Canada's Western Energy Boom
Monday, Dec. 10, 1979 Time Magazine
Neighbors cast envious glances at those sheiks of Calgary
Surveying the skyline of Calgary, where 29 huge construction cranes are climbing atop new office towers, Canadian Novelist Mordecai Richler observed: "That's going to be a helluva city when they get it uncrated." In Edmonton, 180 miles to the north, Ford has sold hundreds more Thunderbirds than usual this year. Boasts Dealer Ryan Taylor: "They can't give those gas guzzlers away south of the border, but they are going like crazy up here." Around the town of Medicine Hat, where 1,700 oil and gas wells have been drilled in the past year, Canadian, British and West German tank troops on war games have to aim very, very carefully to avoid blowing up one of those pools of energy.
Welcome to booming Alberta, the Texas-size province that contains roughly 85% of Canada's proven oil and gas reserves, half of its coal, some major untapped hydropower sites, and vast, oil-bearing tar sands.
Under the Canadian constitution, these mineral rights belong to the provincial government. So Alberta, rather than the national government in Ottawa, has gleefully collected the rewards of gushing oil and gas prices. The province takes an average 43% cut for oil and 33% for gas from the energy companies' local production revenues, and its royalties surged from $1.3 billion in 1974 to $4 billion this year. Coveting more of this wealth for themselves, many Canadians outside the province call Alberta "OPEC North" and refer to its leaders as "blue-eyed sheiks." After traveling throughout the nouveau riche province, TIME Correspondent Ed Ogle reports:
The changes that have resulted from the energy windfall are tremendous. Culture has swept the province like a whirlwind. A critic for the Edmonton Journal figured that in twelve months he covered 136 first nights of theater, opera and symphony. Calgary, once just a prairie cow town that was famous for its Calgary Redeye (beer and tomato juice), has become a cosmopolitan community of 550,000. Nearly 60% of the people are not of English-speaking origin, and despite the presence of some 60,000 Americans in the area, the largest ethnic group is German. This is Canada's fastest growing large city. In the past five years, 20 foreign banks have opened offices in Calgary, and last June the Bank of Montreal became the first major Canadian bank to move its chairman, Fred H. McNeil, to Alberta. Says he in his Calgary office: "The time of the West has come."
Calgary is already the headquarters for 483 of the 587 oil and gas companies that have main offices in the country. It is not hard to spend $250,000 for a four-bedroom house, but heating bills in Alberta average only $27 a month, and gasoline sells for 53¢ a gal. Thanks to energy royalties, Alberta is Canada's only province with no sales or gasoline taxes. Its property and income taxes are the lowest of any province; for a family of four earning $17,000, the overall tax burden is $912 a year, vs. $2,130 in Quebec.
Neighbors cast envious glances at those sheiks of Calgary
Surveying the skyline of Calgary, where 29 huge construction cranes are climbing atop new office towers, Canadian Novelist Mordecai Richler observed: "That's going to be a helluva city when they get it uncrated." In Edmonton, 180 miles to the north, Ford has sold hundreds more Thunderbirds than usual this year. Boasts Dealer Ryan Taylor: "They can't give those gas guzzlers away south of the border, but they are going like crazy up here." Around the town of Medicine Hat, where 1,700 oil and gas wells have been drilled in the past year, Canadian, British and West German tank troops on war games have to aim very, very carefully to avoid blowing up one of those pools of energy.
Welcome to booming Alberta, the Texas-size province that contains roughly 85% of Canada's proven oil and gas reserves, half of its coal, some major untapped hydropower sites, and vast, oil-bearing tar sands.
Under the Canadian constitution, these mineral rights belong to the provincial government. So Alberta, rather than the national government in Ottawa, has gleefully collected the rewards of gushing oil and gas prices. The province takes an average 43% cut for oil and 33% for gas from the energy companies' local production revenues, and its royalties surged from $1.3 billion in 1974 to $4 billion this year. Coveting more of this wealth for themselves, many Canadians outside the province call Alberta "OPEC North" and refer to its leaders as "blue-eyed sheiks." After traveling throughout the nouveau riche province, TIME Correspondent Ed Ogle reports:
The changes that have resulted from the energy windfall are tremendous. Culture has swept the province like a whirlwind. A critic for the Edmonton Journal figured that in twelve months he covered 136 first nights of theater, opera and symphony. Calgary, once just a prairie cow town that was famous for its Calgary Redeye (beer and tomato juice), has become a cosmopolitan community of 550,000. Nearly 60% of the people are not of English-speaking origin, and despite the presence of some 60,000 Americans in the area, the largest ethnic group is German. This is Canada's fastest growing large city. In the past five years, 20 foreign banks have opened offices in Calgary, and last June the Bank of Montreal became the first major Canadian bank to move its chairman, Fred H. McNeil, to Alberta. Says he in his Calgary office: "The time of the West has come."
Calgary is already the headquarters for 483 of the 587 oil and gas companies that have main offices in the country. It is not hard to spend $250,000 for a four-bedroom house, but heating bills in Alberta average only $27 a month, and gasoline sells for 53¢ a gal. Thanks to energy royalties, Alberta is Canada's only province with no sales or gasoline taxes. Its property and income taxes are the lowest of any province; for a family of four earning $17,000, the overall tax burden is $912 a year, vs. $2,130 in Quebec.
It is also unlikely that Alberta will submit to the wishes of less blessed Canadian provinces and share its energy royalties with them. Alberta's officials, notably Conservative Premier Peter Lougheed, argue convincingly that other regions are already "subsidized," because Ottawa holds down the domestic price of oil to $13.75, half as much as some OPEC nations charge.
But splitting up the energy wealth remains a bitter and divisive issue in a nation already torn by threats of separatism. When Calgary made an offer of $217.5 million and thus became Canada's choice to be host of the 1988 Winter Olympics, one Vancouver official growled: "What are they going to do —landscape the Rockies?" That, for a province as rich and resourceful as Alberta, remains a possibility.
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