For months, the image of the dismantled oil rig has played a key role in the bitter battling about the Canadian government's new energy policies.
Calgary oil men, Alberta politicians and western separatists have cited the number of rigs heading south as concrete evidence of the folly and destructiveness of federal government energy policies. Their most searing indictment of Ottawa is Canadian television's coverage of workers dismantling rigs and trucking them across the border to take advantage of favorable policies and prices in the United States.
Federal officials have long protested that the image of the rigs distorted the issue, but few Canadians listened to the protests. In recent weeks, however, there has been a reexamination of the phenomenon. Two influential newspapers, the Toronto Globe and Mail and the Toronto Star, have reached the conclusion that the federal policies were generally right -- the dismantling of the rigs has far more to do with a surplus of natural gas in Canada than with the new federal policies.
The image of the rigs is especially significant to the government of Alberta because it is trying to court public approval outside the province as it intensifies the energy battle with the federal government.
Alberta yesterday began cutting its oil production by 60,000 barrels a day to protest the federal policies. Provincial Premier Peter Lougheed has warned that the reduction will reach 180,000 barrels a day by September 1. Since this oil will have to be replaced by expensive imports, Canadian consumers surely will have to pay more for a gallon of gas. The Alberta government wants to show that the federal policies are unjust and destructive enough to justify its desperate measures.
The federal policies, announced in October as "the national energy program," angered both the Alberta government and the oil industry. It set wellhead oil prices at half the world price and increased the federal share of oil revenues while decreasing the shares for Alberta and the oil industry. On top of this, it set out to increase Canadian ownership of the industry, now mainly in American hands, and to encourage exploration and production, mostly by Canadians, offshore and in the Arctic areas.
The Alberta government objected to the program because the low prices deprived it of income and because, it said, some of the federal government's ways of collecting revenue through taxes amounted to an attempt to seize ownership of the oil. Under Canadian law, the provinces own all natural resources found beneath their soil.
Alberta argued that anything that hurt the oil industry -- such as Canadianization and reduced income -- hurt the province as well, for most of its economy is dependent on the industry.
The rig heading toward the U.S. border quickly became the symbol of all that was wrong with federal policies. The quick, telling image of the fleeing rig was used to demonstrate that Prime Minister Pierre Elliott Trudeau and his government in Ottawa were ready to damage the country to get their way.
In its latest "industry casualty report," the Canadian Association of Oilwell Drillers said that 60 rigs had left Canada by Jan. 31 and that 60 more were committed to leave by May 1. Insisting that this could lead to a loss of 40,000 jobs by March, the association blamed the problem on the new federal policies.
Lougheed followed the same reasoning speech last week. "The rigs, the people and the capital funds will have to go," he said, "before Ottawa will realize that it has gone overboard and destroyed an industry."
But Jeff Sallot, the Alberta correspondent of the Toronto Globe and Mail, concluded in a recent article that many of the departed rigs "probably were destined to head south even before the federal government announced its oil-pricing plans." While he did not deny that higher American prices were an attraction, Sallot said that two other factors -- a surplus of natural gas in Alberta and an oversupply of drilling rigs -- "seemed to have weighed heavily in the decisions" to move the rigs south.
In fact, Sallot reported, drilling was not in depression. A record number of 822 wells were drilled in Canada in January, he said, 15 percent more than a year earlier.
In 1980, almost half the wells drilled in Canada were for natural gas. But the gas is too expensive to have much of a market in the United States now, and, with a surplus on their hands, companies have been reducing their drilling for it.
Sallot also recalled that, even before the federal government had announced its energy program, the industry was predicting a reduction of the number of rigs. The oil boom in western Canada has doubled the number of rigs since 1975. Even with the current exodus, there were still 577 rigs in Canada on Feb. 10, 46 more than there had been a year earlier.
In his column in the Toronto Star, Financial Editor David Crane examined the same problem and also concluded that the major problem was "the surplus of natural gas in western Canada."
He said that the federal energy taxes, since they reduced the cash flow of oil companies by 25 percent, would reduce drilling of some marginal projects. But he described this as only a temporary problem since, as oil prices increased in 1982 and 1983, oil companies would increase their revenues substantially.
Those suffering the most, Crane said, were the small drilling companies that had extra oil rigs around because it makes no sense to drill for gas.
"The operator has to move south," Crane said. "But this is not a national calamity -- it's a regular occurrence, after all, for auto workers and nickel miners who get laid off every time inventories run too high."
Oil industry officials were somewhat embarrassed by these analysis, but they still insisted that the federal energy program accounted for most of the exodus and that the situation would soon get dramatically worse. And Alberta politicians still raise the spector of the fleeing rig in all their anti-Ottawa rhetoric.