Resource extraction in Canada invariably ends up with broken communities and shattered dreams. It’s a tale as old as Canada – a city finds itself rich with a certain resource and then proceeds to build an entire town devoted to that function over to then watch that town fail when the extractive industry bites the big one. It’s a carryover mentality from Canada’s colonial days which has never really changed; the land, the people, and the community established by the confluence of the two are less important than maintaining profits. These one-industry towns, usually finding themselves on the wrong side of the newest idiotic extraction trend before slowly, painfully twisting into obscurity and decay.
The Circle of Suck, as I’ve taken to calling this cycle of meteoric rise, gratuitous construction without regard for longevity, and brutal decline is on full display at Fort McMurray, a distant hellhole and extraction center for Canadian oil. A city where six-figure salaries ruled the roost while oil prices were sky-high, Fort McMurray drew in victims of previous resource crashes like Newfies and proceeded to build itself with no regard for the future. A city where drug use and pickup trucks are the primary sources of entertainment built itself into a concrete grave. What happens after the oil runs out? Who cares! Build more shit! More condos! More parking!
Mindless booming contrasts with other, saner techniques. Like Norway, which chose to forego the bumper stickers of Calvin pissing on a truck logo in favor of investing the money into a trust fund. This wild and insane idea allows Norway wiggle room while it retools itself when oil prices crash. It also means that Norway isn’t tempted to do what Canada invariably does when the lights at the caker party start to flicker and hand concession after subsidy to the industry in a desperate attempt to keep the lights on. The revenues gleaned from Alberta’s royalty system depend on, among other elements, “the price of oil, natural gas and other liquids; the production levels of an individual well; the age of a well; the depth of a well; the capital costs of an oilsands project; the value of the Canadian dollar; and the return on a Canadian government bond”. In Norway they tax corporate income around 78%, which total of which depends on…income. That’s it.
With plenty of beg-out options through the confusing-as-fuck royalty system the oil sands shockingly failed to provide the kind of revenue that would allow Alberta to retool itself after the price of oil inevitably crashed. Never mind the whoopsie miscalculation errors that the Alberta Tories loved so much – these people chose to let corporate bodies hold massive profits over figuring out what to do with overbuilt places like Fort McMurray. Does anyone expect that city to remain at its current size when the work dies off? What’s the degrowth plan? How is it funded? Fuck if we know! Surprisingly, giving the Suncors of the world a tax break they didn’t need somehow didn’t translate into a tenable Fort McMurray or a way for that city to keep existing when the industry finally fails.
And what happens on the downswing? When prices suddenly fall and the place depopulates for want of work or function the overbuilt Fort McMurray and the toys and the drugs won’t save it. Where Norway is currently doing just fine for itself Alberta is struggling to break both the culture of non-taxation that comes from constantly decrying taxation as “dangerous for the industry” and the monoculture that was the Alberta economy. Undoubtedly this translates as real pain for Albertans and for people who moved there to ride the wave only to find themselves mired in debt.
The natural predisposition of Albertans is of course to cry caker – it’s Quebec’s fault because they take equalization money! Rather than addressing the problem as the lights go out cakers opt for hand-wringing and pointing the finger of blame elsewhere. But the real problem is a Canadian one – the Circle of Suck is timeless and merciless, and only a cultural shift towards tenable construction and careful economic development will end it.
With this lot, I wouldn’t hold my breath waiting for that to happen.