The formation of the Organization of Petroleum Exporting Countries (OPEC) and the threat of significant price increases caused producing countries including Canada to critically examine their remaining oil and gas reserves. The resultant explosion of activity in 1973–74 found oil companies being forced to justify their reserve projections, profits and activities to a disbelieving public, while governments strove to corral reserves and resource revenues in the face of ambiguous, overlapping and sometimes contradictory laws of the land. In Canada, Alberta sought to improve its position with regard to the natural resource revenues within its boundaries and met in confrontation with the oil industry as well as the federal government. The Alberta Petroleum Marketing Commission (APMC) was born early in 1974 and began marketing petroleum in March of that year.
The paper outlines the present marketing and pricing arrangements for oil and natural gas, and the role of the APMC in marketing these resources in view of projected shortages of future supplies. Canadians must face up to a set of hard practical choices soon, to head off a domestic energy deficiency and mounting energy balance-of-payments problems.
The period 1973 to 1983 will always be remembered as the time when the petroleum industry was moving worldwide from a marketing and pricing era of reasonably relaxed regulation into an era of statutory governmental control, and learning how to live with the change. Related to this change is the slow but growing universal awareness that the seemingly inexhaustible oil and natural gas reserves of the world will be essentially gone within a generation or so and that hoped-for breakthroughs in energy source technology will likely arrive too late to head off severe worldwide shortages in energy supply.
My remarks today an oil and gas marketing will be confined to Alberta and the Canadian scene in view of time limitations, but I hope those of you visiting from other countries will be interested in the parallel and comparisons with happenings in your own homelands.
Early in 1973, mast Canadians, along with other residents of the industrialized world were complacently relying on the illusion of continuously abundant energy. Growth of sales of oil, natural gas and electricity were all important, both for the financial well being of those selling these energy sources, and for the individuals and countries utilizing them as a means to attaining better standards of living. A common belief among businessmen and economists was that increasing use of energy was essential to produce a constant increase in gross national product. The ‘tiger in your tank’ philosophy, a slogan well known at least to Canadians present, was the order of the day. A typical item: many Canadian electrical utilities were actively promoting the use of electricity for house heating even though an increasing amount of electrical generation used oil or natural gas rather than water power. The resultant efficiency was probably less than 50% of that which could have been obtained using oil or natural gas furnaces in the same houses.
