OPEC and us ... a little gratitude, please

Both the Alberta and Canadian governments have declined to join The Organization of Petroleum Exporting countries (OPEC) despite an appeal for closer ties by its president, Edmund Daukoru of Nigeria. Canada's Minister of Natural Resources Gary Lunn declared, "Our whole energy industry in Canada is based on free-market principles and we will not stray from that at all."

Mr. Lunn manifests an unfortunate ignorance of the energy history of both Alberta and Canada. Prior to the election of John Diefenbaker's government in 1957, Alberta crude oil couldn't compete with cheaper foreign imports. But "the Chief" came through for his Western brothers and sisters by instituting a national oil policy which dictated that all markets west of the Ottawa Valley were reserved for Western crude. In other words, Ontario consumers paid higher than market prices to subsidize the Alberta oil industry. The national oil policy was pronounced in 1960, coincidentally the same year OPEC was formed.

The policy served Western independent producers well until the early 1970s after which it was no longer needed. The OPEC cartel discovered its ability to manipulate world oil prices and began to do just that, driving them sky-high. Immense riches accrued not only to its members but also to non-members such as Alberta which, no longer having to compete with cheap imports, rode OPEC's golden coattails to enviable prosperity.

In summary, Alberta's great good fortune is much more the result of government interference in the marketplace than in Mr. Lunn's beloved "free-market principles." Canada, too, has benefited greatly. A little genuflection to OPEC wouldn't be out of order.