Engaging the public to avert the risks of oil dependency
Oil wealth is a mixed blessing. While oil represents an incredible economic opportunity, it also comes with multiple risks.
The Cougar helicopter crash in 2009 and the sinking of the Ocean Ranger in 1982 emphasized the tragic price sometimes paid by workers and their families for oil. Newfoundlanders and Labradorians are also now experiencing first-hand the boom-and-bust volatility of economic dependence on oil. Further, oil development poses environmental threats to human health, climate stability and ecosystems.
Underlying all these risks are political challenges faced by oilrich governments, even in affluent democracies like Canada. Oil wealth is associated with less competitive elections; thanks to oil revenue, political leaders can increase public spending while reducing taxes, appealing to voters’ short-term interests and securing more time in office. Meanwhile, to keep oil revenues flowing, oil-rich governments tend to prioritize the oil industry ahead of protecting communities and the environment. Oil development can also heighten regional, class, ethnic and gender inequality — this is never good for democracy.
How should Newfoundland and Labrador avert the multifaceted risks of oil dependence? Given the mounting evidence on how oil wealth hollows out democratic governance, reviving democratic practices should be an essential part of answering this question.
Oil is an extraordinarily valuable asset that belongs to the public, but is predominantly
developed by private corporations. Is the province getting a fair share? Public engagement on this fundamental question depends on the public having access to comprehensible information about how much revenue the Government of Newfoundland and Labrador retains of the total value of oil extracted, cutting through the baffling complexity of royalty regimes, corporate taxation, equity stakes and revenuesharing arrangements with the federal government. Similarly, accessible information on the number, quality and location of jobs created by the sector would be insightful as well. Moreover, how does the share of oil’s value captured by the province compare to corporate profits and to revenues collected by other governments? And what of provincial and federal government subsidies offered to Newfoundland and Labrador’s oil industry? How much is the public paying to support this sector?
With this information in hand, Newfoundland and Labrador could follow Alberta’s lead in fostering comprehensive panel reviews and citizens’ assemblies to debate what counts as a fair share. This could become a regular public conversation supported by yearly audits by the auditor general. Collectively deciding how to capture value from oil is a first step to averting the economic risks of oil dependence. The next is to determine how to spend oil revenue fairly.
Extracting oil is likened to selling the “family silver.” It is a valuable asset that can be sold just once. But selling oil does not guarantee long- term economic security; rather, oil revenue must be transformed to generate sustainable income. What is more, the family silver belongs to the entire family, present and future. The pressing question, then, is how can extracting oil promote equity across Newfoundland and Labrador’s communities today and into the future?
The province could benefit from a collectively developed plan for generating provincewide benefits from remaining oil revenues and for sharing those benefits with future generations. Norway has set the global example by establishing a sovereign wealth fund. Likewise, citizens of Newfoundland and Labrador could debate the merits of safeguarding oil wealth and diversifying the economy away from oil while also addressing the province’s high levels of inequality.
These discussions should also include consideration of a central problem posed by oil: its extensive environmental risks and costs to human health, ecosystems and other economic sectors. The offshore oil projects are among the largest greenhouse gas emitters in Canada, and life-cycle assessments of the industry anticipate stunning cumulative emissions. These emissions contribute to global temperature increases resulting in climate instability and ocean acidification.
Recent scientific studies advise keeping at least 74 per cent of Canada’s oil reserves in the ground to avoid catastrophic climate instability. Not only does Newfoundland and Labrador’s expanding oil sector run contrary to this global responsibility, but it contributes to undermining the stability of renewable sectors in the province, such as the fisheries.
These environmental risks raise significant democratic questions, for while the immediate benefits of oil may not be widely shared, oil development degrades commonly shared ecosystems that sustain our economies and communities. What, then, must Newfoundland and Labrador do? The public discourse needed to answer this question first requires public access to very basic information about the current and anticipated cumulative environmental impacts of this sector, across the marine ecosystem. To date, these impacts are not measured.
Once available, this information could form the basis for democratic debate on environmental regulations surrounding the oil industry. Ideally, an independent advisory board, comprised of scientific specialists and members of the broader public, would guide this research and lead these deliberations.
The recent debate around fracking in western Newfoundland showed citizens’ hunger for renewed democratic participation in decisions about the province’s oil economy. It demonstrated that citizens are deeply concerned about the economic, health, and environmental consequences of intensifying oil activity — and they want to participate in decisions on this sector. But public involvement is premised on accessible, comprehensible information about what exactly is gained from oil and at what cost. In the wake of the recent oil price dive, this is an opportune moment to re-engage the public and plan collectively for the last chapter of the province’s oil sector.
About the Author
Angela Carter (Political Science, University of Waterloo) is originally from Newfoundland. She researches comparative environmental policy regimes surrounding oil developments, primarily in Alberta, Newfoundland and Labrador, and Saskatchewan. Angela is a coinvestigator on the Social Sciences and Humanities Research Council Partnership Grant “Mapping the power of the carbon-extractive corporate resource sector.” This article is an excerpt from “The Democracy Cookbook: Recipes to Renew Governance in Newfoundland and Labrador” (ISER Books, 2017).