In 1973, world oil prices quadrupled due to the Arab oil embargo following the Yom Kippur War. The province of Alberta had substantial oil reserves, whose extraction had long been controlled by American corporations. Elements of the government of Prime Minister Pierre Trudeau and the opposition New Democratic Party felt that these corporations geared most of their production to the American market, and sent their profits south. As a result, they believed, little of the benefit of rising oil prices went to Canadians. This view was not widely shared in the oil-producing province of Alberta.
The bill to create a publicly-run oil company was introduced by the New Democratic Party in 1973, Trudeau's Liberals were then in a minority government and dependent upon the support of the NDP to stay in power. The idea also fit with Trudeau's economic nationalism. The NDP and the Liberals passed the bill over the opposition of the Progressive Conservative Party led by Robert Stanfield.
The company was given $1.5 billion in start-up money and easy access to new sources of capital. It was set up in Calgary, despite the hostility of that city's population and existing oil firms. Its first president was Liberal operative Maurice Strong. The government maintained closer controls over Petro-Canada than was usual for a Crown Corporation so they could use it as a policy tool. The Progressive Conservatives (PCs), now led by Albertan Joe Clark, were opponents of the company, and advocated breaking it up and selling it. The Tories were unable to proceed with these plans during their brief time in power in 1979-1980, however.
The company became popular outside Alberta as a symbol of Canadian nationalism. The federal government and Petro-Canada tried to reinforce this popularity nationwide (but especially in Calgary) through its prominent sponsorship of the city's successful 1988 Winter Olympics bid. It quickly grew to be one of the largest players in the traditional oil fields of the west as well as in the tar sands and the East coast offshore oil fields.
When the Liberals returned to power in 1980, energy policy was an important focus, and the sweeping National Energy Program was created. This expanded Petro-Canada, but it was detrimental to Alberta's economy. The PC government of Prime Minister Brian Mulroney (1984-1993) stopped using Petro-Canada as a policy tool, and it began to compete fully and successfully with the private sector companies.
In 1990, the government announced its intention to privatize Petro-Canada and the first shares were sold on the open market in July 1991, at $13 each. The government began to slowly privatize the company, selling its majority control, but keeping a 19% stake in the company. No other shareholder is allowed to own more than 10%, however. Also foreigners cannot control more than 25% of the company.
During the first year, the value of the shares gradually dropped to $8 as Petro-Canada suffered a huge loss of $603 million, primarily because of the devaluation of some assets. The newly-private company significantly reduced the number of properties in which it had a direct interest. It reduced its annual operating costs by $300 million and it went from a staff of close to 11,000 to only about 5,000 employees. Many of these laid off employees went on to work and start up other oil companies in Alberta creating a new group of Canadian producers.
In his 2004 federal budget, Finance Minister Ralph Goodale pledged to sell the government's remaining stake in the company and by the end of the year it had sold its 19% stake, 49 million shares in all, for net proceeds of $3.2 billion. As of June 2007, the company's largest shareholders were Capital Research and Management Company (a Capital Group company), with 7.3%, and Barclays, with 4%.
Petro-Canada is Canada’s second-largest downstream company with refining and supply operations, retail and marketing networks, and a specialty lubricants business. It has a loyalty program called Petro Points where the customers get points for fuel, car repair and store purchases. It teamed up with Citibank for a Petro Points MasterCard. One of the benefits is 2 cents off a litre for fuel purchases and Petro Points for all purchases on the card. Petro-Canada also runs a chain of car repair with their stations called Certigard Car Repair.
Today, Petro-Canada is Canada's 11th largest company with important interests in such projects as Hibernia, Terra Nova, and White Rose; its gas stations remain a presence in most Canadian cities. It owns refineries in Edmonton, Alberta (135,000 bpd) and Montreal, Quebec (155,000 bpd), accounting for 16% of the Canadian industry’s total refining capacity. Its lubricants plant in Mississauga, Ontario refines crude oil feedstock to produce lubricating oil-based stocks and other specialized products.
Currently the main assets within Petro-Canada's International and Offshore Business are East Coast Canada, United Kingdom (North Sea), Netherlands (North Sea), Libya, Syria and Trinidad and Tobago. These and all the other sites outside of North America are run by the International and Offshore Business Unit of Petro-Canada with its headquarters in London Bridge, London.
Petro-Canada is in the process of carrying out exploration activities in Morocco and Norway.
In 2006, the company entered the mobile phone market with a prepaid service called Petro-Canada Mobility.