My view: The 'resource curse' and rush for fossil fuels in Utah

By Brian Moench

For the Deseret News

Published: Thursday, March 13 2014 12:00 a.m. MDT

Merit Energy Rig, eastern Utah

Lisha Cordova, Division of Oil, Gas and Mining

Enlarge photo»

“Resource curse” is a term coined in the 1980s as an observation that countries depending heavily on natural resources like oil often perform worse than their resource-poor peers in achieving civil society, good governance, long-term economic stability and growth. Studies by economists such as Jeffrey Sachs, Paul Collier and Joseph Stiglitz further legitimized and defined “resource curse” as an international phenomenon describing OPEC and many other petro-states.

But the first and perhaps most extreme example of “resource curse” from oil actually occurred in the United States. Drillers hit the first oil jackpot in Pennsylvania in 1859. Towns like Titusville and Pithole were “petro-cities,” rising from nothing to more than 15,000 nearly overnight. In a matter of months, Pithole had banks, a newspaper, waterworks, fire company, scores of boarding houses and 50 hotels.

But the inevitable bust came just as swiftly. Within a year the oil dried up and the town was deserted. A parcel of land in Pithole that sold for $2 million in 1865 was auctioned for $4.37 in 1878.

In more recent history, entities that succumb to the allure of resource riches and easy money follow a similar, albeit more complicated “curse” pattern — the natural resource sector siphons away a potentially educated or skilled workforce, withering other economic sectors, like agriculture and tourism. High wages in the resource sector drives up the cost of living, particularly harmful to those employed in other sectors.

Oil resources tend to make governments more wasteful, corrupt and authoritarian, with government agencies acting often as facilitators to powerful corporations, and impotent in enforcing rules and regulations. Pollution and public health considerations are often swept under the rug and hidden there by a conspiracy of silence.

With this historical backdrop, it is worth examining what is transpiring in Western states where a new fossil fuel feeding frenzy is underway. Is there a modern, Utah parallel to “resource curse?”

Headwaters Economics analyzed the effects of an early 1980s oil boom in six Western states, including Utah. The study explored the long-term impacts of the boom on social and economic development from 1980-2011, analyzing data from 207 counties. These counties saw per capita income levels decrease by $7,000, on average. Boomtowns typically see the cost of living skyrocket in the short-term, offsetting income gains. In Fort McMurray, the heart of tar sands in Alberta, Canada, the population has recently tripled. The formerly rural area, now bursting at the seams, has the highest housing prices in Alberta, while rating poorly in 70 of 72 quality-of-life indicators. Their local doctor just held a press conference announcing skyrocketing rates of cancer in the local population.

Counties with economies dependent on oil and gas have higher crime rates. The flood of young men into oil and gas drilling jobs, often staying in some form of “man camps,” has driven up crime rates by as much as one-third in Montana and North Dakota. Child and spousal abuse is up, as is rape. Research shows residents of oil and gas boomtowns demonstrate social and psychological stress similar to patterns documented in victims of bullying and other types of abusive relationships.

In Vernal, the epicenter of Utah’s fossil fuel rush, violent crime rates have increased 450 percent compared to 10 years ago, while national rates have dropped. These $60,000 rig-operating jobs are enticing high-schoolers to drop out and join the oil rush. The local pollution levels are often the highest in the state, with ozone levels consistently higher than Los Angeles.

New studies show that pregnant women who live near high concentrations of drilling activity have children with higher rates of birth defects and other adverse pregnancy outcomes. People who believe that’s exactly what’s happening in Vernal have faced personal and career threats for speaking out.

Our pioneer ancestors were once warned against succumbing to the “get rich quick” mentality of the California gold rush. But by paving the way for oil shale, tar sands, expanded refineries and a frenzied pace of oil and gas drilling, Utah is becoming a petro-state, intoxicated with the “black” gold rush and ignoring the resource curse of dirty energy.

Dr. Brian Moench is president of Utah Physicians for a Healthy Environment.

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