tag:theconversation.com,2011:/uk/topics/oil-boom-26122/articlesOil boom – The Conversation2022-08-17T14:54:08Ztag:theconversation.com,2011:article/1889152022-08-17T14:54:08Z2022-08-17T14:54:08ZAngola’s 2022 election: an unfair contest the ruling MPLA is sure to win<figure><img src="https://images.theconversation.com/files/479601/original/file-20220817-18-54dr38.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Protests demanding better living in Angola have become common since 2011. This one was in November 2020.</span> <span class="attribution"><span class="source">EFE-EPA/Luso</span></span></figcaption></figure><p>Angolans go to the polls on 24 August to vote <a href="https://www.eisa.org/calendar.php">in parliamentary elections</a>. The leader of the party with the most seats in parliament automatically becomes the president, so this is also in effect a presidential election. </p>
<p>This will be the fourth election since the end of the Angolan civil war in 2002. The three previous post-war polls were marked by a steady decline in the number of people voting for the Popular Movement for the Liberation of Angola (<a href="https://www.britannica.com/topic/Popular-Movement-for-the-Liberation-of-Angola">MPLA</a>). In the last election, five years ago, the party’s share of the vote <a href="https://www.academia.edu/en/35640101/Angola_s_Elections_and_the_Politics_of_Presidential_Succession">was down to 61%</a> nationally, in contrast to 70% in the previous election according to the official tally. </p>
<p>Most worryingly for the ruling party, it came in with less than 50% of the vote in the capital, Luanda, a city that it <a href="https://www.academia.edu/en/35640101/Angola_s_Elections_and_the_Politics_of_Presidential_Succession">historically regarded as a heartland</a>.</p>
<p>The four main opposition parties issued a joint statement citing irregularities in the vote counting process and <a href="https://www.makaangola.org/2017/09/angolan-opposition-unites-to-challenge-illegal-election-results/">rejecting the election results</a>. Days later, they decided instead to take up their seats and continue to participate in parliament. The sudden change earned criticism from civil society organisations that had also been angered by the irregularities in the vote tallying procedure.</p>
<p>The biggest concern, once again, is that the election will lack credibility.</p>
<p>A local polling service, <a href="https://www.angobarometro.com/">AngoBarómetro</a>, has <a href="https://www.africa-confidential.com/article/id/13916/Alarm_grows_over_vote-rigging_plans">predicted</a> that in a fair competition, there would be an outright win for the National Union for the Total Independence of Angola (<a href="https://www.britannica.com/topic/UNITA">Unita</a>), the former armed movement that fought the MPLA in a 27-year war that ended <a href="https://www.sahistory.org.za/article/angolan-civil-war-1975-2002-brief-history">in 2002</a>. </p>
<p>Voter polling is a relatively new phenomenon in Angola so one cannot vouch for the reliability of the poll. However, it fits with the general downward trend in the MPLA’s electoral performance since 2008.</p>
<h2>Uneasy situation</h2>
<p>The 2017 election marked the resignation of President José Eduardo dos Santos, who had been in office <a href="https://www.france24.com/en/20180908-dos-santos-leader-angola-president-joao-lourenco-ruling-party">since 1979</a>. His lengthy tenure had become a focus of popular protest that had gathered pace in Angola since 2011, along with other issues such as <a href="https://democracyinafrica.org/the-struggle-for-democracy-in-angola/">unemployment, the high cost of living</a> and growing inequality amid an oil boom. The boom had produced, at least on paper, <a href="https://edition.cnn.com/2012/08/30/opinion/opinion-angola-development-elections/index.html">dizzying growth figures</a> between 2004 and 2014.</p>
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Read more:
<a href="https://theconversation.com/angolas-eduardo-dos-santos-an-unlikely-leader-known-for-his-judicious-use-of-violence-188083">Angola's Eduardo dos Santos: an unlikely leader known for his 'judicious' use of violence</a>
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<p>President João Lourenço took office amid the post-boom recession. His first move was to distance himself from Dos Santos. He lost no time in prosecuting some high-profile beneficiaries of the Dos Santos regime and <a href="https://www.dw.com/en/angola-the-fall-of-the-dos-santos-clan/a-45646757">nationalising their assets</a>.</p>
<p>The goodwill generated by such measures, however, could not last long. Dos Santos’s electoral strategy had rested on associating himself with the arrival of peace in 2002, and blaming the country’s problems on the legacy of the war and more specifically on Unita. The MPLA’s <a href="https://www.academia.edu/en/35640101/Angola_s_Elections_and_the_Politics_of_Presidential_Succession">declining share of the vote from 2008</a> onwards showed how that strategy was becoming ever less effective as the war receded into the past.</p>
<p>What is more, in previous elections the MPLA could count on the support of an emerging middle class that got used to a consumer lifestyle during the boom. Lourenço took office in the midst of a deep economic crisis, which has only got worse since he was elected. </p>
<p>Poverty is once again visible on the streets of Luanda, the capital, in the form of people scrounging for food in rubbish containers. Abandoned construction sites are a visible reminder of the bubble that burst. Even the middle class, whose expectations were raised during the oil boom, now struggle to buy basic necessities. </p>
<p>The 2022 election is the first in which citizens born after the war are old enough to vote. To this generation, the old slurs against Unita are meaningless. Even in traditional MPLA strongholds such as Malanje in north-central Angola, the party has <a href="https://www.makaangola.org/2022/08/angolan-elections-2022-indifferent-reception-for-president-lourenco-in-malanje/">battled to mobilise support at campaign rallies</a>.</p>
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<a href="https://theconversation.com/why-luandas-residents-are-asking-where-did-all-the-oil-riches-go-49772">Why Luanda's residents are asking: where did all the oil riches go?</a>
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<p>Lourenço has been more tolerant of criticism than his predecessor was, but the current regime still resorts to force when it feels challenged. In November 2020, a march in Luanda calling for the creation of jobs and the holding of long-delayed municipal elections was <a href="https://www.hrw.org/news/2020/11/12/angola-police-fire-peaceful-protesters">met by police with live ammunition</a>.</p>
<p>In 2021 police also used force against protesters <a href="https://www.amnesty.org/en/latest/news/2022/08/angola-unlawful-killings-arbitrary-arrests-and-hunger-set-election-tone/">in Cabinda and Lunda Norte provinces</a>.</p>
<p>The authorities have <a href="https://www.amnesty.org/en/latest/news/2022/05/angola-authorities-repress-civil-society-organizations-ahead-of-election/">prevented civil society organisations</a> from holding meetings in the run-up to the elections.</p>
<h2>Marshalling the opposition</h2>
<p>As the MPLA’s political capital has diminished, so the opposition has begun to look more credible. Unita, the main opposition party, began to broaden its social base during the 2010s, finding common cause with civil society and a growing protest movement particularly in Luanda – a city where for previous generations, voting for Unita would have been anathema.</p>
<p>The election to the party leadership of <a href="https://www.tellerreport.com/news/2019-11-16---angola--adalberto-costa-junior--new-leader-of-unita---rfi-.H1xiNIKasS.html">Adalberto Costa Júnior</a>, 60, in 2019 marked a change of generation and image, and an effort to build the party’s support beyond its traditional bases in the interior.</p>
<p>In an attempt to gather together divided opposition votes, Unita is including on its electoral list <a href="https://eco.sapo.pt/2022/07/23/unita-apresenta-manifesto-eleitoral-e-promete-governo-de-competentes-e-nao-de-partidarios/">candidates from outside the party</a>. They include Abel Chivukuvuku, a former Unita official who enjoys a strong personal following and whose new PRA-JA party was denied registration, and Justino Pinto de Andrade, a well-known academic and liberation struggle veteran from a prominent MPLA family.</p>
<p>The MPLA, which still has a strong hold over the civil service and judiciary, has done its best to make life difficult for the opposition. Last year the constitutional court annulled the election of Costa Júnior as Unita leader, on the grounds that at the time of the party congress, he held dual Angolan-Portuguese nationality, even though he subsequently <a href="https://www.novojornal.co.ao/politica/interior/tc-anula-xiii-congresso-da-unita---acordao-7002021-da-provimento-aos-requerentes-por-violacao-da-constituicao-da-lei-e-dos-estatutos-de-2015-em-actualizacao-104785.html">renounced the Portuguese citizenship</a> that he had inherited from his father. </p>
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<a href="https://theconversation.com/angolas-peculiar-electoral-system-needs-reforms-how-it-could-be-done-163528">Angola's peculiar electoral system needs reforms. How it could be done</a>
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<p>The composition of the electoral commission is dominated by government and MPLA appointees. As in previous years, state media during the campaign period have been giving disproportionate coverage to MPLA events and government projects associated with the MPLA. Unita has filed criminal complaints over <a href="https://allafrica.com/stories/202208080237.html">breaches of the electoral law</a>, of which the outcome remains uncertain.</p>
<h2>Discontentment</h2>
<p>Lourenço faces new challenges as he heads into his second term. The economy remains oil dependent and the country still depends heavily on imported food. So a recovery in global energy prices has been offset by an increase in food prices <a href="http://hub.ccouc.cuhk.edu.hk/news-and-info/angola-implications-ukraine-crisis-food-fuel-fertilisers-and-freight-prices-southern">brought about by the war in Ukraine</a>. </p>
<p>Discontentment over the ongoing issues of inequality and unemployment is likely to be sharpened in the wake of an election result that lacks legitimacy.</p><img src="https://counter.theconversation.com/content/188915/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Justin Pearce has received funding from the Leverhulme Trust. </span></em></p>Angola’s 2022 election is the first in which citizens born after the war are old enough to vote.Justin Pearce, Senior lecturer, Stellenbosch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1874622022-07-22T15:25:31Z2022-07-22T15:25:31ZAngola’s Eduardo dos Santos: a divisive figure in life - and in death<figure><img src="https://images.theconversation.com/files/475634/original/file-20220722-228-ecstnl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Jose Eduardo dos Santos. </span> <span class="attribution"><span class="source">epa-efe/Tiago</span></span></figcaption></figure><p>There is unlikely to be consensus on what <a href="https://www.thepresidency.gov.za/national-orders/recipient/president-jos%C3%A9-eduardo-dos-santos-1942">José Eduardo dos Santos</a>, Angola’s former longtime president who died earlier this month in Barcelona, Spain, will represent in the memory of Angolans.</p>
<p>While he has been credited for steering his country through a decades long <a href="https://www.sahistory.org.za/article/angolan-civil-war-1975-2002-brief-history">civil war</a>, his rule was marred by authoritarianism, high levels of corruption, and the securitisation of the state.</p>
<p>Critics were not tolerated and inequality marred attempts at post-conflict reconstruction. The failure to significantly diversify the country’s economy beyond its heavy reliance on oil has continued to haunt his successor, <a href="https://www.angola.or.jp/2020/08/24/biography-pr-joao-lourenco-en/">João Lourenço</a>. </p>
<p>Dos Santos was not a man known for his speeches or for intense public engagement. The most common way that he was encountered was through his face being on the country’s banknotes, an ironic reminder of the <a href="https://www.plataformamedia.com/en/2020/06/26/jose-eduardo-dos-santos-is-still-the-richest-man-in-angola/">wealth he seemed to personally control</a>. </p>
<p>Outside election cycles, Dos Santos was a withdrawn president. He stayed in his presidential homes, trusting only a small group of advisers and preferring to give verbal instructions rather than written ones. Angolans generally only saw him in the media and occasionally at official events if they were allowed to be present. </p>
<p>His silence allowed people to project their beliefs onto him, rather than ever be sure of an insight into his own thoughts. It was precisely this distanced silence, therefore, which produced his aura of power and the cult of personality that surrounded him.</p>
<h2>Absent but omnipresent</h2>
<p>Dos Santos came to power in September 1979 <a href="https://www.thepresidency.gov.za/national-orders/recipient/president-jos%C3%A9-eduardo-dos-santos-1942">at the age of 37</a>. He quickly came to inhabit his presidential position, side-lining many of the original prominent leaders of the governing People’s Movement for the Liberation of Angola (<a href="https://www.britannica.com/topic/Popular-Movement-for-the-Liberation-of-Angola">MPLA</a>), while installing his own people in positions of power. </p>
<p>His understanding of the workings of state institutions, presidential power and financial flows became apparent as the MPLA found itself increasingly unable to counteract its own president, causing frictions between party and leader.</p>
<p>Oil funds were used to ensure the viability of the MPLA’s war effort against the rebel movement Unita through the purchase of weapons and food. They also became a means of <a href="https://www.jstor.org/stable/43664097#metadata_info_tab_contents">disbursing patronage and favours</a>, tying the elite to the president’s whims. The fear of losing access to financial support in a country where to be poor meant having almost nothing acted as the ultimate threat for the elites.</p>
<p>By the end of the country’s civil war <a href="https://www.sahistory.org.za/article/angolan-civil-war-1975-2002-brief-history">in 2002</a>, decisively won by the MPLA led by Dos Santos, the presidency had almost rendered other decision-making structures irrelevant. The new <a href="https://www.constituteproject.org/constitution/Angola_2010.pdf?lang=en">2010 constitution</a> further embedded presidential powers. These had been informally accumulated during the 1980s and strengthened in the 1990s. This included the elimination of the position of prime minister as <a href="https://www.britannica.com/place/Angola/Government-and-society">head of the government</a>.</p>
<p>Dos Santos inspired loyalty and fear. A number of factors made this possible. These included his long stay in power <a href="https://www.africanews.com/2022/07/08/former-angolan-president-jose-eduardo-dos-santos-dies-at-79//">(1979 to 2017)</a> as well as the creation of a parallel security state answerable almost exclusively to him. People were wary of phones being tapped, of acquaintances working for intelligence services, and the internet being monitored.</p>
<p>This fear created a relationship to the presidency in which it was understood as socially remote from ordinary Angolans; but seemingly omnipresent due to the belief in the office’s capacity to collect information about the most banal of everyday actions and statements.</p>
<p>These beliefs often seemed to be realised in the late days of Dos Santos’s rule when activist circles were infiltrated. This led to <a href="https://www.amnesty.org/en/latest/press-release/2015/11/angola-trial-of-15-activists-after-five-months-in-detention-a-travesty-of-justice/">arrests and show trials</a> of those questioning state policies and the political system.</p>
<p>One of the long-term legacies of his rule is a paranoid and authoritarian political system. It does little to serve the needs of the majority and centres too much power in the presidency.</p>
<p>Attempts at opening up the political space and producing an engaged civil society <a href="https://www.africanews.com/2017/09/26/profile-angolas-eduardo-dos-santos-guerilla-fighter-to-democratic-president//">were dampened if not openly crushed</a>. Despite leading the country into its most-prolonged period of peace since 1961, when the <a href="https://link.springer.com/chapter/10.1007/978-3-319-61792-3_13">insurrection against Portuguese colonial rule began</a>, Dos Santos’s style of rule was detrimental to the growth of a vibrant democracy. Criticism was treated as a threat. Security forces were readily used to harass critics and opposition.</p>
<h2>Oil dependence, corruption and inequality</h2>
<p>Dos Santos’s economic legacy, more than his political one, attracted the most attention abroad. During his final years and his retirement in 2017, the accumulation of wealth by his family, especially his eldest child, <a href="https://www.bbc.com/news/world-us-canada-59616316">Isabel dos Santos</a>, generated significant criticism from Angolans and foreigners.</p>
<p>His children’s actions were viewed by many as symbolic of the broader scourge of corruption that had come to characterise Angola’s political economy. This, under the pretence of building a “national bourgeoisie”.</p>
<p>At the heart of Dos Santos’s power and Angola’s wealth stood oil. While many understood the country’s continued reliance on oil during the civil war period (1975-2002), Dos Santos’ inability to encourage significant diversification of the economy during the decade long post-conflict oil boom was perhaps one of his greatest failures.</p>
<p>If poverty was already extreme for many Angolans, the failed promises of the oil boom only made the period that followed worse. With <a href="https://blogs.worldbank.org/developmenttalk/what-triggered-oil-price-plunge-2014-2016-and-why-it-failed-deliver-economic-impetus-eight-charts">the crash of oil in 2015</a>, <a href="https://www.worldbank.org/en/country/angola/overview#:%7E:text=Since%202015%2C%20the%20oil%20sector,GDP%20decline%20of%209.9%20percent.">the country has experienced</a> austerity, rising unemployment and worsening social conditions. This situation could have been alleviated if more focus had been placed on building alternatives to the oil industry.</p>
<h2>Legacy unclear</h2>
<p>Dos Santos died five years after leaving office in self-imposed exile, abandoned by his previous political allies, especially those belonging to his own generation of the anti-colonial struggle.</p>
<p>His body is now <a href="https://www.expatica.com/es/general/spanish-court-refuses-to-hand-over-dos-santos-body-192519/">in litigation in a Spanish court</a> and is the subject of a close dispute between different wings of his family and the Angolan state. President João Lourenço <a href="https://nation.africa/africa/news/angola-declares-7-days-of-national-mourning-after-jose-eduardo-dos-santos-death-3874220">decreed seven days of national mourning</a> and insists on holding a state funeral. Dos Santos’s children have accepted to bury him in Angola, but only after the 2022 election as they seek to leverage the political significance that his body symbolises. </p>
<p>The dispute is evidence of the power Dos Santos’s wielded in life and now in death. On the eve of the Angola’s <a href="https://www.africanews.com/2022/06/04/angola-to-hold-general-elections-on-august-24//">August 24 elections</a>, his funeral would be a means for Lourenço to gain electoral advantage and redeem himself in the face of public criticism for the attacks carried out against Dos Santos and his children.</p>
<p>For Lourenço and the hard-core of the MPLA, Dos Santos’ body is a political asset with the potential to appease internal divisions, negotiate with his children, and calm popular dissatisfaction with Lourenço’s and the party’s <a href="https://theconversation.com/angolas-president-has-little-to-show-for-his-promise-of-a-break-with-the-authoritarian-past-167933">performance since 2017</a>.</p>
<p>Amid the political dispute over the body and general elections, Dos Santos’s political legacy will continue to divide Angolans immensely for a long time.</p><img src="https://counter.theconversation.com/content/187462/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Claudia Gastrow has previously received funding from the National Science Foundation, the Wenner-Gren Foundation, the Social Science Research Council, the Research Council of Norway, and the Stellenbosch Institute for Advanced Study. </span></em></p><p class="fine-print"><em><span>Gilson Lázaro receives funding from the Norwegian Embassy programme for research.</span></em></p>Dos Santos was a withdrawn president. His silence produced an aura of power and the cult of personality that surrounded him.Claudia Gastrow, Senior Lecturer in Anthropology, University of JohannesburgGilson Lázaro, Research associate, Catholic University of AngolaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1406092020-06-25T16:54:31Z2020-06-25T16:54:31ZWhen the Calgary Stampede rises again, so too will local roots, folk & country musicians<figure><img src="https://images.theconversation.com/files/344009/original/file-20200625-33524-137wtom.jpg?ixlib=rb-1.1.0&rect=0%2C35%2C6000%2C3952&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Calgary performers persist in the face of uncertainty, and use music to voice dissent and to create community.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>While the pandemic means some of us are scrambling to transition <a href="https://globalnews.ca/news/6946816/canadians-internet-coronavirus-providers/">to more time online</a> or to supplement <a href="https://www.canada.ca/en/services/benefits/ei/cerb-application.html">Canada’s Emergency Response Benefit</a> with a little more income, Alberta’s horses are taking a much-deserved vacation. So are the cattle. </p>
<p>As June descends towards the province’s <a href="https://www.weather-ca.com/en/canada/calgary-climate">hottest</a> and busiest month of the year, primarily <a href="https://www.calgarystampede.com/faq">because of the Calgary Stampede</a>, livestock are normally in their last period of rodeo training. Concentrated care and extra rest help the animals ready themselves for <a href="https://www.calgarystampede.com/visitor-information">a 10-day stretch</a> of entertaining crowds on the city’s fairgrounds.</p>
<p>Not this year. As with other public events, the <a href="https://globalnews.ca/news/6815098/covid-19-2020-calgary-stampede-update/">Stampede was cancelled</a> <a href="https://calgary.ctvnews.ca/calgary-stampede-officially-cancels-2020-edition-of-the-greatest-outdoor-show-on-earth-1.4906742">earlier this spring because of coronavirus</a>. </p>
<p>The scheduled July 3 opening day proved too soon — and too risky — to take a chance. This says a lot for a city <a href="https://www.calgarystampede.com/heritage/history/the-world-wars">that persisted in stampeding</a> through the Great Depression, Second World War and the <a href="https://www.calgarystampede.com/heritage/history/next-hundred-years">great flood of 2013</a>. In fact, it’s the first cancellation since it became an annual event in 1923.</p>
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<img alt="" src="https://images.theconversation.com/files/343561/original/file-20200623-188921-9mslug.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/343561/original/file-20200623-188921-9mslug.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=385&fit=crop&dpr=1 600w, https://images.theconversation.com/files/343561/original/file-20200623-188921-9mslug.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=385&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/343561/original/file-20200623-188921-9mslug.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=385&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/343561/original/file-20200623-188921-9mslug.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=484&fit=crop&dpr=1 754w, https://images.theconversation.com/files/343561/original/file-20200623-188921-9mslug.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=484&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/343561/original/file-20200623-188921-9mslug.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=484&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Alberta’s horses are taking a much-deserved vacation with the cancellation of the Calgary Stampede due to COVID-19. Here, people pet a horse at the Stampede in July 2019.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jeff McIntosh</span></span>
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<h2>Lost city revenues</h2>
<p>Maybe the horses are happy to <a href="https://theconversation.com/rodeo-is-a-theatre-of-violence-and-danger-and-its-not-going-anywhere-121156">avoid their frightful, sometimes fatal, rotations around the chuckwagon track</a>. But for a city already decimated by the crash in oil prices and the economic fallout of the pandemic, the cancellation is bad news. The Stampede first announced <a href="https://calgaryherald.com/business/local-business/calgary-stampede-announces-mass-layoffs-amid-covid-19-outbreak/">staff layoffs</a> in mid-March. </p>
<p>It’s estimated that the 10-day affair <a href="https://calgaryherald.com/news/calgary-stampede-to-give-update-on-2020-plans">gives the city a $227-million boost</a>, and more than double that amount through the rest of the year. And it’s only growing: last year’s attendance was second only to the city’s centennial celebrations in 2012. The income isn’t just from what goes down on the grounds either; for every dollar spent there, the rest of the city gobbles up $2.65. </p>
<p>That means restaurants, clubs, hotels and shops, also already debilitated by coronavirus, will lose a big chunk of their annual revenue.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/343559/original/file-20200623-188931-12yalon.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/343559/original/file-20200623-188931-12yalon.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/343559/original/file-20200623-188931-12yalon.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/343559/original/file-20200623-188931-12yalon.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/343559/original/file-20200623-188931-12yalon.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/343559/original/file-20200623-188931-12yalon.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/343559/original/file-20200623-188931-12yalon.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Mariel Buckley and Tim Buckley, sister and brother, perform on Calgary’s Stephen Ave. in July 2018.</span>
<span class="attribution"><span class="source">(Gillian Turnbull)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<h2>Added musician uncertainty</h2>
<p>For the city’s local musicians, this is added uncertainty. Many of Calgary’s entertainers are able to call themselves full-time musicians because of the Stampede — and that’s saying something in the age of <a href="https://doi.org/10.1177/0950017019865877">musician precarity</a>. </p>
<p>As gigs decline from <a href="https://nationalpost.com/entertainment/music/what-does-it-mean-that-torontos-music-venues-are-slowly-being-replaced-by-drugstores">closing venues</a> throughout North America and recording revenue dries up thanks to <a href="https://firstmonday.org/ojs/index.php/fm/article/view/10382">online streaming platforms</a>, some musicians are already succumbing to economic instability and increased <a href="https://www.helpmusicians.org.uk/assets/publications/files/can-music-make-you-sick-part-2-qualitative-study-1.pdf">mental health problems</a>. </p>
<p>The Stampede bills its <a href="https://www.calgarystampede.com/coca-cola-stage">Coca-Cola stage</a> as the place for “the biggest names in music” and stocks it with a mix of international, Canadian and cross-Alberta performers of various genres from hip hop to rock, alternative pop and country music. The <a href="https://www.calgarystampede.com/stampede/music/nashville-north">Nashville North tent</a> is also typically piled with commercial, often American, country acts. </p>
<p>Places like the Western Oasis schedule <a href="https://vimeo.com/76120439">traditional folk and country acts</a> for their <a href="https://westernshowcase.com/window-on-the-west.html">Window on the West</a> series. But many local Calgary country, folk and roots musicians are likely to be found performing throughout in the city. </p>
<h2>Roots musicians benefited</h2>
<p>Go anywhere in Calgary — a pancake breakfast, a grocery-store barbecue, a corporate afternoon beer garden — and there are those local country, folk and roots musicians, a constant soundtrack to the city’s party. </p>
<p>These musicians typically have a particularly easy go at Stampede time of year, primed as they are to amplify the <a href="https://www.aupress.ca/books/120142-icon-brand-myth/">western theme of the season</a>. It’s here where they can make the majority of their year’s income, <a href="https://www.ecwid.com/store/eternal-cavalier-press/Sonic-Booms-Making-Music-in-an-Oil-Town-p144899685">sometimes pulling in salaries in the tens of thousands as they play upwards of four gigs a day</a>. </p>
<p>This has led the city’s roots music scene to stay relatively contained and for the performers to carve out a somewhat middle-class existence, unlike other cities in Canada that force musicians to travel far and wide to build their audience.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1273321590055469056"}"></div></p>
<h2>Oil prices, gigs shrinking</h2>
<p>The Stampede was the last vestige of strong financial support for local musicians, whose income bouquets have been thrashed by their volatile partner, the economy. As I was winding down a <a href="https://www.ecwid.com/store/eternal-cavalier-press/Sonic-Booms-Making-Music-in-an-Oil-Town-p144899685">two-decade research project</a> on the city’s independent country and roots music scene, <a href="https://www.theguardian.com/business/2015/dec/21/brent-crude-oil-price-11-year-low">oil prices hit a low</a> from which Calgary has found it near-impossible to recover. </p>
<p>By 2018, my last fieldwork trip to the city, venues were beginning to shut down, gigs were drying up and musicians were panicking. Many considered returning to past careers they’d been able to temporarily relinquish; some quit making music altogether. </p>
<p>Meanwhile, climate change and political turmoil at provincial and federal levels further exacerbated the oil industry’s uncertainty, challenging the way many people conceived of their <a href="https://thewalrus.ca/what-the-trans-mountain-pipeline-battle-is-really-about/">local heritage and identity</a>. Musicians took on challenging topics of the era, grappling with <a href="https://www.youtube.com/watch?v=YpizFWZ1Jwk">environmental issues</a> and <a href="https://www.youtube.com/watch?v=yEBYT2Ud9o0">politics</a> in song, changing the face of Calgary.</p>
<p>Prior to then, from the late 1990s to 2015, Calgary had reached historical heights in <a href="https://www12.statcan.gc.ca/census-recensement/2016/dp-pd/hlt-fst/pd-pl/Table.cfm?Lang=Eng&T=302&SR=1&S=86&O=A&RPP=9999&PR=48">population increase</a> and <a href="http://www.assembly.ab.ca/lao/library/egovdocs/2006/altd/167211.pdf">economic activity</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/canadas-most-livable-city-is-not-vancouver-its-calgary-101957">Canada's most livable city is not Vancouver...it's Calgary</a>
</strong>
</em>
</p>
<hr>
<h2>Money flowed, then slowed</h2>
<p>As much as we may fear the very real fact of arts economies’ dependence on broader economic growth in our late-capitalist world, that proved to be true in the case of Calgary. Money flowed from the corporate office to bars, clubs, venues, festivals, house concerts and record shops. Then it slowed, and stopped.</p>
<p>Yet as I found, performers persist, and thrive, in the face of uncertainty, showing us a progressive community who use music to voice solidarity, dissent and to create community. Their musical commentary has ranged from critique of the Conservatives’ <a href="https://twitter.com/mariel_buckley">spending policies</a> around <a href="https://twitter.com/johnworthannam">education</a> and health care to <a href="https://www.penguineggs.ab.ca/current-issue/current-issue/item/663-mike-tod">diversifying the narrative</a> of Canadian folk music history to countering the prevailing notion that Calgary is a socially regressive city.</p>
<figure>
<iframe src="https://player.vimeo.com/video/111903338" width="500" height="281" frameborder="0" webkitallowfullscreen="" mozallowfullscreen="" allowfullscreen=""></iframe>
<figcaption><span class="caption">“Calgary has been seen as a redneck place … which it isn’t,” says musician Tom Phillips. Here, he reflects on the Calgary music scene and his song ‘Like a Rodeo.’</span></figcaption>
</figure>
<p>While some Canadians unfairly stereotype Alberta <a href="https://thewalrus.ca/the-great-myth-of-alberta-conservatism/">as an all-round conservative province</a> seeing only staunch opposition to weaning itself from an oil-based economy, in fact the horses that typify the Stampede have always spoken to a far more complex spirit of risk, creativity and bucking the system. Albertans are protective of the land, love their animals and treasure their heritage and culture. When the Stampede rises again, so too will Calgary musicians.</p><img src="https://counter.theconversation.com/content/140609/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gillian Turnbull is a past recipient of the Canada Council for the Arts Research and Creation grant. She is a co-founder and director for the Wide Cut Weekend Roots Music Festival in Calgary.</span></em></p>While some stereotype Alberta as a “conservative” province, the bucking and swift horses that typify the Calgary Stampede speak to a more complex spirit of risk seen in local musicians.Gillian Turnbull, Contract lecturer, Music section, Department of Philosophy, Toronto Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1368872020-05-28T13:47:07Z2020-05-28T13:47:07ZGhana has tried to be responsible with its oil wealth. This is how<figure><img src="https://images.theconversation.com/files/337234/original/file-20200524-124840-1ul2c3r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ghana is still finding ways of maximising its oil wealth</span> <span class="attribution"><span class="source">Wikimedia Commons</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>After Ghana discovered oil and gas in 2007, the government and civil society aspired to avoid the “resource curse”. This is when countries have an abundance of non-renewable natural resources but no economic growth. </p>
<p>Nigeria, Sudan, Angola, Cameroon, Equatorial Guinea and Chad are among the oil producers that have <a href="https://www.ifpri.org/publication/natural-resource-curse-africa-dutch-disease-and-institutional-explanations">failed</a> to channel their resources into the material improvement of their countries and people. </p>
<p>To avoid a similar fate, Ghana enacted a Petroleum Revenue Management Act in 2011. The law created the Public Interest and Accountability Committee, with a mandate to ensure accountability and transparency in the management and use of oil and gas revenue. </p>
<p>Although there are several published <a href="https://www.researchgate.net/publication/321184435_A_STUDY_OF_GHANA'S_OIL_AND_GAS_INDUSTRY_LOCAL_GHANAIAN_CONTENT_POLICY_PROCESS">studies</a> on Ghana’s oil and gas sector, very few have looked at this committee. Our <a href="https://www.tandfonline.com/doi/full/10.1080/02589001.2020.1715929">study</a> provides a nuanced understanding of the successes and failures of this institutional arrangement.</p>
<p>We also came up with some recommendations for ways to strengthen the committee to deliver effectively on its mandate.</p>
<h2>The big wins</h2>
<p>Since its inauguration in 2011, the Public Interest and Accountability Committee has recorded some success. </p>
<p>A major achievement is its role in legitimising government’s commitment to good governance in Ghana’s oil and gas sector. Indeed, the <a href="https://static1.squarespace.com/static/5728c7b18259b5e0087689a6/t/57ab29519de4bb90f53f9fff/1470835029000/2013_African+Progress+Panel+APR_Equity_in_Extractives_25062013_ENG_HR.pdf">Africa Progress Report</a> describes the committee as an “independent regulatory body” and a pioneer in achieving rigorous rules for reporting and greater accountability in the natural resources sector. </p>
<p>The two major political parties, the New Patriotic Party and the National Democratic Congress, and some state officials use the existence of the committee as indicative of their commitment to good governance. <a href="https://resourcegovernance.org/sites/default/files/nrgi_Resource-Curse.pdf">Scholars</a> of the resource curse consider good governance to be an important factor in whether natural resources benefit a country.</p>
<p>Citizen participation has also been encouraged. For example between 2017 and 2019, the committee held regional workshops with citizens to discuss areas of investment from oil revenue. The choices made by government in its expenditure of oil revenue aligned with suggestions made by citizens.</p>
<p>In eight years, the committee has produced 16 <a href="https://www.piacghana.org/portal/5/25/piac-reports">reports</a> on the activities of the oil and gas sector, as required by legislation. All of these reports have set out findings and recommendations, with a view to enhancing transparency and accountability. In 2011, for instance, the <a href="https://www.piacghana.org/portal/5/25/piac-reports">report</a> noted that not all payments that were expected to go into the Ghana Petroleum Holding Fund had been reported as required.</p>
<h2>Weaknesses</h2>
<p>But the committee also has challenges that have undermined the full realisation of its potential.</p>
<p>First of all, there is the conflict of genuine buy-in by donors on the one hand and the “unswerving support” by the government of Ghana on the other hand.
As pointed out by another <a href="https://www.herald.co.zw/africas-natural-resources-and-underdevelopment/">author</a>: </p>
<blockquote>
<p>… the Petroleum Revenue Management Act 2011 was mostly motivated by donors’ concerns about the alleged corrupt and the “inept” Ghanaian/ African state’s abuse of finances, it was designed to safeguard revenues after they have been paid into government coffers.</p>
</blockquote>
<p>The committee’s 13 members are drawn from civil society, academia and trade bodies. This makeup was heavily influenced by foreign donors like the German Technical Cooperation and Oxfam America in exchange for financial support during its first six years of operation. The potential danger is that the committee could seek the interest of these international donor agencies rather than the interest of Ghana.</p>
<p>Furthermore, there appears to be lack of clarity in some provisions of the law that set up the committee. It’s not clear which committee of parliament must receive and act on reports. </p>
<p>Finally, there are no regulations to accompany the petroleum revenue management act. Regulations are needed to interpret the act and make it work in practice.</p>
<h2>Conclusions</h2>
<p>Having a progressive institution like Ghana’s public interest and accountability committee is, on its own, no guarantee that oil and gas wealth will be used to benefit the country.</p>
<p>We believe there are a few ways to enable the committee to perform its duties more effectively. First, its recommendations should be debated and implemented by Parliament and the Attorney General. </p>
<p>It should have a permanent relationship with the attorney general’s department to investigate and prosecute public and private officials who may be causing loss to the state. This is a significant problem due to perceived bias in the justice system. </p>
<p>Secondly, we recommend that the committee submit its budget to a select committee in parliament to assess and approve. It should then be sent to the finance committee for consideration before approval by parliament.</p>
<p>Finally, the committee should find innovative ways of compelling the government to adhere to its recommendations. This can be done using various social media platforms for public education and advocacy. In this way ordinary Ghanaians and civil society groups will be informed and be able to exert pressure.</p><img src="https://counter.theconversation.com/content/136887/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Oversight over how Ghana’s oil wealth is spent has become more important than ever.E Graham, Teaching Assistant and PhD student (Department of Politics), York University, CanadaIsmael Ackah, Lecturer, Institute for Oil and Gas Studies, University of Cape CoastNathan Andrews, Assistant Professor, Department of Global & International Studies, University of Northern British ColumbiaRansford Edward Gyampo, Associate Professor,Political Science, University of GhanaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1151222019-06-16T17:23:40Z2019-06-16T17:23:40ZLarge classes make it hard to notice ‘off-task’ kids with bigger questions<figure><img src="https://images.theconversation.com/files/274191/original/file-20190513-183096-k9i0qm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The complexity of student experiences can be lost in larger groups. </span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>The benefits of having smaller classes, particularly in the early elementary school years, are <a href="https://nepc.colorado.edu/sites/default/files/pb_-_class_size.pdf">well-documented</a>. My work as a <a href="https://ila.onlinelibrary.wiley.com/doi/full/10.1002/trtr.1701">researcher of language and literacy</a> has examined what takes place on the edges of the classroom — precisely the places that are more <a href="https://theconversation.com/with-larger-classes-teachers-cant-attend-to-childrens-needs-110556">difficult to notice when classes are large</a>. </p>
<p>Last year in my province of Alberta it was reported that more than 85 per cent of the kindergarten to Grade 3 classes in five of the province’s largest school districts are <a href="https://edmontonjournal.com/news/local-news/day-1-classes-sizes-are-way-over-provincial-guidelines">larger than provincially recommended averages</a>. In the lead-up to the recent provincial election, there was no sign that <a href="https://edmontonjournal.com/news/local-news/alberta-teachers-association-slams-ucp-education-platform">the United Conservative Party, now newly elected, would prioritize tackling this problem</a>. </p>
<p>I often inquire into what individual children are doing while their teachers are diligently working to effectively teach the curriculum and maintain order in increasingly larger, <a href="https://www.teachers.ab.ca/SiteCollectionDocuments/ATA/Publications/Human-Rights-Issues/MON-3%20Here%20comes%20everyone.pdf">culturally diverse classrooms</a>, <a href="https://www.teachers.ab.ca/SiteCollectionDocuments/ATA/Publications/Research/COOR-101-5%20The%20State%20of%20Inclusion%20in%20Alberta%20Schools.pdf">with wide ranges of learning needs</a>.</p>
<p>In particular, I am interested in <a href="https://journals.sagepub.com/doi/abs/10.1177/1086296X16658982">those children who seem to be chronically “off task” during language arts instructional time</a> — children who are clearly doing something, albeit not exactly what their teacher had in mind. </p>
<p>Here, I share the <a href="https://www.taylorfrancis.com/books/e/9781351256766/chapters/10.4324/9781351256766-14">story of one such child</a>, whom I will call Charlene, with the aim of illustrating how educators can miss valuable opportunities to attend to particular students when class size <a href="https://books.google.ca/books/about/Learning_to_Teach_in_the_Early_Years_Cla.html?id=Hn1GbwAACAAJ&redir_esc=y">and complexity</a> expand. </p>
<h2>Charlene among 49 other students</h2>
<p>Charlene was in the fourth grade and part of a class of 50 students and two teachers. Charlene had an attention disorder and was one among a group of children in the class with individual education plans.</p>
<p>My involvement with the class centred around an interdisciplinary project looking at <a href="https://theconversation.com/testing-literacy-today-requires-more-than-a-pencil-and-paper-114154">how children develop literacy in multiple ways</a>. In <a href="https://www.tandfonline.com/doi/abs/10.1080/19388071.2016.1162234?journalCode=ulri20">this project</a>, the students worked in small groups to examine various aspects of the history of Alberta becoming a province.</p>
<p>Charlene’s group investigated the growth of the oil industry. The students began their exploration by developing inquiry questions, and Charlene’s group collectively asked several questions related to oil and Alberta’s economy. Unsurprisingly, the questions they asked reflected the ongoing social, political and economic debate currently taking place in Canada. Their list culminated with the following: </p>
<blockquote>
<p>“Was the oil boom bad for our Earth, our plants and our wildlife?” </p>
</blockquote>
<h2>Majority of children took economic angle</h2>
<p>After discussing a broad range of possible questions to pursue, three of the four members of Charlene’s group pursued the economic angle and diligently went about their work. </p>
<p>Charlene, however, always seemed to be at the periphery, not appearing to engage at all with the group’s discussion. Time after time when I would find her three group mates sitting side by side in the computer lab, discussing what they found online with regard to Alberta and oil, Charlene would be seated further away. She was watching puppy videos with the sound turned off. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/278559/original/file-20190607-52739-1er2tdh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/278559/original/file-20190607-52739-1er2tdh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=429&fit=crop&dpr=1 600w, https://images.theconversation.com/files/278559/original/file-20190607-52739-1er2tdh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=429&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/278559/original/file-20190607-52739-1er2tdh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=429&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/278559/original/file-20190607-52739-1er2tdh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=539&fit=crop&dpr=1 754w, https://images.theconversation.com/files/278559/original/file-20190607-52739-1er2tdh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=539&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/278559/original/file-20190607-52739-1er2tdh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=539&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Charlene acknowledged, with a sheepish smile, her love for animals.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Charlene’s ongoing puppy viewing, puppy talk and bouts of puppy writing were both a source of interest and annoyance in her group. On one occasion, a group mate exclaimed in frustration, “She’s obsessed with puppies.” Charlene seemed to agree with this statement as she acknowledged, with a sheepish smile, a declaration of her love for animals.</p>
<p>I too found myself concerned and wondering about this seeming breach of what some literacy researchers identify as the <a href="https://ila.onlinelibrary.wiley.com/doi/full/10.1002/jaal.571">pleasure-purpose divide</a> — in other words, the frequent mismatch between students’ interests and teacher’s goals for students’ uses of literacy. </p>
<p>Tensions can exist between the students’ desires to pursue texts that their teachers might argue are of lesser quality (for example, comics, trading cards, online videos and fan fiction) and a teacher’s desire to use “high-quality” literature and teach essay-writing skills in the classroom.</p>
<p>I was somewhat comforted because Charlene could verbally explain the oil-extraction and refining process with remarkable precision. However, she had not completed the work she promised her group: a poster advertising oil production in Alberta. </p>
<h2>Puppies vs. price</h2>
<p>Instead, Charlene had written a story of farm animals that lost their lives during an oil spill. It was some time later that it hit me: despite her puppy watching, seeming inattention and separation from the group, Charlene was the only member of her group whose work ultimately took a critical position. </p>
<p>She was the only one to follow the group’s ethically oriented inquiry question:</p>
<blockquote>
<p>“Was the oil boom bad for our Earth, our plants and our wildlife?”</p>
</blockquote>
<p>What can happen to teachers’ capacities to notice as class sizes creep upward? I am left with some pointed questions. </p>
<p>What might have happened in Charlene’s classroom had her teachers, and I, for that matter, been able to take note of the way she linked her love for animals and concerns regarding oil spills? How might the teachers have been able to assist her and others like her to participate more fully, both academically and socially, in her group’s work, had there been time for them to notice what was happening? </p>
<p>These questions are not to suggest that teachers will necessarily teach differently with fewer students — some research points out <a href="https://www.routledge.com/Visible-Learning-A-Synthesis-of-Over-800-Meta-Analyses-Relating-to-Achievement/Hattie/p/book/9780415476188">teachers might use the same teaching approach regardless of class size</a> — but they may illustrate how easily the complexity of student experiences may be lost in larger groups. </p>
<p>I close with the following musings: What might happen if class sizes gave educators more time to notice the personally meaningful questions and ideas their students are pursuing? What if they had more latitude to adapt their practices to the varied students before them?</p><img src="https://counter.theconversation.com/content/115122/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dr. Kimberly Lenters receives funding from the Social Sciences and Humanities Research Council (SSHRC) of Canada and the Alberta Advisory Committee for Educational Studies (AACES) . </span></em></p>Grade 4 student Charlene seemed chronically off-task – until an educator noticed she was, in fact, the sole student pursuing the question, ‘Was the oil boom bad for our wildlife?’Kimberly Lenters, Associate Professor of Education, University of CalgaryLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1164052019-05-06T14:04:43Z2019-05-06T14:04:43ZHow Sudan’s economic crisis had a role in protests that toppled al-Bashir<figure><img src="https://images.theconversation.com/files/272520/original/file-20190503-103057-y9htw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Protesters in Sudan demanding the end of military rule.</span> <span class="attribution"><span class="source">EPA-EFE/Stringer</span></span></figcaption></figure><p>The trigger for the demonstrations that brought the downfall of President Omar al-Bashir in April was the <a href="https://www.france24.com/en/20181220-sudan-protest-corruption-bashir-food-prices-bread-sadeq-al-mahdi-economy">trebling of the price of bread</a> last December. It came after a <a href="https://www.bloomberg.com/news/articles/2018-10-07/sudan-revalues-exchange-against-u-s-dollar-to-47-5-from-29">major devaluation</a> of the Sudanese pound in an effort to make the official rate for the pound drop to that of the black market. With the International Monetary Fund pushing for austerity and the rate of inflation hovering <a href="https://tradingeconomics.com/sudan/inflation-cpi">around 70%</a>, the camel’s back was finally broken. </p>
<p>In fact the immediate cause of the economic crisis that brought many thousands of Sudanese out onto the streets in December last year and continued up to and beyond al-Bashir’s downfall lay in the structure of the economy itself. </p>
<p>Sudan’s inherited economy from the colonial era consisted primarily of agricultural exports, particularly cotton. But after independence in 1956 that went into a long decline in the face of man-made fibres and a lack of success in developing of alternative crops – with the partial exception of sugar.</p>
<p>In the 2000s the country experienced <a href="http://documents.worldbank.org/curated/en/809251468102891015/pdf/754930BRI0Suda00Box374332B00PUBLIC0.pdf">something of a boom from oil</a>. But the new wealth wasn’t funnelled into the productive economy – particularly agricultural renewal. Rather it went into short-term rent seeking activities such as urban construction and the expansion of commercial activities. </p>
<p>At the same time the country’s radical Islamism brought US economic sanctions that limited international capital and the prospect of economic diversity. And under the Islamist military regime – in place since 1989 – new wealth went largely to the security apparatus, the government created ruling party and ethnic and regional friends. </p>
<p>This all added up to a highly corrupt system of “crony capitalism”. In addition, Sudan’s <a href="https://www.reuters.com/article/us-sudan-politics-debt/bashir-ouster-rekindles-interest-in-long-defaulted-sudan-loans-idUSKCN1RO24S">large long running debts</a> hung over the country.</p>
<h2>The role of oil</h2>
<p>The development of oil in Sudan was delayed for many years by civil war in the south, where most of the oil fields are located. But by the end of the 1990s security had permitted development with the southern rebels being pushed back, though not defeated. </p>
<p>Under growing international pressure the military rulers and the southern rebels finally moved towards peace, and in 2005 <a href="https://www.un.org/press/en/2005/sc8306.doc.htm">an agreement was reached</a>. It aimed at a national government but conceded that if that proved unworkable the south, including most of the oil fields, would have a right to a referendum on independence. </p>
<p>In 2011 southerners overwhelmingly chose independence and South Sudan became the <a href="https://www.bbc.com/news/world-africa-14069082">world’s newest state</a>. Since then the Sudan government’s oil income has shrunk by about 75%. One reason has been the fluctuating world price of oil, but others are more local. </p>
<p>Oil from South Sudan is pumped north through Sudan to be exported via the Red Sea. After South Sudan’s independence a dispute between the two states about pipeline rents led at one stage to South Sudan closing all its oil production for a year. The flow later restarted, but was once more restricted when South Sudan itself plunged into <a href="https://www.bbc.com/news/world-africa-25427965">civil war</a> in 2013, ended only by a <a href="https://www.reuters.com/article/us-southsudan-sudan/south-sudan-frets-over-whether-sudan-coup-will-derail-fragile-peace-idUSKCN1RN29U">fragile peace</a> last year.</p>
<p>The cuts in revenue from oil, combined with sluggish economic growth, led to rising discontent. This came to a head when the government cut subsidies on basics such as bread and oil. </p>
<p>In 2015 a particularly widespread series of demonstrations was met with a violent response. But the causes of discontent remained largely unaddressed and the situation for many people continued to deteriorate, in spite of a partial easing of US sanctions.</p>
<h2>What needs to be done</h2>
<p>This time around the first mass demonstrations started, unusually, not in the capital but in the regions and in particular in the city of Atbara – which has long been a centre of radical secular thinking – before spreading to the capital in Khartoum. </p>
<p>With memories of the killings of 2015 still fresh there was a good deal of planning going on among the different opposition groups. The security forces also remembered 2015 and this time there was little use of live ammunition, trying to contain rather than shoot the demonstrators in their increasingly well planned and growing efforts.</p>
<p>To restore the economy the post-Bashir government will need to clean up corruption; revive small-scale agriculture in the regions; restore health and education services; and attract investment for productive jobs for underemployed, educated young people who have been the backbone of the uprising.</p><img src="https://counter.theconversation.com/content/116405/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Robert Woodward received funding from The Leverhulme Trust.</span></em></p>The immediate cause of the economic crisis that brought many thousands of Sudanese onto the streets and continued beyond al-Bashir’s downfall lay in the structure of the economy itself.Peter Robert Woodward, Emeritus Professor of Politics and International Relations, University of ReadingLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/993042018-09-10T15:12:35Z2018-09-10T15:12:35ZWhy Nigeria urgently needs to grow non-oil exports<figure><img src="https://images.theconversation.com/files/234235/original/file-20180830-195304-1abwopm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The economy of Nigeria has had to navigate a major crisis that started with the collapse of oil prices in 2014 and was worsened by the <strong>_recurring youth restiveness</strong>_<a href="https://www.forbes.com/sites/uhenergy/2018/03/20/amnesty-and-new-violence-in-the-niger-delta/#7bfdae30263f">ongoing restiveness</a> in the oil rich Niger-Delta region. </p>
<p>The crisis of the past four years <strong>reaffirms</strong> the vulnerability of the Nigerian economy to oil <strong>related shocks</strong>. It underscores the need for Nigeria to look outward, diversifying its export base away from the volatile commodity if the country is to win its battles against poverty and inequality.</p>
<p>Oil accounts for 90% or more of <a href="http://www.worldstopexports.com/nigerias-top-10-exports/">Nigerian merchandise exports</a>. This heavy dependence of the Nigerian economy on oil as the dominant source of foreign exchange is widely <strong>acknowledged</strong>. But the mechanisms through which oil price changes affect the economy and the measures (or lack of them) available to the Nigerian authorities to counter oil price declines are less commonly understood. </p>
<p>We traced the impact of the recent price declines and considered what policy options were available to the Nigerian authorities to come up with counter measures. </p>
<p>The vulnerability of the economy to oil price shocks has been <a href="https://mpra.ub.uni-muenchen.de/16319/1/MPRA_paper_16319.pdf">known for years</a>, and the case for diversification has been made many times. But, as <a href="https://www.ifpri.org/publication/nigerias-macroeconomic-crisis-explained">our paper</a> points out, development of a <strong>robust</strong> non-oil export base is, in all likelihood, no longer a policy choice, it is a growth imperative. To grow and develop over the long term, Nigeria needs very rapid growth in non-oil exports.</p>
<h2>The good times (1998 - 2014)</h2>
<p>From 1998 to 2014, <a href="https://www.imf.org/external/np/res/commod/index.aspx">an oil price boom</a> unfolded that saw the price of Nigeria’s dominant export increase in nominal dollar terms by a factor of about ten – from about USD$10 per barrel to more than USD$100. While the boom period was characterised by some volatility, most notably in 2008, on average, the oil price rose persistently for more than 15 years.</p>
<p>In other words, in 1998, Nigeria got about USD$10 worth of imports for each barrel of oil exported. In 2014, Nigeria obtained about USD$100 worth of imports for each barrel of oil exported. </p>
<p>This strong upward trend in oil prices dulled incentives to diversify. Exports provide the foreign exchange for purchasing imports. Nigerians were able to significantly expand imports over time for the same volume of oil exports.</p>
<h2>The adjustment period (2015 - present)</h2>
<p>By the end of 2015, oil prices had collapsed. At that time, Nigeria got only about USD$40 worth of imports for each barrel of oil exported. By August 2018, prices had rebounded to about USD$65 per barrel or about USD$65 worth of imports for each barrel exported. This is still well below the levels of 2014.</p>
<p>Faced with persistently lower oil prices, Nigerian policymakers had, in principle, two options: increase exports or reduce imports. In practice, because increasing exports is effectively impossible in the short term, there was only one viable option: reduce import volumes to levels consistent with Nigeria’s reduced purchasing power. </p>
<p>This is exactly what happened. Between 2014 and 2016, import volumes declined by about 44%, an enormous reduction. Reduced imports meant fewer goods available in the economy, which in turn meant less consumption by households, less investment by business, and less government service. </p>
<p>This has been painful. We estimate that total real spending on consumption, investment, and government declined by about 12% per person between 2014 and 2016, a large macroeconomic shock. </p>
<h2>Changing course</h2>
<p>Looking forward, in the absence of a long term rebound in oil production or world oil prices, foreign exchange earnings from the sale of oil will remain relatively constant. In this (likely) situation, the economy must export more, of something other than oil, in order to import more. </p>
<p>It’s hard to see how the Nigerian economy can grow consistently without more imports. Businesses in a growing economy require more capital goods and more intermediate inputs. Without progressively more exports, there cannot be progressively more imports of efficient machines, tools, and other technologies that are critical for growth. </p>
<p>The only way Nigeria can avoid this stagnant state of affairs is if it does something dramatic about increasing non-oil exports. Nigerian businesses need to develop products of export quality at globally competitive prices. They must also develop the networks to market those products abroad. </p>
<p>This is difficult, and it will take time. But there are some clear initial options. </p>
<p>Agricultural products are potentially a part of the solution. This is particularly true in the relatively near term as global agricultural markets are relatively easy to enter if quality and cost are competitive. </p>
<p>Another potential area for development is providing regional services – for example, developing Lagos as an airline hub and shipping centre. </p>
<p>Given its large domestic market and its large labour force, Nigeria should also be looking at some longer term strategies to attract foreign direct investment into manufacturing sectors as the first step to learning to compete on global markets.</p>
<p>For more than a generation, Nigerian business, outside of oil, has focused almost exclusively on the domestic market. Looking forward, a significant segment of Nigerian business must look outward to the international market. Initiating, nurturing and growing this outward looking perspective is today’s key economic challenge for business, policymakers, and civil society.</p><img src="https://counter.theconversation.com/content/99304/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The collapse of the oil price in 2014 highlighted the need for Nigeria to dilute its exposure on the commodity.Channing Arndt, Division Director, Environment and Production Technology, IFPRI,, CGIAR System OrganizationAdedeji Adeniran, Senior Research Fellow at the Center for the Studies of Economies of Africa in Nigeria. , University of the WitwatersrandChuku Chuku, Lecturer at the Department of Economics, University of UyoDr. George Mavrotas, Senior Research Fellow, IFPRI and Head of IFPRI's Country Program and Office in Nigeria, CGIAR System OrganizationMorakinyo Adetutu, Lecturer in Economics, Nottingham Trent UniversityVictor Ajayi, Research Associate, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/698322016-12-12T03:40:27Z2016-12-12T03:40:27ZWhy OPEC’s gambit to raise oil prices might not work<p>After months of speculation by oil market watchers, the Organization of the Petroleum Exporting Countries (OPEC) <a href="http://www.opec.org/opec_web/static_files_project/media/downloads/press_room/OPEC%20agreement.pdf">recently announced a six-month production cut</a> of 1.2 million barrels per day (b/d) with the aim of driving up the price. It’s set to take effect on Jan. 1. </p>
<p>Saudi Arabia will be responsible for a little less than half of the total, or just under 500,000 b/d, followed by 210,000 for Iraq and about 135,000 for Kuwait and the United Arab Emirates each. A nonmember, Russia, pledged to cut about 300,000 b/d as part of the deal. </p>
<p>The move, which could be extended for another six months, was in response to the expected continuation of weak oil market conditions: too much supply and too little demand. The result was that for the first time since 1998, OPEC reported a <a href="http://www.opec.org/opec_web/static_files_project/media/downloads/publications/ASB2016.pdf">collective current account deficit of almost US$100 billion in 2015</a>, compared with a surplus of $238 billion in 2014.</p>
<p>The crude oil price reacted as intended by <a href="http://www.reuters.com/article/us-global-oil-idUSKBN13R02L">climbing 15 percent</a> almost immediately, <a href="http://www.macrotrends.net/1369/crude-oil-price-history-chart">settling at about $51</a>. That’s up from a low of less than $30 earlier this year.</p>
<p>The planned cuts and market reaction raise a lot of questions, however, such as why the oil price increased even though the reductions have yet to take effect and whether it will continue to rise. As an energy economist, I believe the best way to answer these and other important questions is by exploring a fundamental concept of my field: supply and demand. </p>
<h2>Economics 101</h2>
<p>Oil markets are notoriously difficult to predict because <a href="http://www.beg.utexas.edu/energyecon/thinkcorner/Think%20Corner%20factors%20impacting%20oil%20price.pdf">there are so many factors</a> that affect the price.</p>
<p>Supply-side factors include crude quality, cost of resource development and production, access to resources, availability of infrastructure, environmental and economic regulations, and the behavior of suppliers such as OPEC. </p>
<p>Probably more complex are demand-side factors: demand growth in various markets for various petroleum products, the state of the refining industry, pricing policies (taxes and subsidies) for different products in different countries, environmental regulations for end use, and energy policies regarding efficiency and alternatives.</p>
<p>While financial trading is the most important factor influencing the oil price in the short-term, whether the price continues to rise or not in the coming weeks and months will depend on fundamental supply/demand dynamics. </p>
<h2>Will members comply?</h2>
<p>First, OPEC members have a mixed record complying with previous agreements to cut production levels. </p>
<p>When OPEC first started the quota system in the early 1980s, Saudi Arabia had to reduce production by up to 6 million b/d to maintain the organization’s quota as other members flouted their commitments. From 2009 to 2013, OPEC production has been typically <a href="https://assets.bwbx.io/images/users/iqjWHBFdfxIU/ip0Au96J5o_8/v4/-1x-1.png">1 million to 2 million b/d above the quota</a>. </p>
<p>Thus verification of compliance with the cuts will be important if markets will have any faith that they’ll actually materialize. </p>
<p>Also, oil data, especially short-term production and storage data by state-owned entities, tend to be opaque. The “reference” production levels for some countries (e.g., Iran, Iraq, Venezuela) might be higher than how much they can sustainably produce. The reference level is the base amount from which cuts will be made. </p>
<p>Although Iran’s October production was reported at about 3.7 million b/d, for example, the reference level was accepted as 3.975 million b/d, the <a href="http://www.arabtimesonline.com/news/opec-deal-expected-tighten-oil-market-2017-production-cut-750000-1-million-bpd-seen/">amount it produced at its peak in 2005</a>. </p>
<p>Russian production – which won’t be subject to monitoring – may be down during the winter months due to scheduled maintenance or by focusing on drilling.</p>
<p>In other words, cuts may appear to be compliant with the agreement, but the actual supply to global markets may not be much different than what it would be without it.</p>
<h2>Will the US get back in the game?</h2>
<p>Second, whether U.S. producers of unconventional oil fields like shale in North Dakota are capable and willing to respond to higher prices by drilling more wells and increasing production is crucial. </p>
<p>Coincidentally, U.S. production fell a little over 1 million b/d after the price of oil plunged early last year. So if they do boost production to take advantage of higher prices, the increase could make the cuts a wash. The question then becomes, would a higher price tempt them to begin drilling again? </p>
<p>Since the price collapse, drilling in the U.S. has focused on the Permian Basin in west Texas and New Mexico. The number of rigs operating in the Permian has increased by about 100 since April to reach 235, or <a href="http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-reportsother">a little under half of the 477 rigs actively drilling for oil across the U.S.</a> Another 119 rigs are drilling for gas. At the peak in October 2014, <a href="http://fuelfix.com/blog/2016/08/12/permian-basin-leads-big-jump-in-rig-count/">1,609 rigs were operating in oil basins</a> in the U.S.</p>
<p>Sustained prices above $50 should encourage more drilling.</p>
<p>However, “upstream” operators (explorers and producers), oilfield services companies and “midstream” transportation and storage businesses have been going through a period of adjustment, having idled hundreds of rigs and laid off <a href="http://www.houstonchronicle.com/business/energy/article/Fed-U-S-oil-job-cuts-reach-about-118-000-7237605.php">tens of thousands of employees</a>. It will not be easy to mobilize these resources quickly. Nor is it clear that it makes financial sense to do so. </p>
<p>The availability of cheap loans during the post-financial crisis era of ultra-low interest rates was instrumental in encouraging too many companies to drill too many wells too quickly, which led to the collapse of <a href="http://www.eia.gov/dnav/ng/ng_pri_fut_s1_d.htm">natural gas prices in the U.S. in the early 2010s</a> and that of <a href="http://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm">oil prices in late 2014</a>. Many companies are still burdened by those debts. </p>
<p>If prices fall after billions of dollars of new investment, the financial recovery of many companies will be stunted. Combined with the uncertainty associated with the expected rise in interest rates and the high costs of remobilization rigs and crews, it is difficult to imagine U.S. oil companies overreacting to the OPEC cuts.</p>
<h2>Libya and Nigeria</h2>
<p>Third, Libya and Nigeria, though members of OPEC, are not part of the announced agreement. </p>
<p>Libyan production has been recovering from 250,000 b/d in August and reached almost 600,000 b/d in late November. Libya’s <a href="https://www.eia.gov/beta/international/analysis_includes/countries_long/Libya/images/crude_oil_production.png">long-term goal</a> is to pump 1.6 million b/d, the level before the ousting of Muammar Gaddafi, and the country might be able to pass the halfway mark next year.</p>
<p>Nigeria should be capable of producing close to 2 million b/d, but pipeline disruptions caused by conflict in the Niger Delta have reduced that to 1.5 million. The resolution of the conflict, albeit not an easy task given the longevity of it, could bring more supplies to the market and thus undercut prices.</p>
<h2>Macroeconomic malaise</h2>
<p>Finally, the world economy has been anemic in recent years despite low oil prices, which have historically been a driver of economic growth. Oil demand growth has been muted.</p>
<p>One potential reason is the reduction in fuel subsidies in recent years in some key countries <a href="https://www.chinadialogue.net/article/show/single/en/8709-Prices-at-China-s-petrol-pumps-stoke-debate-on-fossil-fuel-subsidy-reform-">such as China</a>. So consumers in many countries may be paying the same price for petroleum products now as they did in 2014 when the oil was $90 a barrel and will continue to do so unless governments reinstitute some subsidies. This might be difficult because macroeconomic policies in many countries seem to be failing to stimulate their economies. </p>
<p>Also, years of supporting energy efficiency and alternative fuels or technologies along with regulating emissions might be dampening oil demand growth in some countries. One can only speculate that a sustained and significant increase in the price of oil would encourage these policies. </p>
<p>Overall, OPEC’s production cuts are not building on strong demand growth. To the extent it succeeds in raising the price, it can end up undermining demand. </p>
<h2>Back to the fundamentals</h2>
<p>It is difficult to do justice to the complexity of oil market dynamics in such a short article. </p>
<p>In short, though, the planned OPEC cuts have already provided some respite for oil producers, in terms of higher prices, thanks to the eagerness of financial traders. But once the excitement of the news passes, these and other demand-supply fundamentals will once again govern the oil price.</p>
<p>Although these higher prices will enhance producer revenues and slow the buildup of oil inventories, they can also dampen demand growth and encourage too much production too soon.</p><img src="https://counter.theconversation.com/content/69832/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gürcan Gülen works for a university research unit that receives funding from various organizations. For details see <a href="http://www.beg.utexas.edu/energyecon/">http://www.beg.utexas.edu/energyecon/</a>.</span></em></p>To see why, one must only consider the core economic principle of supply and demand.Gürcan Gülen, Research Scientist, The University of Texas at AustinLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/591172016-06-03T01:02:13Z2016-06-03T01:02:13ZIs OPEC’s oil era over?<p>Just a couple months ago, <a href="http://www.thenation.com/article/did-opec-just-start-preparing-for-the-end-of-the-oil-era/">some were declaring the old oil order</a> dead after the Organization of the Petroleum Exporting Countries (OPEC) failed to agree on coordinated action at its April meeting in Doha.</p>
<p>That meeting was meant to bring about a production freeze to arrest the downward spiral of prices that began in July 2014. Instead, the Doha meeting was <a href="http://www.reuters.com/article/us-oil-meeting-draft-idUSKCN0XE02Y">over before it began</a>. Iran refused to slow production until it had regained its pre-sanctions position in the market, so Saudi Arabia canceled the freeze and continued to produce at peak levels. </p>
<p>This week, with oil <a href="http://www.wsj.com/public/page/news-oil-gold-commodities.html">trading</a> at six-month highs, <a href="http://www.bloomberg.com/news/articles/2016-06-01/saudis-said-to-seek-restoration-of-opec-unity-after-doha-failure-iowrk295?bcomANews=true">OPEC members once again had high hopes</a> to show that the organization remains relevant as they gathered in Vienna. Yet, once again, the <a href="http://www.bloomberg.com/news/articles/2016-06-02/opec-said-to-keep-status-quo-after-failing-to-agree-output-limit">meeting ended without agreement</a>, resulting in no change to the current policy of essentially unlimited production.</p>
<p>So does the verdict that OPEC is dead still stand, signaling the end of an era in which it supposedly ruthlessly controlled the price of oil? In fact, that era <a href="http://www.dundee.ac.uk/cepmlp/gateway/files.php?file=cepmlp_car17_65_711758044.pdf">barely existed</a> in the first place. The failed meetings confirm a longstanding truth: the <a href="http://www.theatlantic.com/business/archive/2009/05/is-opec-a-cartel/18420/">world’s most famous cartel</a> <a href="https://www.foreignaffairs.com/articles/persian-gulf/2015-12-03/how-opec-lost-its-bite">has never really been a cartel</a>. </p>
<p>Rather than the arbiter of global energy, OPEC is and has always been a dysfunctional, divided and discouraged organization. </p>
<p>My recent research has taken me through the <a href="http://www.e-ir.info/2016/01/19/the-oil-of-iran-past-and-present-in-perspective/">history of oil</a>, particularly the relationship between oil revenues, economic development and the geopolitical balance of power in the 1960s and 1970s. Oil’s history has been dominated by a struggle for balance, a contest between competing interests, both economic and political, and between the fundamental market forces of supply and demand. </p>
<p>OPEC has never been shielded from or been able to fully thwart these forces.</p>
<h2>Early days: divided and powerless</h2>
<p>When it was created in 1960, OPEC was meant to offer members a greater say in how their oil was produced and priced, addressing the disproportionate power wielded by private Western corporations. Its larger goal, to bring order to the chaotic world of global energy, has always been elusive. </p>
<p>OPEC was formed from frustration. In the 1950s, the <a href="https://sites.google.com/site/globaloilproduction12/1950-s-oil-production">world was awash in oil</a> as small nations in the Middle East and Latin America discovered enormous deposits, and Western oil companies sought to tap them to meet rising demand. </p>
<p>To gain access to those deposits, the major oil companies (known as the <a href="http://www.americanforeignrelations.com/O-W/Oil-The-seven-sisters.html">“Seven Sisters”</a>) signed concessionary agreements with local governments, allowing them to pump, refine, transport and market a nation’s oil in return for a royalty, typically 50 percent of profits. </p>
<p>This arrangement gave <a href="http://www.americanforeignrelations.com/O-W/Oil-Oil-and-world-power.html">the companies control over the oil</a> – they set production levels and prices – while governments simply collected a check and had little influence on anything else. </p>
<p>In February 1959, amid an oil glut, the Seven Sisters <a href="http://www.opec.org/opec_web/static_files_project/media/downloads/publications/GenInfo.pdf">decided</a> that a price correction was necessary. And so they unilaterally <a href="https://www.quandl.com/data/BP/CRUDE_OIL_PRICES-Crude-Oil-Prices-from-1861">began cutting the posted price</a>, from $2.08 to $1.80 by August 1960. (Back then, oil prices didn’t always follow market forces and were typically set by producers.) </p>
<p>The cuts meant a significant loss of revenue for the oil-producing states. In protest, the oil ministers of Iraq, Iran, Venezuela, Saudi Arabia and Kuwait <a href="https://mees.com/opec-history/1960/09/16/first-opec-meeting-held-in-baghdad">met in Baghdad</a> that September and formed <a href="http://www.opec.org/opec_web/en/about_us/24.htm">OPEC</a> to achieve a more equitable arrangement with the Sisters. </p>
<p>In reality, the oil-producing states could do little to coerce the companies into offering better terms. The Seven Sisters dominated global markets and were capable of shutting out individual producers. Oil was abundant, and nationalization seemed out of the question because the companies could successfully exclude an offending country from the market, as <a href="http://www.iranchamber.com/history/oil_nationalization/oil_nationalization.php">they did with Iran in 1951</a>.</p>
<p>In addition, the United States itself was the world’s top producer and immune from supply shocks thanks to <a href="https://knowledgeproblem.com/2013/08/28/politicized-implementation-of-u-s-oil-import-quotas-1959-1973/">import quotas.</a>. If OPEC threatened to take production offline in order to put pressure on the companies, the U.S. could increase its own to make up the difference, as it did during <a href="http://www.tandfonline.com/doi/abs/10.1080/13537121.2013.829611?journalCode=fisa20#.V1BXEfkrLX4">a partial Arab oil boycott in 1967</a>.</p>
<p>In the end, OPEC did not possess enough market share to make a meaningful impact.</p>
<h2>A new balance of power</h2>
<p>Besides being relatively impotent, OPEC couldn’t agree on a consistent policy among its members. Saudi Arabia wanted to keep production levels low and prices consistent, preserving the global economy and the political status quo. Iran and Iraq, with huge military and development budgets, wanted prices pushed as high as possible in order to maximize revenue. </p>
<p>According to scholar and oil consultant <a href="https://books.google.com/books?id=Jg80AAAAIAAJ&pg=PA266&lpg=PA266&dq=Ian+Skeet+OPEC&source=bl&ots=iu2WFOL73d&sig=-sbhad1ecMH4zM5cQRIXs8qYO-M&hl=en&sa=X&ved=0ahUKEwiIzrHAivPMAhVDwYMKHf49C7MQ6AEIOzAF#v=onepage&q=Ian%20Skeet%20OPEC&f=false">Ian Skeet</a>, an attempt to extract more favorable terms from the Sisters in 1963 was sabotaged by the shah of Iran, who sought a separate agreement. </p>
<p>During the 1960s, OPEC met, debated and released grandiose statements on their rights, yet failed to form a united front.</p>
<p>Nevertheless, significant changes were occurring at the time. <a href="https://sites.google.com/site/globaloilproduction12/1960-s-oil-production">Demand for oil</a> shot up, while production in the U.S. stagnated. The ability of the Seven Sisters to control the market was undermined by international competitors drilling new fields in North Africa, where <a href="http://www.history.com/this-day-in-history/qaddafi-leads-coup-in-libya">Libya’s Muammar Qaddafi threatened</a> to shut off supply if he didn’t get higher prices.</p>
<p>The companies were under <a href="http://www.ogj.com/articles/print/volume-103/issue-17/general-interest/the-1973-oil-embargo-its-history-motives-and-consequences.html">more and more pressure</a> to deliver satisfactory terms to the OPEC members. The price of oil, which had held steady at $1.80 a barrel for years, began ticking upwards. <a href="https://knowledgeproblem.com/2013/08/28/politicized-implementation-of-u-s-oil-import-quotas-1959-1973/">American import quotas ended</a>, leaving the U.S. more vulnerable to supply shocks as its production capacity steadily declined. </p>
<p>These conditions, while not the result of actions by OPEC, gave the organization an opportunity to influence the market and upset the balance of power. </p>
<h2>The oil price revolution</h2>
<p>This shift accelerated in the 1970s as <a href="http://acc.teachmideast.org/texts.php?module_id=4&reading_id=120&sequence=21">war broke out</a> between Israel and its Arab neighbors, creating an opportunity for OPEC to wrest control from the Western oil companies.</p>
<p>To punish the U.S. for supporting the Jewish state, Arab oil producers (<a href="http://www.ogj.com/articles/print/volume-103/issue-17/general-interest/the-1973-oil-embargo-its-history-motives-and-consequences.html">not OPEC, as popularly believed</a>) cut production and declared <a href="http://www.npr.org/sections/parallels/2013/10/15/234771573/the-1973-arab-oil-embargo-the-old-rules-no-longer-apply">an embargo</a>. Together with the war, this destabilized energy markets as demand outpaced supply.</p>
<p>Amid the fighting, OPEC met with the Seven Sisters in Geneva and demanded an increase in the posted oil price. After rejecting a small change, OPEC announced it would double the price to $5 and later doubled it again to $11.65. </p>
<p>This triggered a massive shift in economic power, what Stanford University professor <a href="http://www.amazon.com/Price-Revolution-Professor-Steven-Schneider/dp/0801827752">Steven Schneider</a> called “the greatest non-violent transfer of wealth in human history.” With the uptick in oil revenues, OPEC states spent lavishly on economic development, social programs and investments in Western industry and steadily nationalized their domestic industries, pushing out the Seven Sisters.</p>
<p>How did the balance of power seem to shift so suddenly? Among other reasons, the major oil companies could not agree among themselves on a new price and were actually tempted by the high profits that would result. In other words, OPEC had seized control of the oil market largely due to circumstances <a href="http://vm136.lib.berkeley.edu/BANC/ROHO/projects/debt/oilcrisis.html">beyond its control</a>. </p>
<h2>The oil crisis</h2>
<p>Despite its victory, OPEC had come no closer to resolving its internal divisions. This became evident when another energy crisis hit. </p>
<p>In January 1979, the shah of Iran fled amid revolution, and <a href="http://www.federalreservehistory.org/Events/DetailView/40">global oil markets panicked</a>. Prices soared, from $12.70 to over $30 by 1980. Iran’s 6 million barrels per day (bpd) disappeared, and other OPEC states eagerly seized the opportunity to sell oil at costly premiums, <a href="http://www.history.com/this-day-in-history/opec-states-raise-oil-prices">sending the price even higher</a>.</p>
<p>In the ensuing years, Saudi Arabia tried to impose <a href="http://www.theoildrum.com/node/7363">a quota system</a>, with overall production capped at 20 million bpd. Most members ignored their quotas or over-produced to gain greater revenue. </p>
<p>Meanwhile, the West worked to improve energy efficiency and invested heavily in non-OPEC oil sources, including Alaska, Canada and the North Sea. By 1985, OPEC’s market share <a href="http://www.nytimes.com/1989/12/30/business/worrying-anew-over-oil-imports.html?pagewanted=all">had fallen below 30 percent</a>. OPEC <a href="http://www.brookings.edu/%7E/media/Projects/BPEA/1986-2/1986b_bpea_gately_adelman_griffin.PDF">dropped its production quota</a> to 19 million bpd, then 17 million, to account for diminishing demand, but only the Saudis obeyed the rules, losing market share as other producers pumped above the quota level.</p>
<p>By 1986, the Saudis had had enough. Without warning, the Saudi oil minister announced that Saudi production would increase. Overnight, Saudi <a href="http://www.oilandgas360.com/oil-the-30-year-anniversary-of-the-1986-collapse/">production shot up more than 2 million bpd</a>, flooding the market and <a href="http://oilprice.com/Energy/Energy-General/Why-Todays-Oil-Bust-Pales-In-Comparison-To-The-80s.html">sending prices plunging below $10 a barrel</a>. Sick of watching other OPEC members cheat them out of profits, the Saudis chose to enforce <a href="http://ftalphaville.ft.com/2015/01/21/2095432/re-re-visiting-the-1986-oil-crash/">new discipline through an artificial market shock</a>. </p>
<p>Just as the kingdom did in 2014, this move indicated Saudi willingness to use its massive reserves to “correct” the market and push out high-cost producers, even at the cost of its OPEC allies.</p>
<h2>Feeling the pain</h2>
<p>OPEC’s fortunes have oscillated since the 1986 shock. Cooperation remained elusive. </p>
<p>A 2011 meeting, dubbed <a href="http://www.bloomberg.com/news/articles/2011-06-08/opec-members-are-unable-to-reach-consensus-on-output-quotas-el-badri-says">“the worst ever”</a> by recently-removed Saudi oil minister Ali al-Naimi, produced disagreements over production levels. Acrimony reigned as OPEC states ignored calls for economic diversification in favor of oil-fueled economic growth. </p>
<p>High prices during the early 2000s accounted for a huge boom in oil revenues for OPEC members. For <a href="http://www.cnbc.com/2015/12/03/oil-prices-and-budgetsthe-opec-countries-most-at-risk.html">Venezuela and Nigeria</a>, oil accounts for over 90 percent of all exports. Most OPEC states believed that high demand would last forever, that high prices could fund government programs and that the good times would never end.</p>
<p>Yet the good times appear to be over. OPEC has failed to control the downward spiral in prices, <a href="http://www.bbc.com/news/business-30223721">reportedly begun by Saudi Arabia</a> in November 2014 to flood the market with cheap crude to put new and old competitors – U.S. shale producers and Iran – out of business. Saudi Arabia pursued its political interests and existing market share, leaving other OPEC members to fend for themselves.</p>
<p>The <a href="http://oilprice.com/Energy/Crude-Oil/OPEC-Is-Dead-Whats-Next.html">death of OPEC</a> has been announced in some quarters, with its <a href="http://news.forexlive.com/!/the-question-on-everyones-lips-is-opec-dead-or-just-in-a-coma-20160523">long-term decline</a> seemingly assured as global energy enters a new era. </p>
<p>It is possible that Saudi Arabia may emerge from this current crisis unscathed, free to embark upon its recently announced Vision 2030 plan for an “oil-less” economy, <a href="http://www.ibtimes.com/saudi-arabias-vision-2030-economic-plan-break-its-oil-addiction-draws-cautious-praise-2359400">however dubious that plan might appear</a>. It’s possible that OPEC may succeed in concerted action in the future. But its recent failures suggest that political interest will be more likely to divide OPEC and prevent mutual self-interest from uniting its members.</p><img src="https://counter.theconversation.com/content/59117/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gregory Brew is affiliated with OilPrice.com, where he writes once per-week on current energy issues.</span></em></p>OPEC has been declared dead in recent months as the group of oil-exporters has been unable to agree on a plan to stabilize the market. But was it really ever alive in the first place?Gregory Brew, PhD Student in History, Energy and Foreign Relations, Georgetown UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/595022016-05-18T16:36:23Z2016-05-18T16:36:23ZA tale of two oil and gas boomtowns – a boost to the economy, a tricky landing<figure><img src="https://images.theconversation.com/files/122910/original/image-20160517-9501-1ksf6x5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Drilling on a farm in North Dakota, site of a huge economic upswing from the oil and gas industry.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/timevanson/9287130523/in/photolist-f9EYm4-pP5hkr-4z9P3Y-nqXwio-a1d3Xz-g1EDcJ-8LUBER-8cpZNF-9mSoEK-8ySdo9-s4Zw8z-vMQG5J-awLDwh-4z5yTe-bGiLVp-54reeK-mLrGMb-2woE4b-s4UYNt-4z9PtS-BtcWbK-pJnH44-f9HdZk-nHq89w-BZDiAg-btoXcj-f9Hecp-awLD7S-9bNFfd-9dCNBf-6XRA84-9iDJdh-nGRA9g-4z5uUX-qj4hDK-7osrY1-9K46xU-jXtiMZ-nG2Seu-fbdE6G-KJwZK-4z5wVp-4z9SCb-6mePeu-f9HfgX-8CqH3f-4z5yqD-fEtAjo-f9HeKc-3zPrCX">timevanson/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Over roughly the past 10 years, the United States has experienced remarkable growth in the <a href="https://www.eia.gov/totalenergy/data/monthly/pdf/sec1_5.pdf">production of natural gas and oil</a>. This growth has taken place across dozens of regions, from the scrub of west Texas to the plains of North Dakota to the pastoral hills of Appalachia. It has sparked economic growth, raised environmental concerns and reduced energy prices.</p>
<p>But how does the oil and gas industry affect the financial well-being of the communities where it operates? Over the past three years, we have looked deeply into this question, traveling to 21 regions across the top 16 oil- and gas-producing states. We interviewed more than 200 officials from over 150 local governments (mostly cities and counties), analyzed financial records from each of these government entities and examined how policies have shaped their experiences.</p>
<p><a href="http://energy.duke.edu/shalepublicfinance">Our results</a> illustrate the difficulty of generalizing from one region to another, as each community experiences oil- and gas-driven growth differently. Despite the differences, our findings can offer lessons for regions where oil and gas activity – an industry marked by booms and busts – is likely to play a major role in the economy for decades to come.</p>
<h2>A tale of two boomtowns</h2>
<p>Most coverage of the recent boom and subsequent downturn of U.S. oil and gas production has focused on parts of North Dakota, Pennsylvania and Texas. But several other regions experienced similar booms just a few years earlier, and the diverging stories of two cities – Rifle, Colorado and Farmington, New Mexico – offer insights into what may lie ahead for other regions.</p>
<p>Rifle lies along Interstate 70 on the Western Slope of the Rocky Mountains. Incorporated just after 1900, the city grew with the expansion of the railroad, becoming a regional hub for cattle ranchers during the first half of the 20th century. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/122905/original/image-20160517-9458-1o1eni.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/122905/original/image-20160517-9458-1o1eni.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/122905/original/image-20160517-9458-1o1eni.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122905/original/image-20160517-9458-1o1eni.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122905/original/image-20160517-9458-1o1eni.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122905/original/image-20160517-9458-1o1eni.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122905/original/image-20160517-9458-1o1eni.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122905/original/image-20160517-9458-1o1eni.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">An oil well in Rifle, Colorado.</span>
<span class="attribution"><span class="source">Daniel Raimi</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Garfield County, which encompasses Rifle, also has a long history of energy production, and has experienced <a href="http://www.gjsentinel.com/news/articles/black-sunday-still-reverberates-30-years-later/">booms and busts before</a>. Most recently, technological advancements allowed companies in the early 2000s to tap the region’s vast reserves of natural gas trapped in previously unprofitable “<a href="http://www.rigzone.com/training/insight.asp?insight_id=346">tight sands</a>,” rock formations with low permeability. </p>
<p>In the year 2000, roughly 150 wells were completed each year in Garfield County. In 2005, that number grew to 800. By 2008, more than 2,000 wells were completed and Rifle was bursting at the seams. Thousands of workers were moving to the region to participate in the new industry, and studies commissioned by the county <a href="http://www.rifleco.org/DocumentCenter/View/1113">projected population growth</a> to continue rapidly for years to come.</p>
<p>Looking to the future, Rifle borrowed more than US$40 million to expand and upgrade its water and wastewater infrastructure. The city was growing: new homes, restaurants and shopping centers were concrete signs of Rifle’s economic vitality.</p>
<p>Then came the financial crisis, housing bust and recession of 2008-2009. Well completions dropped by more than half. As the national economy recovered and commodity prices rebounded, oil and gas companies shifted their focus to extracting natural gas from shale rock deposits, known as <a href="https://www.eia.gov/dnav/ng/ng_prod_shalegas_s1_a.htm">shale plays</a>, in Pennsylvania and elsewhere, further decreasing activity in Rifle. In 2015, just 71 wells were completed in Garfield County.</p>
<p>In the aftermath of the bust, the millions of dollars of investment in Rifle’s infrastructure, which seemed a wise investment a decade earlier, has become a burden. With population well below levels projected during the boom, remaining residents have shouldered the costs. Wastewater rates have more than doubled, water rates have risen by <a href="http://energy.duke.edu/shalepublicfinance">roughly 50 percent</a> and voters approved a new sales tax of 0.75 percent to finance the debt incurred for these new systems.</p>
<h2>San Juan Basin</h2>
<p>About 250 miles south of Rifle, through dusty mesas, lush national forests and windy mountain roads, sits Farmington, New Mexico. Farmington has the feeling of high desert, with snowy peaks in the distance and scrubby brush adorning the suburban roadways. The largest city in the “Four Corners” region, Farmington is the hub for oil and gas companies operating in the rich <a href="https://www.eia.gov/dnav/ng/ng_prod_coalbed_s1_a.htm">coalbed methane</a> fields that produce natural gas from coal seams.</p>
<p>Like Rifle, Farmington experienced a boom in drilling activity in the early and middle decade of the 2000s. Long a hub of industry activity, the number of new wells entering production in San Juan County, of which Farmington is the seat, nearly doubled, from 435 in 2000 to 799 in 2006. But like the area around Rifle, industry activity rapidly declined in the following years, falling to just <a href="http://info.drillinginfo.com/">60 new wells in 2015</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/122909/original/image-20160517-9501-lx5wbq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/122909/original/image-20160517-9501-lx5wbq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/122909/original/image-20160517-9501-lx5wbq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122909/original/image-20160517-9501-lx5wbq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122909/original/image-20160517-9501-lx5wbq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122909/original/image-20160517-9501-lx5wbq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122909/original/image-20160517-9501-lx5wbq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122909/original/image-20160517-9501-lx5wbq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A drilling rig in San Juan County, New Mexico.</span>
<span class="attribution"><span class="source">Daniel Raimi</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>However, Farmington’s downturn has been far less severe, and the city did not need to dramatically expand its services to accommodate the boom. Because it is the region’s largest city, Farmington has become a commercial hub for the surrounding Four Corners area, attracting shoppers from nearby parts of Arizona, Colorado, New Mexico, Utah and the nearby Navajo Nation.</p>
<p>In addition, the region has seen large-scale drilling activity for a longer period of time than Rifle, and the industry has grown deeper roots. Thousands of workers in pickup trucks owned by <a href="http://www.yellowpages.com/farmington-nm/oil-companies">oilfield service companies</a> continue to traverse the region, checking on the status of old and new wells, making repairs and supporting the local economy.</p>
<h2>On the whole, net economic benefits</h2>
<p>Much like the different experiences of Rifle and Farmington, we found the effect of the oil and gas boom varied across the country, depending on the nature of a community’s location, policy structure and economy. </p>
<p>Overall, though, based on our interviews and analysis of financial data, it appears that a substantial majority of local governments across the United States have experienced net fiscal benefits from increased oil and gas production. They have seen growth in demand for public services, but increased revenue from a variety of sources has in most cases been more than enough to offset new costs.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/122904/original/image-20160517-9491-12d4fyq.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/122904/original/image-20160517-9491-12d4fyq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/122904/original/image-20160517-9491-12d4fyq.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=328&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122904/original/image-20160517-9491-12d4fyq.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=328&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122904/original/image-20160517-9491-12d4fyq.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=328&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122904/original/image-20160517-9491-12d4fyq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=412&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122904/original/image-20160517-9491-12d4fyq.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=412&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122904/original/image-20160517-9491-12d4fyq.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=412&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Map illustrates oil and gas permits issued in the 90 days leading up to Feb. 20, 2015. Permit data not available for Alaska.</span>
<span class="attribution"><span class="source">DI Desktop. Annotations by Daniel Raimi and Richard Newell.</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Local governments raise revenue from oil and gas activity in a variety of ways. In most states, county governments collect property taxes based on the value of the oil and gas produced (or in some cases the value of the underground reserves), leading to large upswings in revenue. For city governments, we found that sales taxes have been the largest growth source, spurred by increased populations and economic activity associated with the industry.</p>
<p>In addition, many state governments allocate a substantial share of oil and gas revenues to the local level. These revenues come from state <a href="http://www.mineralweb.com/owners-guide/leased-and-producing/royalty-taxes/oil-severance-tax/">severance taxes</a> paid by oil and gas producers, along with royalties and other sources derived from production on state and federal lands. Figure 2 shows how four key revenue sources flow to local governments in the 16 states we examined.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/122903/original/image-20160517-9476-77fqdb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/122903/original/image-20160517-9476-77fqdb.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=279&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122903/original/image-20160517-9476-77fqdb.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=279&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122903/original/image-20160517-9476-77fqdb.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=279&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122903/original/image-20160517-9476-77fqdb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=350&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122903/original/image-20160517-9476-77fqdb.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=350&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122903/original/image-20160517-9476-77fqdb.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=350&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Figure 2: Oil and gas revenue flows to local governments in fiscal year 2013 in millions of dollars.</span>
<span class="attribution"><span class="source">Raimi and Newell 2016</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<h2>Some highly rural regions have faced challenges</h2>
<p>Not all local governments, however, have seen net fiscal benefits from oil and gas production. Some regions, particularly rural areas like Rifle experiencing rapid industry growth, have struggled to provide services for a booming population. The leading challenges for these local governments have been maintaining <a href="http://journalistsresource.org/studies/government/infrastructure-government/costs-shale-natural-gas-extraction-local-roads">roads impacted</a> by the large volume of heavy vehicle traffic, expanding water and wastewater infrastructure, and retaining government staff attracted to <a href="http://www.cnbc.com/2015/07/22/oil-and-gas-jobs-pay-is-still-big-but-not-booming.html">high-paying opportunities</a> in the oil and gas sector.</p>
<p>For some cities and counties, particularly those in North Dakota and Montana’s Bakken region, local populations grew by 50 percent or more over just a few years, creating challenges that any local government would struggle to manage. </p>
<p>With <a href="http://www.eia.gov/dnav/pet/pet_pri_spt_s1_a.htm">oil</a> and <a href="http://www.eia.gov/dnav/ng/ng_pri_fut_s1_a.htm">natural gas</a> prices falling by more than half since early 2014, many regions that experienced rapid growth driven by oil and gas activity face an uncertain future. </p>
<p>Population growth has slowed or reversed and revenues from industry have fallen. Some local governments invested tens or hundreds of millions of dollars to serve an increased population that may never arrive.</p>
<h2>Boomtown lessons: big or small, plan carefully</h2>
<p>Farmington’s population is roughly four times that of Rifle’s, and its economy is more diverse, able to attract economic activity from surrounding areas. For the small cities of Texas, North Dakota, Pennsylvania and other regions that have experienced rapid growth from the more recent boom, Rifle offers a cautionary note about the risks of rapid expansion driven by volatile oil and gas activity.</p>
<p>For larger cities with a more diverse economic base, the downturn in oil and gas activity will create economic challenges, but they are unlikely to be as dramatic as those experienced in regions that depend predominately on the oil and gas sector.</p>
<p>A larger lesson, one learned over decades by some oil- and gas-rich countries like <a href="http://www.swfinstitute.org/fund-rankings/">Norway and Saudi Arabia</a>, is that an economy tied to <a href="http://www.imf.org/external/pubs/ft/fm/2015/02/pdf/fm1502.pdf">extractive industries</a> is well-served by saving money during the good times, and preparing for the inevitable hard times that come with the next downturn.</p>
<p>Some U.S. states including <a href="http://www.eia.gov/todayinenergy/detail.cfm?id=21032">Alaska, New Mexico, North Dakota and Wyoming</a> have applied these lessons by establishing large savings funds that can support government services when belts tighten. But even Alaska, which boasts the largest state savings fund, is <a href="http://www.theatlantic.com/business/archive/2015/08/alaska-budget-crisis/402775/">struggling to manage its budget</a> during the current downturn. </p>
<p>In the long run, all communities heavily dependent on oil- and gas-related revenues will face the need to diversify or shrink, a major challenge when regional economies have come to thrive on the extraction of finite resources.</p><img src="https://counter.theconversation.com/content/59502/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Daniel Raimi received funding from the Alfred P. Sloan Foundation for the relevant research underpinning this article. </span></em></p><p class="fine-print"><em><span>Richard G Newell received funding from the Alfred P. Sloan Foundation for the relevant research underpinning this article.</span></em></p>The boom in oil and gas development has brought new revenues to many communities in the U.S., but rural areas in particular have struggled to handle the rapid downturn in prices.Daniel Raimi, Lecturer on Public Policy (UM Ford School), Research Specialist (UM Energy Institute), Associate in Research (Duke Univ. Energy Initiative), University of MichiganRichard G. Newell, Professor of Energy and Environmental Economics, Duke UniversityLicensed as Creative Commons – attribution, no derivatives.