BackgroundThe current situation in the oil industry in Canada is not as favorable as it should be for the people, the federal government, and the private firms. These are the stakeholders in the oil industry in the country. The situation leads to the need for the decision to come up with a national petroleum company in Canada. In an interview with the Canadian opposition leader, Joseph Clark, stated that the government is intrusive in the oil industry (Carruthers B1). He negated the government’s efforts stating that they could not match those of the private firms (Carruthers B1). Fraud in the political arena has characterized the country in the oil industry hindering the commencement of the operations of a national petroleum company that is expected to provide the government with a link to the industry.
Unequal taxation of the resources in the various provinces in Canada has resulted in inter-provincial wars barring the success of the oil industry, especially with the involvement of the federal government. The war has jeopardized all the operations, for example in British Columbia. The presence of the federal government in the petroleum industry has been associated with unfair competition, according to Maurice Strong (Carruthers B1). Strong is a former president of Power Corp. of Canada Ltd. He further states that the source of the competition arises from the government’s failure to utilize the presence of Petro-Canada well; to link the government and the oil industry (Carruthers B1). This has led to the existence of unfair competition between the federal government and the private firms in the oil industry in Canada (“Unfair competition is feared from Petrocan’s frontier play”). The federal government of Canada is myopic in the initial focus of petroleum and its retail in the country by importing oil from countries such as Venezuela.
Discussion
The choice of an option is one of the best things Canada can go for to turn the tables in the country’s oil industry. The following are the facts that need to be considered in coming up with the alternatives. The federal government of Canada needs to minimize its direct involvement in the oil industry. This will enable the staggering industry gain stability (Carruthers B1). For the success of setting up the national petroleum company in Canada, political fraud needs to be identified and avoided at all costs. This will ensure that a favorable environment for the development of the company is available.
The minister of finance and the minister of energy, mines, and resources in Canada need to work jointly to end the war emanating from the uneven taxation of resources in the various provinces in the country. This is to ensure there is free movement of citizens from one place to another. The federal government needs to allow Petrocan link it to the oil industry as it will be easier for the government to handle the oil market in Canada (Carruthers B1). It is imperative for the federal government to come up with strategies to gain a competitive advantage over the private firms in the oil industry and the other countries (“Unfair competition is feared from Petrocan’s frontier play”).
Options
The following are the alternatives to coming up with a national petroleum company in Canadian oil industry. The first one is buying a well-known international company to replace the national company. The advantage of this is that the company will already be experienced in the oil industry and therefore the management will be efficient. The disadvantage of this is that it may be viewed traitorously by the citizens and the opposition to the government (“Royal commission sought to study petroleum industry”). The other option is to let the Canadian citizens buy the shares in the industry. This will benefit the government by distributing the risk in case of losses. This will be a demerit by causing the uproar among the citizens when the industrial gains plummet (“The secret of their success”). The other option is the federal government coming up with regulations targeting oil and gas such as pricing and distribution. The advantage of this is that the government will have a bigger say in the industry thus favoring the consumers in the country. The disadvantage of this is that it will cause disagreements with the opposition and the private companies if the prices are unfavorable or too low (Gulbrandsen 78). If nothing is done concerning the current situation in the oil industry in Canada, losses will be incurred, private firms will withdraw, and the industry might fail in the near future.
Recommendations
The most preferred option is to let the Canadian populace purchase shares in the oil industry as they will have the satisfaction that they are controlling one of the chief contributors to the Canadian economy. This will increase harmony and reduce inter-provincial wars.
- Carruthers, Jeff. “Clark suggests a PC government would move to wind down Petrocan.” The Globe and Mail, 3 Nov. 1976, p. B1.
- Carruthers, Jeff. “Strong feels Petrocan role will be benefit to oil industry.” The Globe and Mail, 17 Oct. 1975, p. B1.
- Gulbrandsen, Lars H. “Dynamic governance interactions: Evolutionary effects of state responses to non-state certification programs.” Regulation & Governance, vol. 8, no. 1, 2012, pp. 74-92.
- “Royal commission sought to study petroleum industry.” The Globe and Mail, 14 Nov. 1975, p. B5.
- “The secret of their success.” The Economist, 2 Feb. 2013. www.economist.com/news/special-report/21570835-nordic-countries-are-probably-best-governed-world-secret-their.
Accessed 1 Dec. 2017. - “Unfair competition is feared from Petrocan’s frontier play.” The Globe and Mail, 23 May 1975, p. B2.
