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Collecting rent : political culture and oil and gas fiscal policy in Alberta, Canada and Norway Phillips, Jeffrey Paul Truman

Abstract

This paper seeks to explain divergent policies toward oil and gas development across two jurisdictions, Alberta, Canada and Norway. Empirical evidence reveals that Norway collects a significantly higher portion of available economic rent from oil and gas activities than Alberta. Edwards (1987) postulates that if we assume governments have similar economic objectives (e.g. to receive the highest possible levels of revenue from the exploitation of a depleting natural resource), then it is to be expected that oil and gas policy outputs in various states would be similar. Why then did Norway develop a policy regime that allows it to capture comparatively higher levels of economic rent? The puzzle is even more interesting given the fact that Alberta and Norway are both advanced, industrialized, mature democracies that share many institutional characteristics. In response to this question, this paper presents a framework that links contemporary variations in rent collection performance to early government policies in Alberta and Norway. Several alternative explanations are tested as a means for understanding these divergent policies: resource differences approaches, bargaining power explanation, and political institutional differences. Finding each of these alternative explanations insufficient, it is argued that fundamental differences in political culture are important for understanding variations in early policies and ultimately in rent collection performance. The implications of this research are important both theoretically and empirically. For one, the analysis overcomes some of the traditional shortcomings of political culture analyses by delineating the specific dimensions of political culture that impacted policy outcomes. The analysis is pushed further by hypothesizing the intervening mechanism linking political culture to policy outcomes, namely motives. On the empirical side, there is a dearth in the political-economy literature dealing with why oil and gas fiscal policy outputs differ between developed states. This research seeks to fill this gap by focusing on how political culture can affect oil and gas policy.

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Attribution-NonCommercial-NoDerivatives 4.0 International

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