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Policy instruments in the American and Canadian oil sectors, 1973-77 : a comparative analysis

University of British Columbia

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, an American NOC would have had to compete with home-based multinationals making it relatively unattractive to governing elites, and unnecessary to the American public. Finally, the differences between Canadian and American institutions are stark and important. Canada's parliamentary system of government fosters public corporations because corporations are easy to create and offer significant benefits to their political masters who can control them. The Canadian government set out to create an NOC in the mid-1970s and came across no obstacles. On the other hand, America's presidential system discourages public corporations. Not only did American Presidents and Congressmen not desire an NOC, but they were unable to legislate what comprehensive oil policy they did desire.

Text

2010-09-09

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http://hdl.handle.net/2429/28309

Political Science

University of British Columbia

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