ABSTRACT
The National Energy Program (NEP), launched in October 1980, had three basic objectives: security of energy supply, Canadianisation of the oil and natural gas industry, and fairness in pricing and revenue-sharing. The NEP has also adversely affected the rate of economic growth in western Canada, and helped to generate both substantial unemployment and numerous commercial bankruptcies. In effect, higher cost frontier resource developments are being encouraged at the expense of potentially lower cost ones in the western Canadian sedimentary basin, a situation which makes little sense from the point of view of the optimal timing of exploration and development of potential oil and gas pools. From this perspective, one might interpret the $5.4 billion of Alberta incentives, including both drilling incentives and royalty relief, partly as an attempt to redress this imbalance while also shoring up industry revenues more generally.
