ceos, believes oil could be a key to expanding nafta in a number of areas in exchange for a secure supply of crude from the oil sands. It would effectively integrate the North American economy and eliminate tariff and subsidy disputes, like the softwood lumber issue. According to the joint investment analysts’ report, it is the Alberta reserves and the “special relationship” between Canada and the US that “should be driving [oil] prices; not Washington’s less than perfect relationship with monarchies and repressive regimes half a world away.”
In Siberia, Japan and China are furiously competing for direct access to Russian oil. France and Russia clashed with the US over oil in Iraq. In December, Venezuela President Hugo Chavez went to Beijing, and the two countries signed several bilateral energy agreements. Like Canada, Venezuela sells much of its exports to the US, though there is an enduring political antagonism between the two countries, exacerbated by what was viewed as American support for the attempted coup against Chavez’s government in 2002.
Everywhere, there are political alignments, military movement, and antagonisms, but in Canada oil remains purely a commodity as opposed to an instrument of foreign policy. As power struggles gain definition around the globe, our only political issues are domestic; once more, we are at war with ourselves. Any federal interference will revive the animosity in Alberta that was first sparked by the National Energy Program in 1980. Twenty-five years after the fact, Trudeau remains a potent satanic symbol out in God’s country.
When I was a rig worker in the 1970s, breaking up the university year with stints as a roughneck, oil meant money. The reckless, tipsy flow of capital and Calgary’s giddy growth began in 1973, when opec countries imposed an oil embargo on the US to protest America’s support of Israel, and raised prices for Western allies. Within four months, the price went from $3 (US) a barrel to $11.65 (US), and everyone got fat.
My fellow roughnecks were failed farmers, ex-cons, a man who had tired of the killing floor at the Burns plant, and a disturbed local whose hobby was sucker-punching British soldiers stationed at the Suffield base outside of Medicine Hat. On one rig, we sometimes drank rye whiskey on the way to work and began the dangerous night shift in a state of relaxation that gave way to prolonged bitterness. In the course of four summers, I recall a water tanker falling off the flatbed into a rape crop because we had forgotten to chain it down, working short-handed because the day roughneck had driven his 1963 Cadillac into a house after a breakfast of Tang crystals dissolved in vodka, riding in a driller’s pickup truck when he ran into a cow, shooting a rattlesnake, accidentally setting fire to a field of cheat grass, being shot at by a farmer, punched by a motorman, and listening to sad country music in a diner while eating generic Chinese/Canadian food, drinking terrible coffee out of mugs that were half an inch thick, and hoping the big-haired waitress would somehow take me away from all this. The first rig I saw had a sign that read, “This rig has worked 0 accident free days.” Next to it, a man was sitting on a forty-gallon drum, his hand wrapped in dirty gauze that was leaking blood.
Thirty years later, the Syncrude and Suncor plants have signs that advertise millions of accident-free man-hours. The industry is driven by skilled workers, engineers, and strict supervision, but in the evenings in Fort McMurray, there are still a few oil workers on Franklin Avenue who evoke the past, young men with weathered faces and heavy shoulders and a look that says the world can go fuck itself. They have money, youth, the existential loneliness that comes from living in camps with other men, and they seek out Teasers or Showgirls or the Boomtown Casino, looking for a good time that won’t show up in the drug and alcohol tests some companies require, for the remote solace of a stripper. Most of them are part of the city’s shadow population of 7,500, men who live in the camps on-site at Syncrude or Suncor or Shell/Albian Sands. Efforts are made to keep A Calgary company with a large lease in the oil sands turned to China when its American partner pulled out, citing the high cost of extraction. For the Chinese, cost is less of an issue. the shadow population on-site, away from temptation, away from bars that cash your paycheques, where you drink half of it and then get jacked up by a local wingnut for the other half. But despite the amenities and the steaks and big-screen televisions, the camps are dispiriting masculine compounds, while local shelters are filled with the unemployed, men who came north without any real skill, unaligned with any union, to find that this boom was more formal than the 1970s one, and that they weren’t needed.
Fort McMurray is surprisingly sedate, a middle-class bedroom community of 56,000 that is laid out at the confluence of the Athabasca and Clearwater Rivers, and extends up onto forested benchlands in the hills in a pleasant suburban sprawl. It is, people say almost by way of greeting, a good place to raise your children. It is wealthy (the median household income is over $90,000 and houses cost roughly what they do in Calgary), and young (the average age is thirty), a hotbed of volunteerism, and, like most boomtowns, diverse: about fifty ethnic groups as well as displaced Ontarians and, inevitably, a strong community of Newfoundlanders.
Almost half the population is directly employed by oil and thousands more have a secondary or tertiary connection. The infrastructure is overtaxed, the roads clogged, the hospital burdened, and on Thursday nights when the shifts change, there is a stately line of pickup trucks along highway 63 heading to Edmonton. There are two scenic golf courses, but the city is barely holding onto its market share of biker meth, prostitutes, and shackle-kitted Trans Ams. The local citizens are wary of the term boom, coming as it does with its inevitable twin: bust. At a cocktail party, with oil sliding from $55 to $40 (US) in six weeks, there was talk of the fragile equity in their homes, and a few people spoke of escape. In Calgary during the 1970s, oil infected the civic personality and acted as an aphrodisiac, but the mood in Fort McMurray today is more subdued. If it is a party, it is a company party. As conventional oil supplies wane, Fort McMurray may be the last boomtown, and perhaps it is fitting that in the twenty-first century it looks more like Oakville, Ontario, than Sodom.
The city grew in a series of godless oil booms followed by periods of Calvinist contrition. In 1906 a German, Alfred Von Hammerstein, arrived and spent the next four years drilling twenty-four unsuccessful oil wells, but he founded the Athabasca Oil and Asphalt Company and a town formed around his optimism. The first American interest came in 1917 through a Mellon Institute study that looked at the possibility of commercial development of the oil sands. By 1927, the International Bitumen Company was trying to mine the oil sands, but most of their projects either burned down or were abandoned. In 1946, Canada was importing 88 percent of its oil from the US and Latin America, but that changed the following year with the huge oil discovery in Leduc, Alberta.
After that, the oil sands developed quietly, in the shade of regular oil finds in southern Alberta. In 1953, the Great Canadian Oil Sands Ltd. was formed. Controlled by Sun Oil Co. of Philadelphia, it evolved into Suncor. Eleven years later, Syncrude began production and Fort McMurray boomed. Like other Alberta boomtowns in the seventies, it lurched into the future with a sense of drunken immortality. But in 1982, oil prices collapsed and the money and workers drifted south.
The next boom came in the unlikely form of federal aid from a Liberal government. Jean Chrétien, who had been Trudeau’s lieutenant during the National Energy Program era and who might have been lynched had he come to Fort McMurray in 1980, arrived in 1996 to publicize extensive federal tax breaks for oil sands development. Companies could write off 100 percent of their capital costs, including overruns, in the year they were incurred. The provincial government introduced an incentive package that charged only a 1-percent royalty on oil sands revenues until capital costs were paid off. The effect was immediate: housing starts in Fort McMurray rose almost 300 percent within twelve months, and the leases along the Athabasca River quickly solidified into a checkerboard of international interests.
The oil sands are owned by the citizens of Alberta and managed, in trust, by the provincial government, but as the latter doles out generous tax incentives to private industry, its own revenues diminish in the process. While oil sands production increased by 74 percent between 1995 and 2002, royalties from the oil sands decreased 30 percent, a function of the low 1-percent royalty rate. The royalty jumps to 25 percent of net revenues once the operator has recovered all project costs, but, said Tim Howard of the Sierra Legal Defence Fund, “You have got to believe in the tooth fairy to believe that these companies are going to present their accounts in a way that shows a profit.” One way the companies can defer payment of the 25-percent royalty rate is to expand existing mining operations — Suncor tested the limits of that idea by building a new facility, then arguing that it was an expansion of their original project. The Alberta government sees it as an independent operation, and the matter will be decided by the courts, with the industry watching closely.
Alberta’s Pembina Institute, which does environmental research and policy analysis, has criticized provincial management of the industry, as well as its handling of Alberta’s Heritage Savings Trust Fund, set up by Premier Peter Lougheed in 1976 as a hedge against an uncertain energy future. Similar funds were set up in both Norway and Alaska. In 1996, according to a Pembina Institute report, Alberta’s Heritage Fund had $13.7 billion compared to Alaska’s $26.5 billion and Norway’s $11.1 billion. In 2002, Alberta had dropped to $11.8 billion, while Norway’s had risen to $101 billion. Alaska was at $35.7 billion, but it also distributed an annual oil dividend that was between $1,000 and $1,900 (US) to every Alaskan citizen. Furthermore, the Klein government took in less than half the revenue per unit of oil that the Lougheed government did in the 1970s.
Along with the existing tax break and royalty holiday, the federal government provided $60 million in research and development funding for oil sands projects between 1996 and 2002. During the same period, it allowed Syncrude to reduce its taxes by $507 million, and there are mutterings among Calgary oil analysts that the government will never see a profit on Syncrude. “The oil sands are very heavily subsidized,” said 40 the walrus Tim Howard. Without the tax incentives, analysts say, the oil sands would never have been established, and they remain necessary, or future investment will wither.
The mythology of oil draws from the wildcatter, that romantic Texan symbol of grit and independence, and, importantly, movement. It was sustained by the idea that you would always find more oil, that a big strike would transform your life. That version of the oil man has retreated into fiction, yet the image remains. For all the extraordinary engineering feats in a hostile and remote climate, the oil sands most resemble a government operation — assuming some of the traditional roles of government, and taking on some of its personality traits.
Keyano College has a campus in Fort McMurray named for Suncor and makes money providing training for the oil sands companies. The Syncrude Technology Centre on campus is architecturally the city’s most distinctive building, and the company sponsors the Engineering Technology program. Syncrude spent $107 million in 2004 on local First Nations businesses, it contributes to literacy programs, career initiative programs, scholarships. It funded archeological studies, contributed to community centres, and raised a herd of 300 wood bison. Suncor has a similar record of largesse, and both companies fund environmental initiatives.
The oil sands companies resemble governments in other ways. Due to increased labour costs, questionable management, and a series of miscalculations, the big three — Syncrude, Suncor, and Shell/Albian Sands — have incurred massive overruns on expansion work extending into the billions. When queried about the overruns, the answers were vague and governmental, and there was none of the symbolic bloodletting that free enterprise usually favours, the heads on pikes to assure the markets that things are now in control. As the Klein government retreats into a private-enterprise model, the oil sands companies are becoming bureaucracies—inefficient, supported by tax breaks and research money, but providing jobs, education, and environmental management. They are Big Daddy.
There is an inherent conflict in industry driving environmental policy. Stewart Brand, founder of the Whole Earth Catalogue, once noted that he loved working with the Pentagon because they were the only group other than environmentalists that thought in fifty-year time frames. It isn’t reassuring that the Pentagon presents a bleaker scenario than most environmentalists. A 2003 Pentagon report presented a world changed by global warming, a Darwinian, medieval landscape that could begin taking shape in twenty years. “Humanity would revert to its norm of constant battles for diminishing resources,” the report reads. “Once again, warfare would de•ne human life.” It warns of oil shortages, chaos, the skies •lled with greenhouse gases.
The energy sector is the largest producer of greenhouse gases in Canada, and the oil sands themselves are “the largest terrestrial development in North America, affecting adjacent provinces and downstream areas,” said Tim Howard. The government management of the environment is under the overlapping auspices of the Alberta Energy and Utilities Board (eub), the provincial Ministry of the Environment, and Environment Canada. To proceed with an oil sands project requires a provincial environmental assessment, and depending on what is being affected, possibly a federal assessment as well. “But the responsible authority can set the scope of the assessment,” said Howard. In the case of a TrueNorth Energy proposal, Fisheries and Oceans Canada, which was conducting the environmental assessment, limited its examination to a single creek. “The federal government hasn’t stepped up to the plate on becoming co-regulators,” said Howard.