Energy 101

The 2001 "Canada Action Plan" Crystal Ball Check

TRANSCRIPT

John Robson

I’m John Robson, and welcome to the Climate Discussion Nexus Crystal Ball Check.

Narrator

The global warming issue depends heavily on computer model forecasts about climate problems that greenhouse gas emissions will supposedly cause decades from now. But it turns out that climate experts and government officials have been making these kinds of forecasts for a long time, warning about things that, by now, should already have happened, if their models are as accurate as they claim.

John

And I think it’s time we checked how good their crystal ball turned out to be. Before we put any trust in their new forecasts, we’re entitled to see how good the old ones were.

For our first trip back to the future, we want to look at this 2001 pamphlet, which the Government of Canada mailed out to people across the country to build support for their costly new climate policy plans two decades ago.

“The Earth is getting warmer … We are changing our climate” the pamphlet warned.

It swept aside any uncertainties and insisted that we are the cause, it’s going to be harmful, and we need to take action now (that is, in 2001) to stop it from happening.

Narrator

The pamphlet went on to list the following predictions:

  • Canadian cities will experience longer and more intense heat waves

  • These heat waves will make air pollution get worse

  • Sea levels on the northern coast of British Columbia will rise by up to 30 cm by 2050

  • Crop yields on the prairies will start declining due to increased droughts

  • There will be more frequent forest fires

  • And water levels in the St Lawrence Seaway will fall by up to 1.25 meters this century

John

Now those warnings sound pretty familiar. We’re hearing them today. But it’s been almost 20 years since the Canadian government declared the debate over and made those predictions in that pamphlet. Let’s see if any of them came true.

More Heat Waves:

Environment Canada’s long term temperature archive for every city in Canada can be seen online at YourEnvironment.ca. Toronto’s records go back to 1840. Summertime daily highs have barely changed over the past hundred years.

Now here are the monthly average daytime highs for June, July and August, the hot months, since 1990. There’s simply no evidence of longer or more intense heatwaves over the past few decades. Use the site to check out other large urban areas in Canada yourself – good luck finding anywhere that shows a trend of longer and more intense summertime high temperatures.

More Air Pollution:

Narrator

Environment Canada maintains air pollution records for most major Canadian cities back to the early 1970s. In 2017 the Fraser Institute took the data and produced this report. It clearly shows that, instead of going up, heat-related pollution levels have been steady or declining in major urban areas for at least the past 20 years.

So far on the government’s predictions, we’re zero for two.

Rising BC Sea Levels

John

Global tide gauge data is maintained by the Permanent Service for Mean Sea Level in Liverpool, England, and it too is all available online. According to the Government’s 2001 pamphlet, sea levels along the northern BC coast should be going up by about 6 cm per decade due to climate change. Northern BC coastal sea levels have been measured at Prince Rupert since 1925. And in fact water levels rose up to the mid-1970s, but since then they haven’t changed much at all. And a little farther north in Ketchikan Alaska, they’re actually going down.

This graph compares what the government forecast and what has actually been observed since the early 1990s. Another wrong prediction.

Falling Prairie Crop Yields

Narrator

Is prairie grain production declining due to drought, or anything else? Statistics Canada has measured annual prairie crop yields since 1908. Since the government published its prediction of falling grain yields, total wheat and canola production on the prairies has soared by over 60%, while spring wheat production per hectare is up about 66%. Another failed prediction.

More Forest Fires

John

The National Forestry Database, again operated by the Canadian government, provides estimates of the number of forest fires every year. The national record goes back to 1970. And the number of forest fires in Canada since 2001, when the pamphlet was published, has actually been going down slightly, not up, as the government’s model forecast.

Declining St. Lawrence Water Levels

Narrator

The government predicted that St Lawrence River water levels would fall so quickly they should be down by about 25 cm by now. The Water Survey of Canada is a government agency that monitors water flow and levels in all major Canadian river systems. Their data collection is easily accessible online.

Here’s the monthly average data for the St Lawrence from the monitoring station near Cornwall Ontario, going back to when the seaway opened in 1959. And here’s a chart of the data up close since 2000, comparing actual St Lawrence levels to the government’s predicted rate of decline. As you can see, the level changes a little from year to year, but it isn’t declining the way the government forecast.

John

So that’s zero out of six predictions right. That’s like striking out twice in one at-bat. Their forecasting model did far worse than random guessing would have.

It would be bad enough if they made all these mistakes while admitting that the science is uncertain and needs to be debated, and that climate is complex. But they were doing the opposite.

Already two decades ago they had shut down the idea of a debate and insisted that the science was settled. But the science that produced these forecasts was hopelessly inaccurate. The government used worthless computer projections to engage in fearmongering aimed at silencing critics and intimidating Canadians into supporting a costly policy agenda.

Narrator

So you don’t have to take at face value any of the government’s current forecasts about the supposed dangers of climate change until they can explain why so many of their past predictions were wrong.


About the Author

Dr. John Robson is Executive Director of Climate Discussion Nexus. He holds a Ph.D. in American History from the University of Texas at Austin and has worked as a historian, policy analyst, journalist and documentary filmmaker for three decades. He has been examining the climate change issue for many years, including both the science and the policy debates.

The "97% Consensus" slogan


TRANSCRIPT

There are so many empty slogans out there I wish we could tackle all of them at once. But the “97% of scientists agree” is surely the elephant in the room. Lots of people have tried to rebut it by dismissing the notion of consensus itself, or by praising the historical examples of renegade scientists who went against a prevailing consensus and turned out to be right. But that unnecessarily concedes the major claim itself, which the evidence shows is simply not true. I hope you enjoy the video, and that you’ll share it widely.
-JR

Narrator

The claim that 97% of the world’s scientists agree is pretty much the ace of trumps in the whole climate debate. After all, who’s going to argue against a consensus that strong, backed by so many experts. But what exactly are they supposed to agree on? If you look behind the curtain, no one seems sure what the experts actually said. Or who they are. Or… anything.

John

At first glance it seems straightforward enough. In 2013 President Barack Obama famously tweeted that “Ninety-seven percent of scientists agree: #climate change is real, manmade and dangerous.”

In 2014, his Secretary of State John Kerry said 97% of “the world’s scientists tell us this is urgent.” And that same year, CNN said “97% of scientists agree that climate change is happening now, that it’s damaging the planet and that it’s manmade.”

Narrator

That’s pretty much what most people think when they hear the 97% slogan: Every scientist believes man-made climate change is an urgent crisis.

But there are millions of scientists in the world. How many exactly were surveyed? When were they surveyed? Who did it? And what exactly did they agree on?

John

Let’s find out. I’m John Robson and this is a Climate Discussion Nexus Fact Check on the 97 percent consensus slogan.

To begin with, there are some ideas that pretty much all scientists accept. For instance that birds are descended from dinosaurs, though that idea was once dismissed as highly eccentric. And when it comes to climate, you don’t need a poll to tell you that carbon dioxide is a greenhouse gas, meaning it likely has some overall warming effect. That’s been known since the mid-1800s. And if you did do a survey, you would find overwhelming scientific agreement on that point.

Also, there are lots of indications that the world is somewhat warmer now than it was in the mid-1800s, the end of a natural cooling period called the Little Ice Age.

Finally, virtually nobody disputes that humans have changed the environment of our planet, by releasing emissions into the air, changing the land surface, putting things in the water, and so forth.

These aren’t controversial ideas, and they’re accepted even by most climate skeptics. What we don’t accept is that any of them prove that humans are the only cause of global warming, or that climate change is a dangerous threat.

If 97% of scientists believed that, it would be troubling. Though even so, we’d still have to find some plan whose benefits outweighed its costs. In any event, that level of consensus that the problem was manmade and urgent would certainly be noteworthy. But the thing is, they don’t agree on that.

A close look at what survey data we have, and there isn’t much, tells us, yes, there is a great deal of agreement that CO2 is a greenhouse gas to some degree, that the Earth has warmed in the last 160 years, and that humans affect their surroundings. But that survey data also tell us there’s far less agreement on everything else including whether we face a crisis.

So where did this 97% claim come from and why is it so widely repeated?

Narrator

The 97% claim seems to have begun with a historian of science named Naomi Oreskes who, in 2004, claimed she’d looked at 928 articles about climate change in scientific journals, that 75% of them endorsed the “consensus view” that “Earth’s climate is being affected by human activities” and that none directly disputed it.

By 2006, in Al Gore’s An Inconvenient Truth, this finding had somehow morphed into “a massive study of every scientific article in a peer-reviewed journal written on global warming for the last 10 years and they took a big sample of 10%, 928 articles, and you know the number of those that disagreed with the scientific consensus that we’re causing global warming and that it’s a serious problem? Out of the 928, zero.”

John

That was a fib. Gore took a study that found 75% endorsed the idea that humans have some effect on climate and turned it into proof that 100% of scientists believe it’s a serious problem. It does no such thing.

Narrator

And nor do the handful of other surveys on the subject. For instance five years later, in 2009, a pair of researchers at the University of Illinois sent an online survey to over 10,000 Earth scientists asking two simple questions: Do you agree that global temperatures have generally risen since the pre-1800s? and Do you think that human activity is a significant contributing factor? [Note: They asked some other questions too, but didn’t report the questions or results in the publication.]

John

They didn’t single out greenhouse gases, they didn’t explain what the term “significant” meant and they didn't refer to danger or crisis. So what was the result?

Narrator

Of the 3,146 responses they received, 90 percent said yes to the first question, that global temperatures had risen since the Little Ice Age, and only 82 percent said yes to the second, that human activity was a significant contributing factor.

Interestingly, among meteorologists only 64 percent said yes to the second, meaning a third of the experts in the study of weather patterns who replied didn’t think humans play a significant role in global warming, let alone a dominant one.

What got the most media attention was that among the 77 respondents who described themselves as climate experts, 75 said yes to the second question. 75 out of 77 is 97%.

John

OK, it didn’t get any media attention that they took 77 out of 3,146 responses. But that’s the key statistical trick. They found a 97 percent consensus among 2 percent of the survey respondents. And even so it was only that there’d been some warming since the 1800s, which virtually nobody denies, and that humans are partly responsible. These experts didn’t say it was dangerous or urgent, because they weren’t asked. [Note: or as noted above, if they were the results weren’t reported.]

So far the claim that 97% of “world scientists” are saying there’s a climate crisis is pure fiction. But wait, you say. There must be more. Yes, there is. But not much.

Narrator

Another survey appeared in 2013, by Australian researcher John Cook and his coauthors, in which they claimed to have examined about 12,000 scientific papers related to climate change, and found that 97% endorsed the consensus view that greenhouse gases were at least partly responsible for global warming. This study generated headlines around the world, and it was the one to which Obama’s tweet was referring.

John

But here again, appearances were deceiving.

Two-thirds of the papers that Cook and his colleagues examined expressed no view at all on the consensus. Of the remaining 34%, the authors claimed that 33% endorsed the consensus. Divide 33 by 34 and you get 97%. But this result is essentially meaningless, because they set the bar so low.

The survey authors didn’t ask if climate change was dangerous or “manmade”. They only asked if a given paper accepted that humans have some effect on the climate, which as already noted is uncontroversial. It could mean as little as accepting the “urban heat island” effect.

So a far better question would be: How many of the studies claimed that humans have caused most of the observed global warming? And oddly, we do know. Because buried in the authors’ data was the answer: A mere 64 out of nearly 12,000 papers! That’s not 97%, it’s one half of one percent. It’s one in 200.

And it gets worse. In a follow-up study, climatologist David Legates read those 64 papers and found that a third of them didn’t even say what Cook and his team claimed. Only 41 actually endorsed the view that global warming is mostly manmade. And we still haven’t got to it being “dangerous”. That part of the survey results was simply invented, by politicians and activists.

Other researchers have condemned the Cook study on other grounds too. For instance economist Richard Tol showed that over three-quarters of the papers counted as endorsing even the weak consensus actually said nothing at all on the subject. And evidence later emerged that the authors of the paper were drafting press releases about their findings before they even started doing the research, which indicates an alarming level not of warming or of consensus but of bias.

The reality is that neither this study, nor a handful of others like it, prove that 97% of scientists believe climate change is mostly manmade, let alone that it’s a crisis. The fact that people who claim to put such stock in “settled science” accept such obvious statistical hocus pocus is both astounding and disappointing.

Narrator

So what do climate experts really think? The year before Obama sent out his tweet, the American Meteorological Society (AMS) surveyed its 7,000 members. They got about 1,800 responses. Of those, only 52% said they think global warming over the 20th century has happened and is mostly manmade. The remaining 48% either think it happened but is mostly natural, or it didn’t happen, or they don’t know. And while it’s possible that the three-quarters who didn’t answer split the same way as those who did, it’s also possible that committed alarmists are more likely to answer such surveys. In any case, it’s a small sample, even of AMS members, let alone of the world’s scientists.

John

There was one more survey a few years later by the Netherlands Environment Agency that claimed 66% of climate experts believed humans were mostly responsible for warming since 1950. Which falls far short of 97% even if it outperforms the other studies.

A social psychologist named Jose Duarte, who specializes in survey design, published an analysis of that one, pointing out that they diluted the sample by including large numbers of psychologists, philosophers, political scientists, and other non-experts, making their results meaningless as a measure of what scientists think. Just as you’ll find that the people who cite that 97% number are overwhelmingly not trained scientists, certainly not trained statisticians.

Narrator

So we’re no farther ahead than when we began. Most experts agree on the basics, namely that carbon dioxide is a greenhouse gas and probably causes some warming and that humans have some impact on climate probably including some warming. But they actively debate the rest: How much warming will there be? Is it a problem? Should we try to stop it, or adapt, or wait and see? These are all important questions and we need good answers.

John

And there's the claim that many of the world’s national science academies, representing hundreds of thousands of scientists across the globe, have issued statements supporting the consensus about global warming and demanding government efforts to cut emissions. The problem is, not a single one of those societies took a survey of their members before issuing their statements in the name of their members. The statements were put out by a small number of activists using their committee positions to make it look as though their views are shared by all the world’s experts. But if they are, why didn’t these authors survey their members before publishing the statements?

There are a couple of other studies that claimed to prove a consensus. But they run into the same problems. All they show is wide agreement on the uncontroversial bits. They offer no information about whether a majority of scientists think global warming is a crisis. And then they’re spun wildly by non-scientists to tell us things they don’t begin to say, often about questions they didn’t even attempt to investigate .

The problem isn’t just that we don’t know what percentage of scientists agrees with this or that statement about global warming. It’s something much worse. All this talk of a 97% consensus amounts to a dishonest bullying campaign to stifle scientific debate just when we need it most because the question looms so large in public policy.

As physicist Richard Feynmann once said, “I would rather have questions that can't be answered than answers that can't be questioned.” And that’s especially true when we’re asked to take drastic action based on those answers.

Not long ago that survey expert I mentioned earlier, Jose Duarte, warned his fellow scientists about the negative consequences of claiming consensus. He said:

“It is ill advised to report a consensus as though it is an aggregation of independent judgments. Humans are an ultrasocial species, and dissent is far costlier than assent to a perceived majority… A scientist who contests the prevailing narrative on human-caused warming, or merely produces smaller estimates, will likely end up on a McCarthyite blacklist of ‘deniers’. Self-described mainstream climate scientists refer the public to such lists, implicitly endorsing the smearing of their colleagues. This is disturbing, and unheard of in other sciences.”

The unfortunate truth is that there is strong political pressure for climate experts not to question claims of impending doom. Those who do so face steep personal and professional costs, including a barrage of abuse that can be highly unpleasant for people who mostly wanted to devote their lives to the quiet pursuit of knowledge not to noisy polemics. And that means we should listen carefully to them when they feel compelled to speak out anyway.

Whether they represent 50%, or 10%, or 3% of experts, what matters is the evidence they bring and the quality of their arguments.

And on that, I would hope we have 100 percent agreement.

For the Climate Discussion Nexus, I’m John Robson.


About the Author

Dr. John Robson is Executive Director of Climate Discussion Nexus. He holds a Ph.D. in American History from the University of Texas at Austin and has worked as a historian, policy analyst, journalist and documentary filmmaker for three decades. He has been examining the climate change issue for many years, including both the science and the policy debates.

Economic Report | Part 5: Leveraging Opportunities, Diversifying Canada's Oil and Natural Gas Markets

CAPP’s Vision for the Future of Canada’s Oil and Natural Gas Industry

For more than 150 years, Canada’s oil and natural gas industry has been a reliable and affordable supplier of energy for all Canadians, and has improved the future of our nation. From spurring economic growth to developing major nation-building energy projects, our country’s energy sector is woven into the fabric of our nation, and is as much a part of Canada as the maple leaf.

The Canadian Association of Petroleum Producers (CAPP) represents an energy industry that is looking to the future – one that values sustainable development practices and lower-carbon processes. With a growing world where many emerging economies need a variety of energy products, we want to help create a vision for Canada’s oil and natural gas industry that recognizes the significant role our resources play in the world’s future energy mix.

Canada has taken a leadership role in becoming one of the world’s most responsible oil and natural gas producers, recognizing resource development needs to be done in a responsible manner. The onus is on all Canadians to ensure we remain the world’s energy supplier of choice.

Our joint vision for the future needs to look at the big picture – a global view of the long term that includes access to world markets, effective regulatory outcomes, commitments to innovation, global climate leadership, and enabling a strong, reliable and dynamic fiscal framework.

We need collaboration between industry and all levels of government to rebalance the playing field and restore our country’s competitiveness to benefit all Canadians, not just the oil and natural gas industry. We can satisfy the world’s demand for energy but to do so we need to work collectively to create an ambitious plan for the future.

Together we can provide the world with the energy of tomorrow.

Sincerely,

Tim McMillan

President and CEO, Canadian Association of Petroleum Producers



About the Author

The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada's upstream oil and natural gas industry. We enable the responsible growth of our industry and advocate for economic competitiveness and safe, environmentally and socially responsible performance.

Lougheed Challenges the 'Eastern Bastards' and National Energy Program

In 1971, Peter Lougheed became the Progressive Conservative Premier of Alberta. A moderate by international standards, Lougheed enraged petroleum producers by retroactively changing the royalty maximums written into long-term petroleum leases, causing a sense of betrayal in the oil patch. The Seven Sisters had been generous to Alberta, which had been one of the poorest provinces in the country before the oil boom, but the electorate supported Lougheed’s move.

A month before the Yom Kippur war broke out in November 1973, Ottawa had announced that it would finally extend the Alberta-Ontario pipeline into Quebec, which in 1961 had refused western oil because foreign imports were slightly cheaper and the security of supply seemed irrelevant due to the international oil glut. Now, amid rising prices and market uncertainty, Ottawa asked Alberta producers to voluntarily freeze their domestic price until the end of January. Insult was added to injury two weeks later when the federal Energy Minister Donald Macdonald imposed a 40-cents-per-barrel export tax on crude oil.

The rush of petroleum discoveries in the western provinces through the late 1940s and 1950s were developed in the teeth of persistently low prices. Even so, Quebec refused to buy Canadian oil because offshore supplies were slightly cheaper. The federal government’s provocation aimed to raise money so Ottawa could continue to subsidize increasingly expensive foreign crude to Quebec and the other eastern provinces. Also suspected was to deter exports so domestic supply would be kept artificially high and prices artificially low.

The federal taxation on provincially owned resources was an unprecedented attack and exacerbated inter-provincial tension created by Ottawa, being antagonistic toward the western provinces since Confederation. With an upcoming election, and the Liberal government in a minority position, the goal of the deliberate confrontation with Alberta was to earn votes and popularity in their eastern stronghold. With the Arab embargo in place, Macdonald then raised the export tax fivefold to $1.90 per barrel, costing western producers $1 billion annually.  

The angry Ottawa-Alberta confrontation spawned the widely posted bumper sticker with the slogan, “Let Those Eastern Bastards Freeze in the Dark”.

In the seven years between 1973 and 1980, Alberta’s Oil Boom brought incredible wealth to the once-destitute province, the oil patch headquarters in Calgary, their employees, and the economy beyond the petroleum industry itself. The cradle of the Oil Boom was the repository of petroleum that geologists called the Western Canadian Sedimentary Basin, which stretched from the 49th parallel northward on a swath from central Manitoba to northeast British Columbia, to the Beaufort Sea and the Arctic Islands.

The men who managed it were the first generation of postwar, post-Leduc boom professional leadership. Having successfully explored the Basin in the 1950s and 1960s, they knew the sweat and grit of the fieldwork first-hand. They had drilled wells and laid pipelines before graduating to the executive suites in which they recreated the Alberta economy, building a foundation of prosperity of future generations. Before OPEC started ratcheting up oil prices, Alberta was poised for a decade of exceptional growth, with a new energy and confidence in the Canadian oil industry and among the 250 independent explorers and producers. The boom was executed by this group of entrepreneurs who blended roughneck aggressiveness with the practical creativity of western farmers. The oil boom was directly and indirectly responsible for the creation of tens of thousands of jobs in Alberta during the 1970s. At the drilling rigs, it was filthy, back-breaking, dangerous work and the rig was run like a military bootcamp. Young men came of age making lots of money while the work tested their strength and character.

Lougheed inherited his opinion that the first step to a diversified Alberta economy was the production of oil and gas processed at home from his grandfather, Senator Sir James Lougheed, who had invested profitably in Alberta’s first commercial oil discovery at Turner Valley in 1914. Lougheed had a circle of Canadian oilmen with whom he conferred, but even as producers applauded his toughness with the federal government, they took issue with his interventionist mindset and eagerness to tinker with the royalty regime. That said, criticism from outsiders was not welcomed: “He may be a son of a bitch, but he’s our son of a bitch,” one influential executive told the national newspaper Globe and Mail.

At the closing of the fall session of the Legislature in 1978, Lougheed said he was now convinced that Ottawa, backed by a few other provinces, might try to take over Alberta’s energy resources in the name of national interest. Liberal Prime Minister Pierre Trudeau called the long-awaited federal election on May 22, 1979 and campaigned primarily on his plans to patriate the constitution and his government’s economic record – a shaky platform. The public didn’t share Trudeau’s grand constitutional vision and the country suffered from a sluggish economy, double-digit unemployment, rising government debt, and a slumping dollar. On election day, the Conservatives formed a minority government. However, by 1980 the Liberals were back in government with a majority and zeroed in on Alberta to turn around Ottawa’s deteriorating finances.

On October 21, 1980 federal Finance Minister Allen MacEachen and Energy Minister Marc Lalonde of the Liberal government unveiled the government’s National Energy Program (NEP). The Prime Minister hoped to treat Ottawa’s increasing deficit problems with an extra injection of oil money from Alberta, which was already contributing a healthy amount to federal coffers, and he was determined to make his mark on history by patriating the constitution. To achieve these aims, he needed concessions from Lougheed on energy revenue and provincial rights – concessions the Premier was unwilling to make. His government reflected Albertans’ firm belief that they deserved their hard-earned profits as well as a larger voice in national affairs. Therefore, Alberta found itself in direct conflict with Trudeau’s vision of Canada as a nation of two founding peoples held together by an all-powerful central government. Lalonde said it was time for Ottawa to “seize control” of Canada’s energy resources in the name of “fairness to all Canadians.

The Alberta government’s response to the NEP was immediate and decisive; 48 hours after it was unveiled, Lougheed went on province-wide television to inform Albertans that “the Ottawa government has, without negotiation, without agreement, simply walked into our home and occupied the living room.” The federal budget and energy measures were more than just another round of simmering energy conflict between Ottawa and Alberta, explained Lougheed, “they are an outright attempt to take over the resources of this province, owned by each of you as Albertans.” He warned that the federal program directly threatened the constitutional rights of ordinary Albertans.

The Premier fought back hard with high-risk decisions. He announced that over the next nine months, beginning March 1, the province would reduce its oil output by 15 percent. Shipments of oil to the rest of Canada would be cut by 180,000 barrels per day, and $16 billion earmarked for the oil sands and heavy oil development would be re-evaluated and possibly shelved. Alberta would launch a legal challenge to the new export tax on natural gas. After eighteen months and the third round of output cutbacks, Lougheed and Trudeau signed a five-year energy pricing agreement on September 1, 1981, which was not well-received by industry.

By this time, there was a high surplus of crude oil in the international markets caused by falling demand following the 1970s energy crisis and 1980 marked a six-year decline in the price of oil, which reduced the price by half in 1986 alone. Additionally, a severe global economic recession across the developed world that began in the late 1970s left high unemployment until at least 1985 and Canada experienced high inflation at an average of 12 percent, and high interest rates, with the Bank of Canada’s rate hitting 21 percent in August 1981. The Alberta government had wanted to avoid a protracted war with Ottawa and the severity of the province’s response to the NEP was calculated to force the federal government to the table, and it worked. In less than twelve months there was a new deal and Alberta shelved the threatened production cuts.

Throughout the 1970s and early 1980s the notion that Albertans were obliged to share their “windfall” resource wealth was the keystone of federal Liberal policy towards the province. Implicit in this argument was the suggestion that Albertans were not sharing their good fortune with the rest of the country, and were, therefore, greedy and un-Canadian. In reality, the federal government confiscated $139 billion in net transfers between 1961 and 1992 from Alberta to the country’s ‘have-not provinces’, specifically Quebec, Ontario, and the Atlantic provinces. By 1985, the NEP and its related tax policies had resulted in this net transfer of wealth from the producing provinces, where 90 percent of this had been taken from Alberta. Th assessment and figures, determined by economist Robert Mansell from the University of Calgary, indicated that Alberta had been subjected to the largest per capita transfer of wealth ever recorded in a democratic nation.

In a 2001 interview, Lougheed reflected that the West had turned against Trudeau after 1968 for three reasons. First, he suffered from a “lack of knowledge” of western issues. Second, his policies catered to his political base in Quebec and Ontario. Finally, “more than anything”, he came across as someone who
thinks he knows it all” and westerners found this offensive. Lougheed said the relationship with Ottawa always seemed to come down to a desire to “control” Alberta: “They see us as being able, physically, to be independent and that means we would have influence with other provinces. When I look back on the Heritage Fund and the Canadian Investment Division, we just thought we should be participating in the Canadian mosaic. But actually … lending money to Nova Scotia and Newfoundland just drove the federal bureaucrats wild. It shook the foundations of their position. We probably, in hindsight, shouldn’t have done that … [but] we though we were expressing our patriotism.


Source: Alberta in the Twentieth Century, Volume Eleven, Lougheed and the War with Ottawa; CanMedia Inc.

Birth of the Global Oil and Gas Industry and OPEC

In August 1859, former railway conductor Edwin Drake struck oil at 69 feet after piecing together the world’s first oil well drilling rig – powered by a steam engine – in Titusville, Pennsylvania, USA - population 125. Within fifteen months, 75 wells were producing there and when these original reserves ran out, exploration shifted to other sources in the hills of northwestern Pennsylvania by more than 16,000 drillers over the next decade.

With uneven success in these early days, the price of oil fluctuated wildly between 50 cents and $10 a barrel. Since the major oil product in those days was kerosene, used for lighting lamps, a tug-of-war between drillers and refineries began, where drillers kept oil supplies and prices in flux due to the uncertain nature of exploration, but the manufacturing operations of refineries benefited from a steady flow of low-priced crude.

John D. Rockefeller, a trader from Cleveland, started in oil refining when a rail line linked his Ohio hometown with western Pennsylvania. By the late 1860s, the industry was in a glut, with far more oil and perhaps three times as much refining capacity as the market needed. Rockefeller came up with a legal plan to restore order by uniting the entire American refining industry at a time when there was an abundance of local competitors in the United States, making anti-trust laws unnecessary.

He started Standard Oil and persuaded many rivals to contribute their refineries in exchange for a stake in the publicly traded company. Holdouts found themselves facing brutal competition in their regional markets, often from firms that appeared to be independent but actually belonged to Standard, and few rebels survived. As its muscle strengthened, Standard secretly negotiated lower freight rates with the railways and, in a brazen demonstration of monopoly power, charged them a kickback fee for every barrel of crude shipped by its competitors. 

Crude oil was initially shipped in whiskey barrels, which became the industry’s standard measure of volume. At times, a wooden barrel cost more than the oil it contained.

In a desperate move to break the Standard stranglehold on refining and transportation, petroleum producers united behind a daring scheme to construct a long distance pipeline in 1879, but Rockefeller swiftly outdid them by building his own pipelines. It was the last domestic challenge to Standard’s dominance in the American and Canadian markets. In 1880, sixteen Ontario refiners had united as Imperial Oil, which would remain Canada’s largest petroleum company, but the province’s oil production base was weak and in 1896 Standard bought control of Imperial. In the late 1880s, as Pennsylvania’s reserves dwindled, an oil rush began in Ohio and Indiana and the price of oil plummeted to 15 cents a barrel. In response to the glut, Rockefeller decided Standard should acquire its own oil fields and soon controlled reserves that fed his expanding network of refineries. As the twentieth century began, what was previously almost worthless gasoline, a by-product of kerosene production, started to beat out electricity and steam as fuel for the newly invented automobile.

In 1892, Ida Tarbell, the daughter of a Titusville oilfield equipment manufacturer, wrote a 24-part expose for McClure’s magazine, outlining Standard’s dealings that included espionage against competitors and systemic bribes to politicians. Her anti-monopoly advocacy impressed President Theodore Roosevelt, who was elected in 1901 and utilized the 1890 Sherman Act to launch 45 actions against railways, tobacco, beef, steel, and other industries. Roosevelt said the directors of Standard were criminals and a government lawsuit that lasted from 1906 to 1911 found Standard guilty of restraining trade, ordering the company to dissolve. Standard was carved up into 38 companies, divided along geographical lines, including Standard Oil (later renamed Exxon) in New Jersey, which became the largest oil company in the world, Socal (Standard Oil of California), Standard of New York (Mobil), Gulf Oil (Texas) and Texaco (Texas). The five majors faced two foreign rivals of their stature: Royal Dutch/Shell and British Petroleum.

As gasoline-powered automobiles proliferated the globe, especially North America, these majors – who became known as the Seven Sisters – sought to control the largest possible portion of the cash flow. The corporate ideal within the oil patch became ownership of the entire chain of petroleum operations from wellhead to gas pump, of a vertically integrated system run by self-capitalizing firms. Exxon and Shell, though strongest in the retail market, were weakest at producing crude and therefore expanded overseas into countries such as Saudi Arabia and Venezuela, becoming the first multinational corporations.

As a result, the world’s first oil cartel took shape in the Middle East. In the 1920s, Shell, BP, Exxon, and Mobil divided up Iraq and in 1934 Gulf and BP signed an exclusive production deal with Kuwait, a tiny country whose largest economic asset was a small wooden fishing fleet. That same year, the additional Sisters from the United States moved into Saudi Arabia, a country of which its entire treasury could then fit into a camel’s saddlebag, and King Ibn Saud was desperate for cash to keep his two-year-old country together. An alliance of Socal and Texaco came up with a short-term payment of USD $275,000 in gold plus USD $25,000 per year in exchange for 60-year leases of lands which proved more prolific than the entire United States. To ensure access to markets, the first two Sisters later cut Exxon and Mobil into the Saudi deal.

In 1928, Exxon, Shell, and BP had held secret meetings to deal with the threat posed to their European markets by cheap crude from Communist Russia and this private volume and price fixing soon expanded worldwide. For decades, the Sisters agreed to sell oil to countries overseas at a price competitive with the cost of Texas crude if it were shipped into that market. The arrangement meant lavish profit margins for majors producing in the Middle East, since oil there was much cheaper to pump and transport to Europe and Asia.

By negotiating with each other, the Sisters determined which countries would produce how much oil at what price for consumers. Major industrial powers in Europe and Asia, provided with oil at a price that permitted excellent rates of economic expansion, did not interfere. The United States accepted the practice, which ensured that domestic production was not affected by a flood of cheaper oil from Venezuela and the Middle East. American governments realized that oil was a strategic commodity and that security of supply was more important than low prices. Inevitably, the producing countries resented the lavish profits earned by the companies, despite themselves not having the technological ability and market power.

This frustration came to a head in 1938, when Mexican workers went on strike and the Mexican government ordered the employers to meet their demands. When they refused, President Lazaro Cardenas nationalized the industry. American, British, and Dutch companies boycotted the new state-owned company, Petroleos Mexicanos, shutting its production out of their refineries and markets. Although some Mexican oil found its way to market after the Second World War began, it was no match for the flood the majors were pumping out of Venezuela, which, by 1946, was the world’s largest producer aside from the United States.

Venezuela, aware that its reserves were limited compared to the Middle East, took advantage of its temporary pre-eminence in production. In 1948, the country successfully insisted that petroleum profits be split 50-50 between producing companies and the government. Within two years, Saudi Arabia won the same deal. When BP refused to compromise in Iran, Prime Minister Mohammed Mossadeq nationalized the country’s oil fields in 1951. Iranian oil then vanished from the market and reappeared without a ripple in oil prices since the world was still awash in crude.

Advocates from producing states, who wanted higher oil prices and a larger percentage of oil revenue, realized that the Seven Sisters were financing their empires of refineries, pipelines, and tankers entirely from huge internal profits. They saw the opportunity to exploit the geographical concentration of the world’s oil exports from Venezuela, Saudi Arabia, Iran, Iraq, and Kuwait, which accounted for 80 percent of the world’s oil exports by the end of the 1950s. Venezuela urged the others to create a producer cartel to mirror that of the Sisters, arguing they could achieve higher revenues by using quotas to match their oil output to world demand.

In 1960, Exxon, followed by the other majors, unilaterally imposed a stiff oil price-cut without consulting exporting nations. Infuriated, the five largest producers formed the Organization of Petroleum Exporting Nations (OPEC) in response, which initially had little impact due to the ongoing surplus of crude oil.

Aside from Communist nations, total oil consumption tripled from 15 million barrels a day in 1955 to 45 million by the end of 1973. Oil and natural gas rose from 38 percent of total world energy consumption in 1950 to about two-thirds in the 1970s, replacing coal. American petroleum production peaked and then entered an irreversible decline by 1970, though still demand grew.

The Seven Sisters lost their grip over the world market starting with Libya. Oil began flowing in the country in the early 1960s, accounting for 25 percent of western Europe’s supply by 1969 – the year corrupt King Idris was replaced by Colonel Muammar al-Qaddafi through as military coup. The Libyans had been careful to ensure that half of their oil was produced by independents rather than the majors. In 1970, the new dictator’s regime threatened to bankrupt Occidental, an independent, by curbing its allowable production. Desperate for oil, Occidental founder Armand Hammer agreed to higher prices and a more generous share of oil revenue for the Libyan government. Other producers in Libya, including the majors, subsequently caved in to the new financial terms as well, at which point the Middle Eastern countries demanded and obtained better contacts that included higher oil prices. Libya in turn demanded even more, and these tactics succeeded because the demand for oil had outstripped supply. Even Texas, which was North America’s primary source, could no longer supply allies so even the United States became dependent on OPEC crude. OPEC’s producers, including Libya, Algeria, and Iraq, began nationalizing their oilfields and Saudi Arabia acquired majority ownership in Aramco, the Sister’s producing consortium in the country.

Then the Egyptian and Syrian armies launched a surprise attack against Israel on October 6, 1973 – the Jewish holy day of Yom Kippur. Anti-American sentiment grew when the United States provided resupply of war materiel to Israel to counter the Soviets doing the same for its Egyptian and Syrian allies. The new OPEC cartel seized control of world oil pricing from western companies to bring pressure against Israel. Arab producers choked the flow of oil to industrialized nations and petroleum prices skyrocketed. Though Egypt and Israel stopped fighting after three weeks, the Arab oil embargo lasted until March 1974.


Source: Alberta in the Twentieth Century, Volume Eleven, Lougheed and the War with Ottawa; CanMedia Inc.

Canada's Oil Sands | Part 4: Environment and the Facts

The future of Canada’s oil sands industry is changing – and we are excited about it. Like the entrepreneurs who established our industry and helped fuel our world over the past 100 years, we share Canadian values and have built our industry focused on solutions and continuous improvement.

We are going to be using oil for a long time to come – both in Canada and around the world. Canada has a tremendous resource base combined with a stable political environment and skilled people that make it the ideal place to develop our natural resources responsibly.

We know we have an impact on the planet. Just as we are committed to growing our businesses, we are equally committed to improving our environmental performance. We collaborate on our biggest environmental challenges, and develop technologies that lessen our impact on air, land and water, and provide benefits for our country.

We know that our innovation and technological advances will help Canada achieve its global environmental commitments and move towards a cleaner energy future. We know it, because we are working on tomorrow’s energy, today.

So, when it comes to helping the globe meet the need for increasing demands for energy – all forms of energy – we believe the world needs more Canada.



About the Author

The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada's upstream oil and natural gas industry. We enable the responsible growth of our industry and advocate for economic competitiveness and safe, environmentally and socially responsible performance.


If you enjoyed this article, please consider becoming a patron of The Visionable


Economic Report | Part 4: Toward a Shared Future, Canada's Indigenous Peoples and the Oil and Natural Gas Industry

CAPP’s Vision for the Future of Canada’s Oil and Natural Gas Industry

For more than 150 years, Canada’s oil and natural gas industry has been a reliable and affordable supplier of energy for all Canadians, and has improved the future of our nation. From spurring economic growth to developing major nation-building energy projects, our country’s energy sector is woven into the fabric of our nation, and is as much a part of Canada as the maple leaf.

The Canadian Association of Petroleum Producers (CAPP) represents an energy industry that is looking to the future – one that values sustainable development practices and lower-carbon processes. With a growing world where many emerging economies need a variety of energy products, we want to help create a vision for Canada’s oil and natural gas industry that recognizes the significant role our resources play in the world’s future energy mix.

Canada has taken a leadership role in becoming one of the world’s most responsible oil and natural gas producers, recognizing resource development needs to be done in a responsible manner. The onus is on all Canadians to ensure we remain the world’s energy supplier of choice.

Our joint vision for the future needs to look at the big picture – a global view of the long term that includes access to world markets, effective regulatory outcomes, commitments to innovation, global climate leadership, and enabling a strong, reliable and dynamic fiscal framework.

We need collaboration between industry and all levels of government to rebalance the playing field and restore our country’s competitiveness to benefit all Canadians, not just the oil and natural gas industry. We can satisfy the world’s demand for energy but to do so we need to work collectively to create an ambitious plan for the future.

Together we can provide the world with the energy of tomorrow.

Sincerely,

Tim McMillan

President and CEO, Canadian Association of Petroleum Producers



About the Author

The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada's upstream oil and natural gas industry. We enable the responsible growth of our industry and advocate for economic competitiveness and safe, environmentally and socially responsible performance.


If you enjoyed this article, please consider becoming a patron of The Visionable


Canada's Oil Sands | Part 3: Transporation and Economy

The future of Canada’s oil sands industry is changing – and we are excited about it. Like the entrepreneurs who established our industry and helped fuel our world over the past 100 years, we share Canadian values and have built our industry focused on solutions and continuous improvement.

We are going to be using oil for a long time to come – both in Canada and around the world. Canada has a tremendous resource base combined with a stable political environment and skilled people that make it the ideal place to develop our natural resources responsibly.

We know we have an impact on the planet. Just as we are committed to growing our businesses, we are equally committed to improving our environmental performance. We collaborate on our biggest environmental challenges, and develop technologies that lessen our impact on air, land and water, and provide benefits for our country.

We know that our innovation and technological advances will help Canada achieve its global environmental commitments and move towards a cleaner energy future. We know it, because we are working on tomorrow’s energy, today.

So, when it comes to helping the globe meet the need for increasing demands for energy – all forms of energy – we believe the world needs more Canada.



About the Author

The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada's upstream oil and natural gas industry. We enable the responsible growth of our industry and advocate for economic competitiveness and safe, environmentally and socially responsible performance.


If you enjoyed this article, please consider becoming a patron of The Visionable


Economic Report | Part 3: Competitive Climate Policy, Supporting Investment and Innovation

CAPP’s Vision for the Future of Canada’s Oil and Natural Gas Industry

For more than 150 years, Canada’s oil and natural gas industry has been a reliable and affordable supplier of energy for all Canadians, and has improved the future of our nation. From spurring economic growth to developing major nation-building energy projects, our country’s energy sector is woven into the fabric of our nation, and is as much a part of Canada as the maple leaf.

The Canadian Association of Petroleum Producers (CAPP) represents an energy industry that is looking to the future – one that values sustainable development practices and lower-carbon processes. With a growing world where many emerging economies need a variety of energy products, we want to help create a vision for Canada’s oil and natural gas industry that recognizes the significant role our resources play in the world’s future energy mix.

Canada has taken a leadership role in becoming one of the world’s most responsible oil and natural gas producers, recognizing resource development needs to be done in a responsible manner. The onus is on all Canadians to ensure we remain the world’s energy supplier of choice.

Our joint vision for the future needs to look at the big picture – a global view of the long term that includes access to world markets, effective regulatory outcomes, commitments to innovation, global climate leadership, and enabling a strong, reliable and dynamic fiscal framework.

We need collaboration between industry and all levels of government to rebalance the playing field and restore our country’s competitiveness to benefit all Canadians, not just the oil and natural gas industry. We can satisfy the world’s demand for energy but to do so we need to work collectively to create an ambitious plan for the future.

Together we can provide the world with the energy of tomorrow.

Sincerely,

Tim McMillan

President and CEO, Canadian Association of Petroleum Producers



About the Author

The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada's upstream oil and natural gas industry. We enable the responsible growth of our industry and advocate for economic competitiveness and safe, environmentally and socially responsible performance.


If you enjoyed this article, please consider becoming a patron of The Visionable


Canada's Oil Sands | Part 2: Uses and Resources

The future of Canada’s oil sands industry is changing – and we are excited about it. Like the entrepreneurs who established our industry and helped fuel our world over the past 100 years, we share Canadian values and have built our industry focused on solutions and continuous improvement.

We are going to be using oil for a long time to come – both in Canada and around the world. Canada has a tremendous resource base combined with a stable political environment and skilled people that make it the ideal place to develop our natural resources responsibly.

We know we have an impact on the planet. Just as we are committed to growing our businesses, we are equally committed to improving our environmental performance. We collaborate on our biggest environmental challenges, and develop technologies that lessen our impact on air, land and water, and provide benefits for our country.

We know that our innovation and technological advances will help Canada achieve its global environmental commitments and move towards a cleaner energy future. We know it, because we are working on tomorrow’s energy, today.

So, when it comes to helping the globe meet the need for increasing demands for energy – all forms of energy – we believe the world needs more Canada.



About the Author

The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada's upstream oil and natural gas industry. We enable the responsible growth of our industry and advocate for economic competitiveness and safe, environmentally and socially responsible performance.


If you enjoyed this article, please consider becoming a patron of The Visionable


Economic Report | Part 2: Canada's Role in the World's Future Energy Mix

CAPP’s Vision for the Future of Canada’s Oil and Natural Gas Industry

For more than 150 years, Canada’s oil and natural gas industry has been a reliable and affordable supplier of energy for all Canadians, and has improved the future of our nation. From spurring economic growth to developing major nation-building energy projects, our country’s energy sector is woven into the fabric of our nation, and is as much a part of Canada as the maple leaf.

The Canadian Association of Petroleum Producers (CAPP) represents an energy industry that is looking to the future – one that values sustainable development practices and lower-carbon processes. With a growing world where many emerging economies need a variety of energy products, we want to help create a vision for Canada’s oil and natural gas industry that recognizes the significant role our resources play in the world’s future energy mix.

Canada has taken a leadership role in becoming one of the world’s most responsible oil and natural gas producers, recognizing resource development needs to be done in a responsible manner. The onus is on all Canadians to ensure we remain the world’s energy supplier of choice.

Our joint vision for the future needs to look at the big picture – a global view of the long term that includes access to world markets, effective regulatory outcomes, commitments to innovation, global climate leadership, and enabling a strong, reliable and dynamic fiscal framework.

We need collaboration between industry and all levels of government to rebalance the playing field and restore our country’s competitiveness to benefit all Canadians, not just the oil and natural gas industry. We can satisfy the world’s demand for energy but to do so we need to work collectively to create an ambitious plan for the future.

Together we can provide the world with the energy of tomorrow.

Sincerely,

Tim McMillan

President and CEO, Canadian Association of Petroleum Producers



About the Author

The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada's upstream oil and natural gas industry. We enable the responsible growth of our industry and advocate for economic competitiveness and safe, environmentally and socially responsible performance.


If you enjoyed this article, please consider becoming a patron of The Visionable


Economic Report | Part 1: A Global Vision for the Future of Canadian Oil and Natural Gas

CAPP’s Vision for the Future of Canada’s Oil and Natural Gas Industry

For more than 150 years, Canada’s oil and natural gas industry has been a reliable and affordable supplier of energy for all Canadians, and has improved the future of our nation. From spurring economic growth to developing major nation-building energy projects, our country’s energy sector is woven into the fabric of our nation, and is as much a part of Canada as the maple leaf.

The Canadian Association of Petroleum Producers (CAPP) represents an energy industry that is looking to the future – one that values sustainable development practices and lower-carbon processes. With a growing world where many emerging economies need a variety of energy products, we want to help create a vision for Canada’s oil and natural gas industry that recognizes the significant role our resources play in the world’s future energy mix.

Canada has taken a leadership role in becoming one of the world’s most responsible oil and natural gas producers, recognizing resource development needs to be done in a responsible manner. The onus is on all Canadians to ensure we remain the world’s energy supplier of choice.

Our joint vision for the future needs to look at the big picture – a global view of the long term that includes access to world markets, effective regulatory outcomes, commitments to innovation, global climate leadership, and enabling a strong, reliable and dynamic fiscal framework.

We need collaboration between industry and all levels of government to rebalance the playing field and restore our country’s competitiveness to benefit all Canadians, not just the oil and natural gas industry. We can satisfy the world’s demand for energy but to do so we need to work collectively to create an ambitious plan for the future.

Together we can provide the world with the energy of tomorrow.

Sincerely,

Tim McMillan

President and CEO, Canadian Association of Petroleum Producers



About the Author

The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada's upstream oil and natural gas industry. We enable the responsible growth of our industry and advocate for economic competitiveness and safe, environmentally and socially responsible performance.


If you enjoyed this article, please consider becoming a patron of The Visionable


Canada's Oil Sands | Part 1: Our Energy Future

The future of Canada’s oil sands industry is changing – and we are excited about it. Like the entrepreneurs who established our industry and helped fuel our world over the past 100 years, we share Canadian values and have built our industry focused on solutions and continuous improvement.

We are going to be using oil for a long time to come – both in Canada and around the world. Canada has a tremendous resource base combined with a stable political environment and skilled people that make it the ideal place to develop our natural resources responsibly.

We know we have an impact on the planet. Just as we are committed to growing our businesses, we are equally committed to improving our environmental performance. We collaborate on our biggest environmental challenges, and develop technologies that lessen our impact on air, land and water, and provide benefits for our country.

We know that our innovation and technological advances will help Canada achieve its global environmental commitments and move towards a cleaner energy future. We know it, because we are working on tomorrow’s energy, today.

So, when it comes to helping the globe meet the need for increasing demands for energy – all forms of energy – we believe the world needs more Canada.


About the Author

The Canadian Association of Petroleum Producers (CAPP) is the voice of Canada's upstream oil and natural gas industry. We enable the responsible growth of our industry and advocate for economic competitiveness and safe, environmentally and socially responsible performance.


If you enjoyed this article, please consider becoming a patron of The Visionable