Only recently has the Canadian federal government become involved in the regulation of energy prices. Since 1973 the federal government has imposed an export tax on crude oil, set the wellhead price of crude oil, implemented a one-price policy for domestic crude oil, regulated the Toronto city-gate price of natural gas, and increased the export price of natural gas. The federal government has also been involved in restricting the flow of energy quantities, mostly in the export market. The lack of rigorous economic analysis of the implications of these and other policy recommendations, as contained in various reports by the Department of Energy Mines and Resources and the National Energy Board, motivated me to build an economic policy-oriented model describing some aspects of Canadian energy demand and supply. The demand part of the model contains a set of estimated equations that describe the demand for crude oil, natural gas, electricity and coal within each of the five major consuming regions - Atlantic, Quebec, Ontario, Prairies, and B.C. A change in any energy price through government regulation will induce interfuel substitution and alter the mix of energy fuels demanded. To forecast future energy demand, the parameters estimated from historical experience are used in conjunction with forecasts of the exogenous variables, the latter usually obtained from government sources. The resulting "base-case" forecast of energy demand is compared with the forecasts by the National Energy Board and the Department of Energy, Mines and Resources. The supply side of the model considers only the supply of crude oil and natural gas. The output of these fuels can be affected through any policy which affects either the amount of fuel demanded by Canadians or the amount of fuel demanded in the export market. An interesting component embedded in the supply -model for crude oil is the Sarnia-Montreal pipeline. The flow through the Sarnia-Montreal oil pipeline can be altered in the model to examine certain trade-off possibilities between imports and exports of crude oil. The supply model for both crude oil and natural gas contains details relating to production, exploration, development, costs, taxes, royalties, and the distribution of economic rents among producers, consumers and governments. The complete model is used to provide results of some sensitivity experiments and some policy experiments. The sensitivity experiments Involve altering the basic assumptions with regard to the growth of real gross national expenditure, the offshore oil price and the efficiency factors for oil and gas use. The policy experiments focus on three main areas: the pricing of oil and gas, the trading of oil and gas, and the eastward flow through the Sarnia-Montreal oil pipeline. I believe that the dissertation provides three main contributions I believe that the specification and estimation of the aggregate demand system is a useful contribution. I believe that the process of building a model which, integrates the supply and demand relationships, and details the costs, rents and trade flows for both crude oil and natural gas has been successful. And I have been successful in using the integrated energy system to generate quantitative results under alternative policies. / Arts, Faculty of / Vancouver School of Economics / Graduate

In the last decade or so political scientists have found the pluralist and marxist theoretical perspectives wanting for their inadequate attention to the causal role of states. In response, a burgeoning international literature has emerged which sets out to develop a state-centred theoretical perspective. This study is deeply informed by the emerging statist theoretical perspective. This thesis explores the relative capacity of the federal state to increase its autonomy in relation to the powerful oil MNCs in the period 1973-84 through an expanded federal presence in the energy sector. Whereas many scholars have assumed that a positive relationship existed between state capacity and the effectiveness of state intervention, Evans and Ikenberry for instance argue that an almost inverse relationship exists between the magnitude of intervention and its effectiveness. In Canada the literature on federalism has long been cognizant of the important role of states. This thesis therefore attempts to fuse the two bodies of literature, namely statism and federalism, in order to shed added light on the development of federal oil policy during 1973-84. The fact that the Canadian state is federal accounts for the recurring tendency for the energy issue to be redefined from its "obvious" focus on state-oil industry relations to intrastate issues (federal-provincial relations). A major contribution of this thesis is to explore the circumstances in which jurisdictional concerns deflect attention from policy substance - and also to those in which the reverse occurs. The thesis finds that when one level of government sought to become more independent of dominant societal actors, such as the oil industry, the intervention, whether so intended or not, was redefined to follow intergovernmental lines of conflict, rather than state-society lines of conflict. The nature of the issues also changed as distributional problems became subsumed under and were driven by the jurisdictional concerns of governments. This increased the policy interdependence between the two levels of government, squeezed out industry interests from intergovernmental deliberations, and generated intervention aimed directly at curtailing the power of the other level of government. This intervention which at first rendered the aggregate state less dependent on the oil industry by for example the creation of Petro-Canada, and later by the NEP, ultimately backfired on the state, at both levels. Important world oil market changes, intergovernmental conflicts and stalemates, deteriorating economic performance, industry reactions, and other mounting economic and political problems undermined the federal government's intervention and led to concessions for the industry. Such concessions were therefore the product of an increasingly irrelevant regulatory framework rather than purely a reflection of the power of the oil industry as such. This thesis confirms in general terms Ikenberry's finding that an inverse relationship exists between the degree and magnitude of intervention and its effectiveness. Evans and Ikenberry see this most clearly in relation to NOCs, that is in their propensity to evade state control schemes and to undermine centralized state control. In Canada the opposite change.exacerbated conflicts, namely the efforts by governments to shore up their capabilities as corporate actors and the emergence of "political federalism" which saw decision-making becoming centralized within each government, in the hands of decision-makers with jurisdiction-wide concerns. The ensuing process of intrajurisdictional policy coordination not only exacerbated conflicts but also oriented the emerging policy instruments along intergovernmental lines. Another contributing factor was the learning process that decision-makers underwent in the intergovernmental arena. In addition, 'policy mobilization' in the NEP served to link Petro-Canada closer to the political objectives of federal elites. Therefore, while the effects are the same in Canada, the process is almost the reverse of the one described by Evans and Ikenberry. Evans and Ikenberry see ineffective state intervention largely as the product of state actors mobilizing societal actors and state and societal actors becoming more closely linked. This study supplements the statist literature by noting that the attempts of a number of interventionist governmental actors to introduce comprehensive and more independent interventionist strategies heightened conflicts, generated inefficiencies and essentially caused the intervention to fail. / Arts, Faculty of / Political Science, Department of / Graduate