All oil booms go bust. As a corollary, all busts go boom. Such is the fate of an economy obsessed with commodities. Fortunes rise and fall with the global price of an abundant natural resource. The bounty from Earth is more curse than boon. The luck of the physical geographic draw turns out to stifle growth. The Canadian province of Newfoundland and Labrador (no offense intended, Quebec) grapples with this very issue. Offshore oil fields fill the public coffers. But what to make of the brave new world of persistent low prices?
Normally, those flush with commodity cash get drunk on prosperity. Everyone, for a spell, looks relatively rich. Such histories bode ill for Newfoundland as a cold winter settles in for the long-haul concerning the local oil industry. The hangover could last decades. The bust is here to stay.
Although the oil industry has not existed in Newfoundland and Labrador for very long, it is now a key economic driver. From 1997 through 2007, the Hibernia, Terra Nova, and White Rose fields produced 867 million barrels of crude oil, worth about $46 billion, according to Newfoundland and Labrador Heritage. The industry accounted for 35 per cent of the provincial GDP in 2007, up from 13 per cent in 1999 and 24.3 per cent in 2004. According to Statistics Canada, Newfoundland and Labrador experienced greater economic growth in 2007 than any other Canadian province, largely due to its oil and mining industries. “We have seen unprecedented growth,” says Neil Jacobs, regional managing partner in Newfoundland and Labrador with Stewart McKelvey, one of the largest firms on the East Coast. “Newfoundland has gone from a have-not province to a have province. That changes the whole dynamic within the country.” ...
... The impact of the oil industry is felt in boardrooms and courtrooms. Law offices have responded by enhancing their skills and building an expertise in offshore oil. The opportunities for lawyers in St. John’s have grown outside the traditional practice areas, with corporate opportunities rising to an ever-greater degree, says Benson, a former president of the Law Society of Newfoundland and Labrador. “Practice specialization is becoming a bit more common,” he notes. “For instance, my practice is primarily in the business law area, and I am seeing a definite trend away from generalists and towards specialists in this area.”
The nature of the work is also changing. “We’re now servicing larger clients with larger-value deals,” says Jacobs, who was called to the bar of Newfoundland in 1986. “Having the opportunity to work on these world-class projects sets us apart. You need to develop skills that are on the cutting edge. You’re getting experience in Newfoundland now that you used to be able to get only in the larger centres.”
The supposed resource curse demanded "world-class" legal expertise. St. John's joined the white collar, global labor club. Globalization has landed in Newfoundland.
Traditionally, Newfoundland has exported blue-collar talent when the fishing failed. Sure, the oil discovery kept more natives from moving to Alberta. All booms bust, and this time is for keeps. As a result, Calgary (Canada's Houston) won't age gracefully. St. John's, with its specialist lawyers, will serve as the draw for young adult Newfies seeking opportunity.
Jim Russell, a geographer studying the relationship between migration and economic development, writes regularly for Pacific Standard.