Venezuela and Canada: Two models of oil development

Ralph Klein is not the premier of Alberta. He hasn't been since early last December. The premier is Ed Stelmach.
This is an interesting article. The new Alberta premier is following the same policy path as Ralph Klein for the most part. There are some alternative energy projects in Alberta. There is quite a bit of wind generated power in the foothills of the Rockies where wind conditions are good for generation.
The situation in Canada is somewhat constrained by the fact that resources are under provincial control. Alberta has always been sort of a Texas north and US oil has always been a big player in Alberta politics.
Trudeau infuriated Alberta with his National Energy Policy. I don't think that it is true that the west as a whole was alienated by the policy. It was mainly Alberta.
Anyway as mentioned NAFTA has also constrained the development of a national energy policy. NAFTA gave the US the same right to our resources as Canadians and makes it virtually impossible to nationalise oil companies. We would be required under NAFTA to compensate all the companies involved for lost profits.
I don't know why the author does not mention that.
He could also have noted that prime minister Stephen Harper is an Albertan and great admirer of the US. He is against increased power for the federal govt. except to buy military toys to be used to help the US in its empire building. In fact the direction of Canadian politics is towards dismantling national programs. A national child care program painfully worked out by the provinces was sabotaged by Harper. He is now cosy with Quebec autonomists(ADQ) and is buying them off through transferring federal funds to Quebec. Although the separatist PQ lost seats in the Quebec federal election the minority Liberal govt. of Charest represents a very weak federalist option. Harper is happy with both---Charest is himself a former Conservative and the ADQ is right wing on social issues just as Harper.
---
>
>
> To Sow the Oil, or Give it Away?
>
> Canada and Venezuela are pursuing very different oil
> policies. In the
> war of the wells, whose investment will bring the
> biggest return?
>
> by Jonah Gindin; Alberta Views; December 04, 2006
>
> With the recent surge in oil prices, long-standing
> debates about
> Canadian and Albertan oil policy have been infused
> with new vigour. Is
> Canada getting the most out of this precious natural
> resource? What
> are we doing with our wealth?
>
> Canada and Venezuela represent the most important
> sources of oil
> outside the Middle East -- and as heavy oil
> extraction methods
> improve, they may surpass even that black-gold mine.
> But their
> approaches to oil revenue could not be more
> different.
>
> Venezuela's oil industry was very similar to
> Alberta's in the early-
> to mid-1990s, when US-promoted neo-liberalism --
> "free trade" and the
> privatization and deregulation of the oil industry
> -- was implemented.
> But when the controversial yet popular Hugo Chávez
> was elected in
> 1998, Venezuela embarked on a transformative
> experiment,
> "re-nationalizing" the state oil company. With the
> country's oil-based
> income increasing exponentially, Venezuela has
> invested heavily in
> social programs. According to the Venezuelan
> National Statistics
> Institute, poverty rates have declined from 49 to 37
> per cent since
> Chávez assumed office. The Chávez administration has
> presented a
> serious challenge to neo-liberalism in Latin America
> by developing a
> social-democratic model with a sharp revolutionary
> edge. This process
> was made possible by Chávez's successful
> mobilization of poor
> Venezuelans into a mass movement.
>
> Canada's oil sector is highly regionalized, with
> royalty rates and the
> bulk of corporate taxes set and collected at the
> provincial level.
> Alberta Premier Ralph Klein has pursued
> diametrically different
> policies than Chávez. Despite its business-friendly
> approach, the
> Klein government has presided over huge surpluses
> over the past few
> years. Nevertheless, though social spending has
> increased marginally
> over this period, it remains below the level it
> reached in 1993 before
> being slashed by Klein.
>
> Were Alberta to begin demanding a bigger piece of
> the oil-revenue pie,
> would it end up being invested in the public good?
> Would it inspire
> (or require) popular mobilization along the lines of
> the Venezuelan
> experience?
>
> Two Models
>
> From the birth of the Canadian and Venezuelan oil
> industries in the
> early 20th century to the late 1990s, the policies
> in both countries
> followed similar trajectories. Up until the 1973
> OPEC oil shock, both
> oil industries were increasingly dominated by
> foreign corporations,
> most of them American.
>
> As happened in many other OPEC countries as a result
> of the crisis,
> then-President of Venezuela Carlos Andrés Peréz
> nationalized the oil
> industry in 1975, creating state-run oil company
> Petroleos de
> Venezuela S. A. (PDVSA). Venezuela pursued a series
> of nationalist
> policies during the late seventies and early
> eighties, investing oil
> revenues in a a slew of ill-conceived development
> projects.
> Ultimately, these were doomed by poor planning,
> arrogance and the
> misconception that everlasting high oil rents would
> provide permanent
> subsidies.
>
> Venezuela experienced a country-wide depression for
> much of the 1980s,
> as oil wealth was replaced by foreign debt. By 1989,
> at the behest of
> the International Monetary Fund (IMF) and the US
> Treasury Department,
> the government implemented the Apertura
> Petrolera—the "oil opening."
> While PDVSA technically remained state-run, the
> industry was opened up
> to external investment under extremely generous
> conditions, quickly
> becoming dominated (once again) by foreign
> multinationals. PDVSA
> itself came under the control of a technocratic
> elite, eventually
> becoming known as a "state within a state" for its
> viciously defended
> autonomy from the Venezuelan government. It resisted
> government
> oversight through "internationalization" --
> investing oil rents in
> overseas ventures to avoid transferring the money to
> the government.
>
> Though not an OPEC member, Canada also founded a
> state-run oil
> company, Petro-Canada, in 1975, during the first
> Trudeau government.
> In 1980 the federal government implemented the
> National Energy Program
> (NEP), despite fervent opposition from Western
> Canada. The NEP
> expanded the role of Petro-Canada, gave preferential
> treatment to
> Canadian oil producers, and by fixing domestic
> prices sought to brace
> Canada's industrial east from the terrifying jumps
> in the
> international price of oil.
>
> In 1984, however, Brian Mulroney won the federal
> election campaigning
> against the NEP, heralding the rise of an emboldened
> regionalism and
> the end of nationalist oil politics in Canada. The
> signing of the
> North American Free Trade Agreement (NAFTA)
> effectively enshrined
> Canada as an energy satellite of the US, making it
> exceedingly
> difficult for Albertan or Canadian governments to
> serve the province
> or the country's energy needs until the US had been
> served first. In
> 1990, the Mulroney government declared its intention
> to privatize
> Petro-Canada, a process completed under Chrétien in
> 2004.
>
> Bolivarian Venezuela: Renationalization and Rebirth
>
> A former colonel who led a failed coup against a
> corrupt and
> repressive government in 1992, Hugo Chávez was
> democratically elected
> in 1998 with a mandate to overhaul Venezuelan
> society. Realizing his
> most important campaign promise, he called a
> Constituent Assembly to
> rewrite the Venezuelan Constitution. Over the past
> seven years,
> Venezuela has seen a truly impressive number of
> elections, plebiscites
> and referendums. All told, Venezuelans have voted 11
> times since
> electing Chávez in 1998. Once key political reforms
> were passed
> through the ratification of the new Bolivarian
> Constitution (named
> after of Simón Bolívar, the 19th-century
> independence leader), the
> Chávez government proceeded with a series of more
> profound changes
> aimed at addressing the country's most glaring
> contradiction: oil
> wealth has made Venezuela one of the region's
> wealthiest countries,
> but poverty rates have been brought below 50 per
> cent only in the last
> two years.
>

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