Lucian M. Ashworth By: Lucian M. Ashworth
Professor
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19 May 2020 : COVID-19 & Oil in Newfoundland & Labrador

Yesterday the oil and gas lobby and its supporting accounts lit up Newfoundland and Labrador Twitter with excited optimism. Despite International Energy Agency (IEA) pessimism in its May report on oil, a series of reports in Reuters and Bloomberg seemed to be saying that global oil demand (especially in China and India) was returning to old levels of consumption as pandemic controls are eased. This was taken as a sign that all the problems of the oil industry were pandemic related, and that oil and gas profitability is here to stay.

The Newfoundland and Labrador Oil and Gas Industries Association (NOIA) is an organization that represents companies that supply and service the oil and gas industry in the Province. Even before the pandemic its position had been that oil and gas extraction would continue off the coast of the Province in the long term, and it supported new exploration and extraction. Since the pandemic it has taken the line that oil and gas extraction will return to normal after the emergency is over. Hence the importance of the recent news reports on a return to pre-pandemic consumption levels.

Of course, fossil fuels were in trouble before the pandemic. The clear link between global heating and fossil fuel burning, the pledged decarbonization goals for 2050 or earlier from several jurisdications (including the EU and the UK), the heavy subsidy regime (reported in a comprehensive IMF report) that seems necessary to make the industry profitable, and the price instability due to conflicts between producers, have put the industry under pressure. Even the top companies in the industry have threatened to jump ship, with commitments from both BP and Shell to decarbonize.

Yet, the Twitter feeds supporting the oil and gas industry still cling tightly to the idea that, after the pandemic passes, the industry will return to normal. On top of this they seem threatened by any contrary voices, and defensive tweets often come close to accusing experts based at the University here of betrayal (one, retweeted by the head of NOIA, accused 'MUN professors' of biting the hand that fed them). In this sense, the Provincial fossil fuel lobby is little different from a broader conservative trend in North America that both advocates for a full and fast return to the status quo, and fears that 'liberals' will use the pandemic to introduce radical changes.

Of course, the pandemic is only a catalyst. Expensive oil producers like Canada were always going to be the first threatened by any price war or peak demand. On top of this, the Provincial industry's blindness to the effects of climate change and climate change action (especially action from government, finance, and renewables) has created a cognitive bubble immune to wider and longer-term global trends. In this sense the major effect of the pandemic has been to highlight the precarity of the industry, but at the Provinical level at least the industry seems oblivious to it.

In my senior undergraduate elective course (the Global Politics of the End of the World), I often stress a point made by the archaeologist Arthur Demarest. While studying the collapse of the late classical Maya Demarest argued that elites, when faced with threats that they do not have the tools to solve, double down on what they do best. Mayan theatre state god-kings responded to famine with monumental building and warfare. In our age we double down with public relations. What better way to solve a problem than to show it is not a problem?

The pandemic has shown up the weaknesses of relying on oil and gas extraction for Provincial economic development and revenues. Luckily PR and Twitter threads can paper over these cracks and reassure us that the good times will roll again thanks to fossil fuels.

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