Prorationing is sometimes implemented when the producing capacity of an area exceeds the demand for that output at a price which many producers feel to be "fair" -when this situation occurs the price of course comes under pressure as producers compete with one another to sell their oil. It is in order to avoid such a possibility that operators are sometimes successful in persuading the government having jurisdiction to assume the responsibility of setting up and policing a prorationing plan. Under such a scheme the total demand for crude oil from the area, at the desired price, is alloted among all the producers of the area on a basis related to some measure of each producer's capacity - no producer has any Incentive to lower his price as he would not be awarded any larger share of the market for so doing. In simple words then the name of the game Is price fixing. Since December 1950 such a scheme for "prorationing production to market demand" has been in force in the province of Alberta and is administered by a board created by the provincial government. This practice of prorationing has had a great influence on the manner in which the Canadian oil industry has developed, not only in the province of Alberta (which is by far the largest producer of crude) but in the other oil producing provinces as well (these being mainly B.C., Sask., and Man.). It has in fact encouraged large amounts of excess expenditure to take place in the development of Canada's crude oil resource. Prorationing has encouraged this over expenditure in two ways - first through the maintenance of an artifically high price for crude oil which has encouraged the development of high cost sources at the expense of already existing low cost ones that must as a result suffer "shut-in" capacity, and secondly as a consequence of the regulations governing the method by which the demand is apportioned which has led to the over drilling of oil fields. A third cause of over expenditure have been field regulations outside of the prorationing plan such as provincial legislation dealing with minimum allowed well spacing, the manner in which maximum allowable rates of production for wells have been calculated, and the manner in which lease rights are allowed to be held. Our estimate is that poor field regulations, both inside and outside of prorationing, have led to excess expenditures of some $730 million in the period 1947 to 1965 inclusive. Over expenditure due to prorationing itself has amounted to some $1,000 million. Extensive amendments to the prorationing regulations in 1964 improved these markedly and largely removed them as a source of future waste. Prorationing itself however and the regulations governing the holding of leases remain, and so long as they do serious over expenditures will continue to be made. / 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

The purpose of the investigation is to present--chronologically, whenever possible--the growth of the Canadian oil industry from the days of earliest discovery to the present, with an eye on both historical growth and potential development.

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