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ADMS 1010 Lecture Notes - National Energy Board, Foreign Direct Investment

Administrative Studies
Course Code
ADMS 1010
Rebecca Jubis

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Before Leduc
Oil demand was small, oil fields of Petrolia easily met domestic needs.
However, demand changed which results from the emergence of the largest
oil and gas company in Canada- Imperial Oil.
Imperial Oil dominated the industry in producing, refining and distribution.
Oil fields of Petrolia production , so the business needed to import to meet
its needs for military, transportation.
Another oil well found was Turner Valley field in Alberta, but insufficient to
meet oil demand.
Alberta was self-sufficient in oil production, while Ontario relied on oil
imparted from U.S
After Leduc (Found on Feb 13th, 1947 by Imperial Oil- known as Imperial
Leduc No.1)
Alberta became a world-class oil and gas player, many companies entered to
seek an action to acquire the oil well.
Imperial Oil sold its stake in its South American subsidiary, International
Petroleum to finance the business.
Oil production growth , foreign direct investment (FDI) in Canada in refining
and distribution infrastructure.
Canadian favour supplying U.S over domestic. In Maritimes, oil is imported
from foreign, while Alberta oil and gas is exported to U.S. Because Alberta is
far away from the Maritime and it would be costly to supply eastern Canada.
Many entrepreneurs made investment in oil company, because drilling wells
was expensive and if the investor were willing to have a stake and take the
risk in this industry, both parties can maximize the goals.
Smaller independents needed the majors, because they want to hold the
large leases of crown land for prospecting.
Foreign Direct Investment Issue
Began as the Liberal government pushed for an all- Canadian gas pipeline to
be built by Trans Canada Pipelines.
National Policy promoted FDI in oil industry. It led U.S. oil majors invested
funds and took risk in Canada.
Against FDI: Canada would be an exporter of raw materials and importer of
finished goods. Public urged government to response the impact on FDI.
Established Gordon Commission, but their role is not effectively
Outflows of the profits of multinationals harmed Canada’s economy which
intensified FDI issue.
Borden Commission’s Energy Report recommended that Ottawa would advise
the government on energy policy and regulate interprovincial transport and
marketing of energy resources-the body created is called National Energy
Upon to the board, Ottawa created National Oil Policy (NOP) to protect
Canadian energy industry from imports of cheap foreign oil. The NOP allowed
for higher oil prices in the western provinces and Ontario to promote greater
development of energy resources; while allowed eastern provinces continue
to rely on imports.
2 track approach: 1) establish royal commissions and issue reports to
appease the public concern. 2) allow Canada to remain a desirable
destination for FDI.