Visits to the Wood Buffalo Food Bank in Fort McMurray are up 300% from 10 years ago, as the area’s fossil fuel workers and their families suffer the bitter consequences of trusting in the boom-and-bust economics of international oil and gas production.
During the boom, the food bank catered mostly to people who couldn’t pay the exorbitant rents that sudden fossil wealth brought to the northern Alberta town of 75,000, Bloomberg reports. Now, as often as not, those who come through its doors are “men and women who were living high before the bust.” Sometimes, “they pull up in shiny pickups purchased just a year or two ago”, along with million-dollar homes purchased on the faith that the oil juggernaut would never falter.
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But after a five-year crash in oil prices, together with “a crippling shortage of pipelines out of the McMurray Formation,” the juggernaut is faltering, and the households that depended on it are hurting badly. “Consumer insolvency filings in the Fort McMurray district climbed 39% in 2018, the largest percentage increase in Canada,” Bloomberg writes, citing federal data. “Claims against property, the first step in the foreclosure process, surged almost tenfold over the past three years, according to court records.”
Those dire statistics stand in sharp contrast to the spectacular increase in fortune that Fort McMurray experienced between 2004 and 2014, as oil boomed and fossils invested C$210.1 billion (US$157.7 billion), “more than last year’s combined total capital spending by all of the companies in the Dow Jones Industrial Average.” As tar sands/oil sands production increased, “Canada shot up from the world’s eighth-largest oil-producing nation to the fifth-largest, overtaking Iran, Mexico, and Norway.”
And on one level, Fort McMurray flourished, with oil revenue paying to revamp the city’s airport, improve its school, and build “top-notch hockey facilities and a gleaming new recreation centre,” Bloomberg recalls. For a while, there was more work than there were people: “Companies, desperate for labour, threw six-figure salaries at low-skill jobs and covered commuting costs for roughnecks and people from as far away as Canada’s Atlantic Coast,” while “median annual household incomes more than doubled from 2001 to 2011, to about $181,000.”
But the massive influx of ready cash also produced “a cascade of typical boomtown challenges,” from inflated housing costs, to insane traffic, to overcrowded classrooms and more.
Then in 2014, oil prices crashed, and international fossil giants like Royal Dutch Shell, got out of the tar sands/oil sands business. They aren’t coming back. Citing data from the Canadian Association of Petroleum Producers, Bloomberg reports that “capital investments are on track to decline for a fifth straight year to an estimated $12 billion this year, about one-third of the 2014 level.” While domestic operators like Cenovus and Suncor “are still active and generally profitable,” they’ve secured their bottom lines “by cutting costs, including, of course, that of labour.”
