From One Depleting Resource To Another  

Bloomberg has an article on the new-found surge of wealth that has flowed into Newfoundland from offshore oil production (and some canny negotiating from the regional government). Unfortunately it sounds like they are mostly busy living it up and haven't learnt from the collapse of the cod fisheries not that long ago that blighted the local economy.

The poorest province in Canada is getting off the dole. The province of Newfoundland and Labrador is being transformed by oil, and by the willingness of Premier Danny Williams to fight Exxon Mobil Corp. and Chevron Corp. for a bigger slice of the revenue. Oil is raising the standard of living for the province's 508,000 people while bringing lower taxes, smoother roads and cheaper education.

Oil income probably created a record budget surplus for the year ended March 31, provincial documents show. The benefit has magnified since oil pushed past $100 a barrel in February. Newfoundland soon may be too flush to qualify under Canada's equalization program, which redistributes federal money so less affluent provinces can provide comparable services.

``We have lived for 400 years with the problems of poverty, and I wouldn't mind looking forward to a couple hundred years of prosperity,'' said Jerry Byrne, 57, president of D.F. Barnes Group, an energy and industrial services firm in St. John's, the capital.

Newfoundland will receive C$899 million ($883 million) of equalization payments this year, down 23 percent from a peak of C$1.17 billion in 2000. The oil that started flowing in 1997 from the Hibernia field, Canada's biggest offshore deposit, helped the province recover from the collapse of its cod fishery, blamed on overfishing or habitat damage, five years earlier.

``You see the SUVs and you see the number of vehicles, the lovely homes being built, and people with everything that they seem to want,'' said Alex Dawe, 58, sales manager of a Chrysler LLC dealership in Harbour Grace, 100 kilometers (60 miles) northwest of St. John's.

The average price of a detached home in St. John's jumped 13 percent in the first quarter to C$164,000, according to Royal LePage Real Estate Services. That's almost double the national price increase.

The nascent prosperity brought a career change for Wayne Bartlett, who auctions wine and art to raise funds for schools and charity groups. He recently sold a bottle of Chateau Haut- Brion wine for C$1,000. ``I'm skimming the cream off the top,'' said Bartlett, 43. ``I have this job that didn't exist.''

The province's economy has grown 50 percent since Hibernia began producing nine years ago. That's second only to the 53 percent expansion in Alberta, whose tar sands hold the biggest oil deposits outside the Middle East. ...

One in 10 people have left since the cod fishery collapsed in 1992, and construction jobs disappeared when the oil rigs were completed. In Marystown, almost a fifth of the 6,000 people commute to jobs with the expanding energy industry in Alberta, 4,400 kilometers away, said Synard, 48.