Shares of oil and gas companies took their worst beating on record on the Toronto Stock Exchange today in response to last night's formal presentation of the federal budget. The budget contained government proposals to get more cash out of the industry and obtain greater Canadian control of oil companies.
The oil and gas index slumped about 360 points, or 7.4 percent, as prices collapsed in the largest decline since the exchange began keeping daily records in 1976.
What set off the selling wave was the government's energy proposals, the major item in the budget. Among the proposals is 50 percent Canadian ownership of all oil and natural gas production within 10 years.
Another proposal would have Petro-Canada, the government-owned oil company, acquire the Canadian operations of at least one multinational producer. The acquisitions would be paid for by taxes of up to 14 cents a gallon on gasoline.
The budget also provides for an increase of 18 cents a gallon in the retail price in each of the next three years. The current price in Canada is about $1.48 an imperial gallon. (A standard gallon is 3.7854 liters; an imperial gallon is 4.546 liters.)
A contentious proposal would give the government of a 25 percent interest in any oil or gas field before authorization for a production system. It will apply to all existing interests.
A big loser was Dome Petroleum, down $7.50 at $74.00 a share. Dome called the federal proposal confiscation. It would give Ottawa a 25 percent interest in Dome's Beaufort Sea activity. The Beaufort is promising offshore area in the Canadian Arctic.
Other losers included Aquitaine, off $4.50 to $48.00; Gulf Canada, off $3.13 at $26.75; Imperial Oil A, off $2.50 at $40.13 (Imperial is controlled by Exxon); Texaco Canada, off $2.50 at $24.50; Westcoast Petroleum, off $3.00 at $24.75; and Hudson's Bay Oil, off $2.50 at $30.50.
An exception was Petrofina Canada, up $1.00 at $76.00. Petro-Canada has been trying to gain control of the company from its Belgian Parent.
Observers here regard the budget as the invocation of a national energy policy by the federal government over the objections of the provinces. Some call it "a declaration of war."
Securities analysts say the budget contains little else, and another budget is likely in the spring.
Efforts by Ottawa to reach an agreement on energy pricing have been unsuccessful, with the western provinces fighting to maintain control of the oil revenue.