FORT MCMONEY, FORT MCPROBLEMS
http://www.vueweekly.com/articles/default.aspx?i=6751
ANDREW CISAKOWSKI / cisa@vueweekly.com
For the past decade, Fort McMurray has grown at a rate of 10 per cent per year, over twice the provincial average. During this time it has developed all the characteristics of a boomtown: skyrocketing prices, overstretched infrastructure and a growing homeless problem. Only able to raise money through increasing property taxes, the city is at a loss of how to deal with these problems. More and more, public pressure is mounting for oil companies to foot the bill.
In the early ’90s, with the price of oil hovering around $20 a barrel (the tar sands need a price of about $40 a barrel to turn a profit) the Klein government attempted to woo big oil with a bargain-basement one per cent royalty rate. Now that the price has been (and looks sure to continue being) around $70 a barrel, many are questioning the sanity of such low taxation.
With investment (already about $35 billion, with another $45 billion on the way) pouring in, the amount of money received by the Alberta government via royalties is, in fact, falling.
As the oil industry swallows all the local resources, the city’s infrastructure is unable to keep up. A growing number of homeless walk the streets. Doctors and teachers complain of being overwhelmed. Because of overflowing sewer lines, construction has been halted in the city centre, leading to growing urban sprawl. With few avenues of entertainment and lots of money, drug use has exploded among oil patch workers, at more than four times the provincial average.
There is also a growing environmental concern. Oil from the tar-sands is particularly carbon intense (about two to three times more carbon is emitted as from traditional wells), as natural gas is used in separating the oil from the sand. And as each hole is several kilometres in width, about 3000 square kilometres of forest is being cleared.
A large source of oil in Canada is, of course, tempting to foreign oil companies. With the high price of oil, the artificially low royalty rate is no longer needed. Not only would an increase in the royalty rate help pad Alberta’s coffers, but also it would act as a break to slow the overheated Northern Alberta economy, allowing resources to divert to where they are badly needed.
