Boom Town – Rats?

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Life in a ‘Man Camp’ is not for everyone: http://www.pressherald.com/life/man-camp.html

When it comes to mining, Australia has many lessons for us. A 2009 report from the Queensland Government and Centre for Social Responsibility in Mining (CSRM) at University of Queensland showed that housing affordability often declines for people in mining towns who aren’t working in the industry.

Stats from the Real Estate Institute of Queensland (REIQ) show a close correlation between Queensland resources and property booms — median house prices in one suburb soared 65 percent in a year. Great if you’re a property investor, but if you just want an affordable home for your family you might be out of luck.

CSRM studies have documented the “two-speed economy” that follows mining “boom towns”, where people who aren’t working in the industry get a sharp shock when they realise that normal life is suddenly a lot more expensive.

A US Department of Agriculture study published last year found that in three states experiencing petroleum booms, a large increase in production caused only modest increases in local jobs and median household income and employment rose 1.5 percent on pre-boom levels.

There is a range of other peer-reviewed empirical studies on the subject (a few listed below), and I’m happy to look at evidence to the contrary.

So while some incomes will rise during an oil boom, the cost of living for everyone is likely to increase as well — meaning those on a fixed income are in fact worse off. We know that most of the high-paying jobs that go with the territory go to specialists who are brought in.

While this may not on its own be reason enough to say “no” to oil and gas exploration here, it’s important to understand the real opportunities and risks before rolling out the red carpet.

And communities aren’t the only ones thinking hard about the pros and cons. Two months ago Rabobank Group said it would no longer provide finance to anyone involved in extracting unconventional fossil fuels such as oil shales through fracking (see their Oil & Gas policy).

One of the world’s largest lenders, Rabobank is worried about the impact oil and gas production is having on people, productive agricultural land, wildlife and the climate — as well as the release of greenhouse gases and their warming of the planet.

As we are seeing in Taranaki now, there is increasing conflict in the communities affected by the expansion of oil and gas there and a perceived risk to the rural sector from residents near new developments.

A letter to Tiniroto resident John Brodie from the FMG Service Centre says:

“Our Underwriters have confirmed we exclude cover of Fracking and anything related to this activity. Fracking is outside of FMG’s preferred risk profile and is not something we would be willing to cover as we do not insure any risks relating to the mining industry.”

I agree that Gisborne refusing to welcome fossil fuels production here won’t make a serious dent in global greenhouse gas emissions. But global agreements don’t happen out of thin air — they tend to come from grassroots movements that influence local government, national legislation and eventually international diplomacy.

The people of Gisborne taking a stand would help the industry and government to think twice and take notice. But that’s a decision for our community to make, and soon. Last year 2000 locals asked for public notification of any mining resource consent yet Gisborne District Council has chosen not to do so. I think now more than ever we need a forum for the community, our government, iwi and industry to sit down and talk about what the pros and cons really mean for Tairawhiti.

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REFERENCES:

http://www.csrm.uq.edu.au/publications/247-local-government-mining-companies-and-resource-development-in-regional-australia

http://apo.org.au/research/benefits-boom

http://www.regionalaustralia.org.au/research-policy/policy-issues/

http://www.cis.org.au/publications/policy-monographs/article/3309-australias-angry-mayors-how-population-growth-frustrates-local-councils

http://www.lgaq.asn.au/c/document_library/get_file?p_l_id=189033&folderId=98699&name=DLFE-9119.pdf

http://www.regions.qld.gov.au/dsdweb/v4/apps/web/content.cfm?id=16447

Weber, J. G. (2012). The effects of a natural gas boom on employment and income in Colorado, Texas, and Wyoming. Energy Economics, 34(5), 1580-1588. doi: http://dx.doi.org/10.1016/j.eneco.2011.11.013

Jacquet, J. 2009.  Energy Boomtowns & Natural Gas: Implications for Marcellus Shale Local Governments & Rural Communities, NERCD Rural Development Paper No. 43, January 2009, 63 pp., University Park, Pennsylvania: The Northeast Regional Centre for Rural Development, The Pennsylvania State University. http://www.sciencedirect.com/science/article/pii/S0301421512006702

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