July 31, 2014

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The Economic Devastation of Unchecked Climate Change: Are Boomtowns Losing Love for Fossil Fuel Development?

Crime, social dislocation and environmental harm are prompting communities to fight back against oil and gas operations in Canada and the U.S.

Mitchellbeer

By Mitchell Beer

When Brian Jean resigned as the Member of Parliament for Fort McMurray-Athabasca, the epicenter of Canada’s oil sands/tar sands boom, it took him less than 100 hours to speak out on the social impacts of boomtown development.

“We have a saying in Fort McMurray,” he told the Edmonton Journal in late January. “We have the best infrastructure in the country for 30,000 people.” The city has a population of 73,000 according to its October 2012 census by the surrounding Regional Municipality of Wood Buffalo, not including nearly 40,000 more in temporary work camps and campgrounds outside city boundaries.

Debates Grow Over Fossil Fuel Trade-offs

Fort McMurray and other energy towns have become focal points for a cluster of intense debates: between renewable and non-renewable energy development, between job creation in the oil fields and cancer clusters in nearby First Nations communities, between the economic boost of a fossil fuel boom and the economic devastation of unchecked climate change.

But too often, the towns themselves are left behind in a national and international conversation that rarely touches on the human and social impacts of Alberta Canadathe boomtown economy.

Old Data on Social Impacts Still Relevant

There’s long-standing evidence that when boomtowns experience a sudden spike in activity, people who live in those towns can see some of the most severe impacts.

Between 1973 and 1976, for example, a boom in copper production drove up the population of Craig, Colorado by 43 percent. According to social researchers at the University of Wyoming-Laramie Judith and Joseph Davenport, the sudden flurry of economic growth led to a cluster of community consequences, including:

  • 130% more child abuse and neglect
  • 222% more property crime
  • 352% more family disturbances
  • 623% more substance abuse
  • 900% more crimes against persons

Over the last decade, Fort McMurray/Wood Buffalo has managed to dodge many of those impacts. Crime rates are below the Alberta and national averages and Fort McMurray has been the United Way’s most generous source of per capita donations for seven years in a row.

But the sheer pace of growth is still a challenge. The region’s population has increased by an average seven percent per year over the last decade—essentially doubling every 10 years or quadrupling every 20. While Fort McMurray’s numbers were stable between 2010 and 2012, the work camps nearly doubled in size from 23,325 to 39,325 over the same period. Those sites have come to be known as “man camps” in another cluster of energy boomtowns in the U.S. Great Plains.

Fort McMurray and Wood Buffalo have the tax base to pay for infrastructure and the region recently committed another 55,000 acres of government-owned land for urban development. But in a northerly climate with a short construction season and high labor costs, it’s no surprise that local infrastructure growth has had trouble keeping up.

No Lessons Learned

The Davenports brought their findings to a mid-1981 conference in Edmonton, titled The Human Side of Energy (and quickly renamed “Dehumanizing Energy” by some of the less satisfied participants onsite).

Nearly 35 years later, there’s little evidence that Canada has had any inclination to balance the relatively narrow benefits and the wider economic disruption of the fossil fuel boom.

In a January 2014 research report summarized by Winnipeg freelancer Frances Russell in the iPolitics online daily, the Canadian Centre for Policy Alternatives determined:

  • In 2002, Alberta’s gross domestic product (GDP) was 10 percent above the Canadian average. By 2010, it was 49 percent higher.
  • More than three-quarters of the GDP benefit of oil sands/tar sands development occurs in Alberta, 20 percent in the U.S., and only four percent in the rest of Canada.
  • Between January 2002 and August 2012, manufacturing fell from 17.2 percent to 12.9 percent of Canada’s GDP (yet it’s still controversial to argue that the fossil fuel boom has laid waste to the country’s manufacturing heartland in Québec and Ontario).
  • In 2000, the federal government reduced the corporate tax rate on oil revenues from 28 percent to 15 percent. Today, the Canadian oil and gas sector pays an effective tax rate of only seven percent.
  • In 2008, consistent with global trends reported earlier this year on CSRwire, Canadian oil and gas companies received $2.8 billion in federal and provincial subsidies.

The economic implications weren’t lost on oil field workerDouglas Porter, Chief Economist at BMO Capital Markets, who issued a brief report on Canada’s trade balance in November 2013. He wrote:

“There is energy (doing just fine) and there is everything else (doing anything but fine). The bad news is that the trade deficit in all other goods [except oil and gas] continues to plumb the depths.”

In September 2013, that shortfall hit a record $72.9 billion, a “massive deterioration in a short period” following a surplus as recently as 2007.

"Dehumanizing Energy"

But it’s still the front-line impacts of boomtown growth that are raising flags in some of the communities that are most closely identified with rapid fossil fuel development.

When the promise of economic benefits and jobs ends up “dehumanizing energy” (full disclosure: I was one of those disenchanted participants who informally renamed the conference), the pushback can be fast and vocal.

Last November, the New York Times reported that violence had become far more common and crime had increased 32 percent since 2005 in the shale oil towns of Montana and North Dakota. The Times noted:

“Amid all of that new money, reports of assault and theft have doubled or even tripled, and the police say they are rushing from call to call, grappling with everything from bar brawls and shoplifting to kidnappings and attempted murders.”

Arrests increased 565 percent in one town in North Dakota, 855 percent in a county in Montana. In some boomtowns in North Dakota, recently declared the deadliest place in the U.S. to work, the threat of sexual violence is a constant, according to an October 2013 exposé on vice.com. Brooklyn-based activist Peter Rugh tells the story:

“The rapid industrialization of North America’s countryside has brought a litany of big city problems to rural America. Critics accuse frackers of fouling air, drinking water, and farmland with swamp gas and carcinogens, while prostitution, methamphetamine, and sexual crime have stalked drilling operations.”

Communities Push Back

Some communities are drawing the line on unrestrained fossil fuel development. Last fall, voters in Fort Collins, Boulder, and Lafayette, Colorado and Oberlin, Ohio approved local initiatives to ban natural gas fracking. In Colorado, the state’s oil and gas association spent nearly $900,000 on traditional advertising and PR in a losing cause against $26,000 for a social media campaign Dallasthat mobilized public opposition to fracking.

A month later, city councilors in Dallas, Texas (yes, Dallas) voted to ban natural gas drilling within 1,500 feet of a home, school, or religious institution.

Social License to Operate Erodes

This is not to suggest that boomtown development has no hometown support. In Canada, there’s a sharp current of interregional resentment at any hint that the oil-rich west should be denied the economic benefits that previously flowed disproportionately to the central provinces.

But the growing trail of social, health, economic, and environmental impacts is steadily eroding the industry’s social license to operate just as surely as the growing fossil fuel divestment movement.

With support that is growing faster than the anti-apartheid campaigns of the 1980s, it makes sense that the activity in colleges, universities and larger municipalities is receiving a wave of coverage. But many boomtowns have their own, complementary and often painfully compelling story to tell. But who's telling?

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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