur la gestion des finances publiques, garantir ces obligations ou autres valeurs mobilieres ou les emprunts ou engagements actuels ou eventuels de la Societe en grevant d'une hypotheque ou d'un privilege ou en nantis-sant des biens meubles ou immeubles entres ou devant entrer dans le patrimoine de la Societe, et garantir tout element d'entreprise et tout droit de la Societe. (2) Les obligations ou autres valeurs mobilie- Amorisaiion res de la Societe ne peuvent etre emises en application d'un reglement administratif pris en vertu du present' article qu'avec 1'autorisation prealable prevue par ce reglement administra-tif. (3) Un reglement administratif pris en vertu Delegation de du paragraphe (1) peut prevoir une delegation p o u > < " " de pouvoirs par le Conseil aux dirigeants ou administrateurs de la Societe designes par ce reglement et preciser I'etendue et les modalites de cette delegation. (4) Le present article n'a pas pour effet de Leiuade limiter ou de restreindre la possibility pour la iordre' ' ° Societe d'emprunter au moyen de lettres de change ou de billets a ordre etablis, tires, acceptes ou endosses par elle ou pour son compte. 1974-75-76, ch. 61, art. 13; 1980-81-82-83, ch. 105, art. 4; 1984, ch. 31, art. 14. Agent of Her Majesty Corporate duty S T A T U S O F C O R P O R A T I O N 15. (1) The Corporation is, for all purposes of this Act, an agent of Her Majesty in right of Canada. (2) It is the duty of the Corporation in carrying out its business in any province to comply with the laws of that province relating to the conservation of natural resources and applying generally to corporations engaged in S T A T U T D E L A S O C I E T E IS. (I) La Societe est, pour ('application de la presente loi, mandataire de Sa Majeste du chef du Canada. (2) La Societe a, dans I'exploitation de son entreprise dans une province, 1'obligation de se conformer aux lois de cette province qui se rapportent a la conservation des ressources naturclles et qui s'appliquent, de facon gene-Mandataire de Sa Majesti Obligation a titre de personne morale 82 Clin p. I ' - l l Peiro-Canada businesses similar to those in which the Corpo-ration is engaged. 1974-75-76, c. 61, s. 14; 1984, c. 31, s. 14. Property iaj<a 1$. Where title to real property or any inter-est therein becomes vested in the name of the Corporation or Her Majesty pursuant to any acquisition thereof by the Corporation under this Act, the Corporation may pay to a munici-pality or other taxing authority a grant in an amount equivalent to the taxes that might be levied with respect to the property or interest by the taxing authority if the property or inter-est were not so vested. 1974-75-76, c. 61, s. 15; 1976-77, c. 10, s. 53.1; 1984, c. 31, s. 14. Agreement! \-j, The Corporation may enter into such agreements as may be necessary to give effect to section 16. 1974-75-76, c. 61, s. 15; 1976-77, c. 10, s. 53.1; 1984, c. 31, s. 14. rale, aux personnes morales qui exploitent une entreprise semblable a la sienne. 1974-75-76, ch. 61. art. 14; 1984, ch. 31, art. 14. 16. Lorsque sont devolus a la Societe ou a impots roncierj Sa Majeste la propriete de biens immeubles ou un droit quelconque sur ces biens, a la suite de leur acquisition par la Societe en vertu de la presente loi, la Societe peut verser a une admi-nistration fiscale, municipale ou autre, une sub-vention equivalant aux impots que cette admi-nistration fiscale pourrait lever sur ces biens ou ce droit s'ils n'ctaicnt pas devolus a la Societe ou a Sa Majeste. 1974-75-76, ch. 61, art. 15; 1976-77, ch. 10, art. 53.1; 1984, ch. 31, art. 14. 17. La Societe peut conclure les accords Accords necessaires pour donncr suite a I'arliclc 16. 1974-75-76, ch. 61, art. 15; 1976-77, ch. 10, art. 53.1; 1984. ch. 31, art. 14. S T A F F P E R S O N N E L Employment of staff Public Service Superannuation-Act Application of other Acts 18. The Corporation may, notwithstanding any other Act, employ such officers, agents and employees as are necessary for the purposes of the Corporation and, except as provided by section 19, such officers, agents and employees shall be deemed not to be employed in the public service of Canada. 1974-75-76, c. 61, s. 17. 19. (1) The President, officers and employees of the Corporation shall be deemed to be employed in the Public Service for the purposes of the Public Service Superannuation Act and the Corporation shall be deemed to be a Public Service corporation for the purposes of section 37 of that Act. (2) For the of the Government purposes Employees Compensation Act and any regula-tion made pursuant to section 9 of the Aeronautics Act, the Chairman, President, offi-cers and employees of the Corporation shall be deemed to be employees in the public service of Canada. 1974-75-76, c. 61, s. 18. 18. La Societe peut, nonobstant toute autre Empioide loi, employer les dirigeants, mandataires et P * " 0 1 " " employes necessaires a ses fins. Sauf dans les cas vises a I'article 19, ces dirigeants, manda-taires et employes sont censes ne pas etre employes dans I'administration publique fede-rale. 1974-75-76, ch. 61, art. 17. 19. (I) Le president, les dirigeants et les io'Jiu0rn'jtla employes de la Societe sont reputes faire partie  Pfon"°ion ' de la fonction publique aux fins de la Loi sur la publique pension de la fonction publique et la Societe est reputee etre un organisme de la fonction publi-que aux fins de Particle 37 de cette loi. (2) Pour I'appl ica lion de la Loi sur Vindem-nisation des agents de I'Etat et des reglements pris en vertu de I'article 9 de la Loi sur I'aeronauiique, les presidents du Conseil et de la Societe. les dirigeants el les employes de cclle-ci sont reputes faire partie de ('adminis-tration publique federale. 1974-75-76, ch. 61, art. 18. Application d'autres lois Exemption from Financial Administration Act F I N A N C I A L 20. Section 130 of the Financial Adminis-tration Act does not apply in respect of any surplus accumulated by the Corporation for the purpose of meeting its obligations under any debentures or other securities issued by the D I S P O S I T I O N S F I N A N C I E R l i S 20. L'article 130 de la Loi sur la gestion des A P P | i " ' i ° B d e „ , , . , . . lart . IJOde la finances publiques ne s applique pas aux exce- ^ , , u , / „ dents qu'accumule la Societe cn vue de satis- tationdei faire les creances decoulant de valeurs mobilie- ^H1[a"t, res emises par elle, et notamment d'obligations. 83 Societe Petro-Canada Corporation. 1974-75-76, c. 61. s. 19; 1984, c. 1974-75-76, 31, s. 14. art. 14. Chap. P-1I ch. 61, art. 19; 1984, ch. 31, Definition of "dividend" N o dividend) when company insolvent Shares in lieu of dividends Payment of* dividends by company whose assets are of wasting character Liability limited Sums due by shareholder may be deducted D I V I D E N D S 21. (1) In this section, "dividend" includes bonus or any distribution to Her Majesty in right of Canada. (2) No dividend shall be declared when the Corporation is insolvent or that renders the Corporation insolvent or, subject to subsection (4), that will impair the capital of the Corpora-tion, and in determining the solvency of the Corporation for the purposes of this subsection, no account shall be taken of any increase in the surplus or reserves of the Corporation resulting merely from the writing up of the values of the assets of the Corporation, unless the writing up was made more than five years before the date of the declaration of the dividend. (3) For the amount of any dividend that the directors may lawfully declare payable in money, they may issue therefor shares of the Corporation as fully paid up, or they may credit the amount of the dividend on the shares of the Corporation already issued but not fully paid up, and the liability of the holder of those shares thereon is reduced by the amount of the dividend. (4) Nothing in this Act prevents the Corpo-ration, when at least seventy-five per cent in value of its assets are of a wasting character, from declaring or paying dividends out of its funds derived from the operations of the Corpo-ration notwithstanding that the paid-up capital of the Corporation may be thereby reduced or impaired, if that payment does not reduce the value of its remaining assets so that they will be insufficient to meet all the liabilities of the Corporation then existing exclusive of its paid-up capital. (5) Nothing in this section shall be deemed to impose on the. directors any liability of a character specified in section 200 of the Canada Corporations Act, chapter C-32 of the Revised Statutes of Canada, 1970, by reason of a declaration or payment of any dividend per-mitted by subsection (4), or, if the dividend is in excess of the amount so permitted, beyond the amount of that excess. (6) The directors may deduct from the divi-dends payable to Her Majesty all sums of D I V I D E N D E S 21. (I) Au present article, «dividende» s'en- Definition de tend notamment d'un boni ou de toute part de ' d l , l d e n d e , Sa Majeste du chef du Canada dans une repartition. (2) II ne peut etre declare de dividende lors- A u c u n que la Societe est insolvable ou que ce divi- cas'd'insoivabi-dende la rend insolvable ou, sous reserve du lite de la paragraphe (4), entame son capital; pour deter- S x , t t t miner si la Societe est solvable pour l'applica-tion du present paragraphe, il ne peut etre tenu compte de I'augmentation des surplus ou des reserves de la Societe qui decoule uniquemcnt de I'inscription d'une plus-value de I'actif de la Societe que si cette inscription a ete effectuee plus de cinq ans avant la date de la declaration du dividende. (3) Les administrateurs peuvent emettre des Actions en actions entierement liberties de la Societe pour dTvfdendes le montant des dividendes qu'ils pourraient legalement declarer payables en especes ou ils peuvent crediter de ce montant les actions de la Societe deja emises et non entierement liberies, reduisanl d'autant I'obligation y afferente des actionnaires en cause. (4) La presente loi n'a pas pour effet d'empe- « m e £ l d e cher la Societe, lorsque son actif, a raison de i , ' s o c i e t " P " soixante-quinze pour cent de sa valeur ou plus, lorsque i'actif est de nature defectible, de declarer des divi- " ' f d e ™ ' u r e • i J • • r , defectible dendes ou de les payer sur les fonds provenant de ses operations, meme si son capital verse s'en trouve reduit ou entame, pourvu que ce paie-ment ne reduise pas la valeur du reste de son actif a un niveau insuffisant pour faire face a I'ensemble de ses obligations existantes, son capital verse exclu. Responsabilile' Iimiiee (5) Le present article n'est cense imposer aux administrateurs aucune responsabilile de la nature de cclle que precise 1'article 200 de la Loi sur les corporations canadiennes, chapitre C-32 des Statuts revises du Canada de 1970, au titre de la declaration ou du paiement d'un dividende autorise par le paragraphe (4) ou, si ce dividende excede le montant autorise, au-dela du montant de cet excedent. (6) Les administrateurs peuvent deduire des P e " ^ j . M £ d e dividendes payables a Sa Majeste toutes les Jmmaduea par les actionnaires 84 Chap. P-ll Petro-Canada money that are due from Her Majesty to the Corporation on account of calls or otherwise. 1974-75-76, c. 61. s. 20. sommcs qu'clle doit a la Societe par suite notammcnt d'appcls de fonds. 1974-75-76, ch. 61, art. 20. C a p i t a l advances L i m i t Increase o f c a p i t a l R e d e e m a b l e A p p r o p r i a t i o n C a n a d i a n pub l i c o w n e r s h i p inves tments GOVERNMENT ASISTANCE 22. ( I ) Subject to subsection (2), on the recommendation of the Minister and the Minis-ter of Finance, the Governor in Council may, when so requested by the Corporation, author-ize the Minister of Finance to advance to the Corporation, out of the Consolidated Revenue Fund, amounts (a) by way of loans on such terms and con-ditions as the Governor in Council may determine; or (b) by way of purchases of preferred shares to which may be attached such rights, re-strictions, conditions or limitations as the Governor in Council may determine. (2) The amount outstanding of loans or pre-ferred shares under subsection ( I ) shall not at any time exceed one billion dollars. (3) The authorized capital of the Corpora-tion is increased by the amount of any pre-ferred shares issued pursuant to this section. (4) A l l preferred shares issued pursuant to this section shall be redeemable at the option of the Corporation but they need not bear any stated rate of dividends or be cumulative with respect to dividends. 1974-75-76, c. 61, s. 22; 1980-81-82-83. c. 105. s. 6. 2 3 . Additional sums required for the pur-poses of the undertaking of the Corporation shall be paid out of moneys appropriated by Parliament for those purposes. 1974-75-76, c. 61, s. 24; 1980-81-82-83, c. 105. s. 8. 2 4 . (1) Where an amount from the Con-solidated Revenue Fund charged to the Canadi-an Ownership Account established under Energy, Mines and Resources Vote 5c of Appropriation Act No. 4. 1980-81 is invested in shares, debentures, bonds or other evidences of indebtedness of the Corporation to enable it or its subsidiary to acquire shares or property in order to increase Canadian public ownership of the oil and gas industry in Canada, or to repay loans or expenses incurred for that pur-Avances de c a p i t a u x AIDE F1NANCIERE DE L'ETAT 22. (1) Sous reserve du paragraphe (2), sur rccommandation du ministre et du ministre des Finances, le gouverneur en conseil peut, lorsque la Societe le demande, autoriser le ministre des Finances a consentir a la Societe des avances, sur le Tresor : a) soit par voie d'emprunt, selon les inodali-tes que fixe le gouverneur en conseil; b) soit par I'acquisition d'actions privilegiees assorties eventuellement des droits, restric-tions, conditions ou limites que fixe le gou-verneur en conseil. (2) Le montant non rembourse au litre des L i m i t e emprunts ou des actions privilegiees vises au paragraphe (1) ne doit jamais depasser la somme de un milliard de dollars. A u g m e n t a t i o n d u c a p i t a l (3) Le capital autorise de la Societe est augmente a raison du montant des actions pri-vilegiees emises en application du present article. (4) Les actions privilegiees emises en appli- R a c n *< cation du present article sont rachetables a la demande de la Societe. Elles peuvent, toutefois, ne comporter aucun dividende fixe et aucun cffcl cumulatif quant aux dividendes. 1974-75-76, ch. 61, art. 22; 1980-81-82-83. ch. 105. art. 6. 2 3 . Les sommes additionnelles necessaires a I'entreprise de la Societe sont versees sur les deniers que le Parlement affecte a cette fin. 1974-75-76, ch. 61, art. 24; 1980-81-82-83, ch. 105, art. 8. 2 4 . ( I ) Lorsqu'une somme provenant du Tresor imputee au Compte d'accroissement du taux de propricte canadienne ctabli sous le regime du credit 5c (Encrgic, Mines el Res-sources) de la Loi if 4 de 1980-81 portant affectation de credits, chapitre 51 des StatUls du Canada de 1980-81-82-83, est investie dans des actions, des debentures, des obligations ou d'autres titres de creance de la Societe pour lui pcrmcltrc ou pcrmcttrc a ses filiates d'acqucrir des actions ou des biens en vue d'accroitre le A f f e c t a t i o n de cred i ts Invest issemenls destines a j c c r o i l r e le taux de propr ic te canadienne 85 Societe Petro-Canada Chap. P-ll Authorized capital increased Appropriations Tor subsidiary pose, the Corporation shall, at the direction of the Minister, (a) issue in the name of the Minister in consideration for that investment common shares of the Corporation taking into account, in addition to the par value of any such share, such amount as may be pre-scribed by the Governor in Council under subsection 5(3) in respect of any such share; or (b) issue in the name of the Minister in consideration for that investment debentures, bonds or other evidences of indebtedness. (2) The authorized capital of the Corpora-tion is increased by the amount of any common shares issued pursuant to this section. 1980-81-82-83, c. 105, s. 8. 25. Sums required for the purposes of the wholly-owned subsidiary of the Corporation in-corporated pursuant to the direction set out in Order in Council P.C. 1981-2167 of August 5, 1981 shall be paid out or moneys appropriated by Parliament. 1980-81-82-83, c. 105, s. 8. taux de participation canadienne publique au sein de I'industrie du gaz et du petrole au Canada, ou de rembourser des emprunts ou des frais faits a cette fin, la Societe emet, suivant les instructions du ministre et en son nom, en consideration dudit investissement: a) soit des actions ordinaires de la Societe en tenant compte non seulement de leur valeur nominale, mais aussi du montant que peut prescrire le gouverneur en conseil a cet egard conformement au paragraphe 5(3); b) soit des debentures, des obligations ou d'autres titres de creance. (2) Le capital autorise de la Societe aug- Accroissement mente du montant des actions ordinaires emises jutorise' 3 ' conformement au present article. 1980-81-82-83, ch. 105, art. 8. 25. Les sommes requises aux fins de la filiale Affectation de de la Societe, possedee en propriete exclusive et n^'mion de la constitute en conformite avec le decret C P . filiale 1981-2167 du 5 aotit 1981, sont versees sur les credits votes par le Parlement. 1980-81-82-83, ch. 105, art. 8. Sale of Panarctic Oils L td . Purchase price Authorized capital increased Winding-up M I S C E L L A N E O U S 26. (I) The Governor in Council may sell or cause to be sold to the Corporation, at such fair and reasonable price as may be agreed on by the Governor in Council and the Corporation, the whole or any part of the capital stock of Panarctic Oils Ltd. held by the Crown, and the Corporation may, in consideration therefor, issue in the name of the Minister common shares of the Corporation taking into account, in addition to the par value of any such share, such amount as may be prescribed by the Gov-ernor in Council under subsection 5(3) in respect of any such share. (2) Any stock sold pursuant to this section may be sold for cash, shares or securities of the Corporation, as may be approved by the Gover-nor in Council. (3) The authorized capital of the Corpora-tion under subsection 5(1) is increased by the amount and by the number of shares issued under subsection (I). 1974-75-76, c. 61, s. 25; 1980-81-82-83. c. 105, s. 9; 1984, c. 31. s. 14. 27. No law relating to the insolvency or winding-up of any body corporate applies to the Corporation and in no case shall the affairs of the Corporation be wound up unless Parliament so provides. 1974-75-76, c. 61, s. 28. Pria de vente D I S P O S I T I O N S D I V E R S E S 26. (1) Le gouverneur en conseil peut vendre v e m e d e i a ou faire vendre a la Societe, au prix juste et L l d raisonnable dont conviennent le gouverneur en conseil et la Societe, la totalite ou une partie des actions du capital-actions de la Panarctic Oils Lid. detenucs par la Couronne, et la Societe peut, en consideration de ces actions, emcttre au nom du ministre des actions ordinaires de la Societe en tenant compte non seulement de leur valeur nominale, mais aussi du montant que peut prescrire le gouverneur en conseil a cet egard conformement au para-graphe 5(3). (2) Le prix de vente d'actions vendues con-formement au present article peut, si le gouver-neur en conseil y consent, consister en especes ou en actions ou valeurs mobilieres de la Societe. (3) Les actions emises aux termes du para-graphe (1) s'ajoutent en valeur et en nombre au capital autorise de la Societe prcvu au paragra-phe 5(1). 1974-75-76, ch. 61, art. 25; 1980-81-82-83, ch. 105, art. 9; 1984, ch. 31. art. 14. 27. Les lois concernant I'insolvabilite ou la Liquidation liquidation d'une personne morale ne s'appli-qucnt pas a la Societe. Les affaires de la Societe ne sont liquidees que si le Parlement y pourvoit. 1974-75-76, ch. 61, art. 28. Augmentation du capital autorise Q U E E N ' S P R I N T E R F O R C A N A D A © I M P R I M E U R D E L A R E 1 N E P O U R L E C A N A D A O T T A W A , 1985. 

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