Collecting Rent: A Comparative Analysis of Oil and Gas Fiscal Policy Regimes in Alberta, Canada and Norway

Abstract

Since the 1970s, Norway has had in place a policy regime that allows it to capture a high level of revenue (or economic rent) from the oil and gas sector. Compared to Norway, the level of rent captured by the Alberta government is considerably lower. Assuming governments have similar economic objectives (e.g. to attain the greatest revenues possible from the exploitation of a depleting natural resource), then it is to be expected that the petroleum policy outputs in various states would likewise be similar (Edwards, 1987). The puzzle is even more interesting given the fact that Alberta and Norway are both advanced, industrialized, unitary states that share many similar institutional characteristics. Why then did Norway develop a regime that allowed it to capture a high level of economic rent whilst Alberta did not? This paper argues that fundamental differences in political culture across the cases represent the key explanatory variable for understanding variation in the levels of captured rent. In doing so, this paper rejects two other explanatory approaches, namely the differences in resource approach and the concept of the obsolescing bargain. The overall focus is on domestic determinants of policy outcomes and international determinants are largely ignored.