Oil Boom = Lower Capita Income, Dislocations, Higher Environmental and Health Hazards, Higher Levels of Conflict…and Virunga?

Oil Boom


Lower Capita Income, Dislocations, Higher Environmental and Health Hazards, Increased Levels of conflict… Local Inflation, Increased Migration, Chronic Underemployment, food shortages, increased prostitution, AIDS, and crime…


and what about Virunga’s Communities and Natural Wealth?


The exploitation of oil has a profound regional and local impact, and from the standpoint of the majority of the local population, this impact is alarming. Rather than bring prosperity to a region, as is often the claim, the boom-bust cycle associated with petroleum dependence is magnified. Localities where oil is actually located over time tend to suffer from lower economic growth and lower per capita incomes than the rest of the country, greater dislocations, higher environmental and health hazards, and higher levels of conflict.

Economically, petroleum fails to offer long-term sustainable employment alternatives at the local level, but it can seriously disrupt pre-existing patterns of production. The promise of new jobs that new oil exploitation seems to offer typically attracts large numbers of migrants to an exploitation area. The rapid influx of people and the higher relative salaries of oil project workers inflate the local prices of key goods and services, bringing about a significant increase in the cost of living, even for those who do not share in the benefits of an oil project. For example, the municipality of Yopal, in the state of Casanare, Colombia, abruptly filled with migrants hoping to find employment at salaries three to four times the minimum wage – even before nearby massive oil fields at Cusiana-Cupiagua came on stream. Rents and prices increased 300 percent, virtually overnight. But because most jobs created by the petroleum industry are temporary or seasonal in nature, and because the growth in jobs generally occurs only during the exploration phase as land needs to be cleared or equipment transported, the industry actually offers comparatively few jobs over time. Thus, while discoveries trigger massive changes, beginning with the influx of workers seeking employment on the construction of roads, pipelines and other infrastructure, these increased employment opportunities are do not last; employment levels tend to decline dramatically when infrastructure construction is complete. These problems are compounded by the expropriation of arable land for resource extraction activity and environmental damage, which promote a shift away from subsistence agriculture. The resulting instability in employment and income and food instability stress the local economy.

The social fabric of oil localities also changes, as disparities in income emerge and migrants pour in, often from other countries, ethnic groups, or religions. After the construction phase has been completed, the most likely local result of an oil boom (along with higher than average local inflation, increased migration, chronic underemployment, and food shortages) is increased prostitution, AIDS, and crime. Original residents who may not have been able to share in oil benefits increasingly clash with “newcomers,” as they see their own ways of life greatly disrupted.

This is the case of the Bakola/Bagyeli ‘pygmies,’ for example, an ethnic minority in the region around Kribi, Cameroon, who, depend on forest products and hunting for their subsistence. They claim that the Chad-Cameroon pipeline construction has destroyed their medicinal plants and fishing and game areas, benefiting foreign workers and the Bantu population without providing meaningful compensation to them. The adverse impact on public health near oil localities is especially great. The migration of workers and the conditions of their housing lead to an increase in the incidences of communicable diseases, such as AIDS, other sexually transmitted diseases, tuberculosis and cholera. Along the Chad-Cameroon pipeline, for example, temporary encampments have led to the rise of prostitution and, consequently, the appearance of HIV/AIDS.

The environmental dimension of oil exploration is a chief cause of social dislocation. Hazardous wastes, site contamination, and the lack of sufficient protection of surface and subsurface waters, biodiversity and air quality (both in the immediate vicinity of the oil project and in relation to global concerns such as ozone depleting substances and greenhouse gases) have endangered the health of local populations near oil installations and pipelines and destroyed local livelihoods such as farming and fishing. Local communities, for example, report a sharp rise in infantile leukemia near oil facilities.

This disruption is most profound among ethnic minorities and indigenous peoples who live off the land and whose customs and traditions may also be threatened.

In Ecuador, the Cofan Indian Tribe reports the contamination of its drinking supply, In Colombia, where at least 2.1 million barrels of petroleum have been spilled since 1987 (approximately eleven times as much oil as was spilled in the Exxon Valdez disaster of 1989), severe damage to this tropical ecosystem includes air pollution, land clearings, water contamination, soil erosion, sedimentation, and the disturbance of wildlife habitats. Petroleum wastes wash directly into local waterways, and Colombia’s Institute of Natural Resources (INDERENA) has repeatedly condemned the presence of high concentrations of heavy metals and toxic polycyclic aromatic hydrocarbons, which are 300 times higher than drinking water standards in the North and 50 percent higher than international standards for oil discharges to surface waters.

But the fate of the Niger Delta region, where exploration began in 1958, is the best known example of the local impact of oil exploration. Although two million barrels per day are pumped out of the Niger Delta’s mangrove swamps every day, providing Nigeria with a large share of its GDP, over 90 percent of its export earnings, and almost all its tax revenues, the people in the region have barely benefited. Despite producing energy for the country and the world, many of them do not even have electricity. While compensation paid for land acquisition and oil spillages have aided some individuals from the Ogoni minority whose land is affected, the local economy and the environment have been devastated. Gas flaring has permanently scorched the earth, destroying food crops and rendering farmlands barren. Some scientists believe that the incomplete combustion of the flares has resulted in acid rain that, in turn, has damaged crops and drinking water. Oil spillages (an average of three per month) and ruptured pipelines (either from improper maintenance or sabotage) have destroyed streams, farmlands and aquatic life. Thousands of villagers have been killed in pipeline explosions resulting from leaks, including over 700 people in one leak alone in October 1998. This has made unlivable the Alwa Ibom community in Iko, a once thriving economically stable and self-supporting community. By most calculations, the region remains one of the most economically backward and politically marginalized in the country. As popular protest against the activities of oil companies rises and security forces are increasingly called upon for protection of facilities, it is also one of the most conflict-ridden and politically explosive.

Source: CDDRL WORKING PAPERS, Number 80, January 2007, Oil-Led Development: Social, Political, and Economic Consequences By Terry L. Karl

How many more reasons do we need….