Canada, the “Oil Curse,” and a Third Way on the Oil Sands?

By Andrew Shaw

Last week Alberta Premier Alison Redford referenced the “oil curse” in a speech at the Wilson Center. The “Oil Curse,” or “resource curse,” is a theory that energy-rich countries perform worse economically for a variety of reasons, including a lack of economic diversification, and mismanagement and corruption by government and energy companies. Advocates of this theory include New York Times columnist Thomas Friedman and Peter Maas, who authored an interesting book entitled Crude World in 2009. Crude World provides case studies of oil-rich countries such as Saudi Arabia and Nigeria, where the ruling elite profit from energy production while the masses live in poverty. 

Alberta, though a province and not a country, is certainly energy-rich with the third-largest proven reserves of crude oil in the world. It is hard, however, to make the case that Alberta suffers from any “oil curse.” In 2011, Alberta’s growth domestic product grew by 4.0% with the unemployment rate being around 5.5%. The development of the oil sands also provides economic benefits to the United States. For instance, more than 900 U.S.-based companies currently supply goods and services to oil sands related projects and pipelines. 

Why does Alberta prosper while other energy-producing countries suffer? While there are likely a variety of reasons, Alberta arguably prospers due in part to the fact that Canada is a democracy and, therefore, its government is accountable to its citizens on a range of issues, including: the level of revenues raised from production and how the resulting funds are used; the manner in which the resource is used; and whether existing regulations are sufficient to protect public health and the environment.

In her speech, Premier Redford touted the benefits of the oil sands, describing the resource as a “blessing.” She also acknowledged the public health and environmental concerns, including the greenhouse gas intensity associated with production. To address these concerns, Premier Redford talked about a new website launched by Alberta Province that provides information on oil sands’ impact on the environment. Premier Redford also discussed new provincial regulations that will require that producers reduce their tailings and the province’s carbon tax, which provides funding for technological upgrades that reduce the environmental footprint of production.

All of this brings up the question as to whether there is “third way” possible for oil sands production where various interests, including government, industry, and NGOs collaborate with one another instead of merely talking past each other. Premier Redford certainly expressed a desire to deepen the dialogue with both the supporters and critics of the oil sands. In the Q&A portion of the event, one attendee asked whether a stakeholder collaboration process could be similar to the timber industry and NGOs cooperation on sustainability challenges in the Amazon rain forest. Premier Redford agreed this could serve as a good model for the oil sands.

The path forward won’t be easy – in a democracy, progress is never easy with such complicated issues and so many loud and conflicting voices. That being said, the mere fact that Alberta is a democracy allows this conversation and debate to take place. Debate can lead to consensus, which can in turn achieve progress towards one of our world’s most pressing challenges – meeting a growing demand for energy in a sustainable manner that responsibly addresses climate change.