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| Imperiled Riches—Threatened Rainforests |
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OIL EXTRACTION: The Impact Oil Production in the Rainforest The extraction of oil is responsible for the deforestation, degradation, and destruction of lands across the globe. The oil extraction process results in the release of toxic drilling by-products into local rivers, while broken pipelines and leakage result in persistent oil spillage. In addition, the construction of roads for accessing remote oil sites opens wild lands to colonists and land developers. Some of the world's most promising oil and gas deposits lie deep in tropical rainforests. While these fossil fuels can be extracted in an environmentally-friendly way, governments and oil companies usually opt for expediency over consideration for the environment or the interests of local people most affected by production. One of the best known and extreme case studies of oil exploitation in the rainforest is in Ecuador, where the U.S. oil giant, Texaco (later Chevron-Texaco), seriously degraded an ecosystem over a generation. The firm's oil operations affected the lives of thousands of indigenous peoples and settlers. The Ecuadorean Oriente, located on the western edge of the Amazon rainforest, is considered the most biodiverse place on Earth. Before Texaco entered in 1967, the region was home to several indigenous groups including the Huaroni people. Some of these Huaroni were among the few remaining indigenous peoples on Earth living fully in their traditional ways.
Originally it appeared that Texaco might pull out of the Oriente without reparations to the people whose environment was so seriously degraded, but widespread protests by indigenous peoples, environmentalists, and human-rights organizations forced Texaco into negotiations. Texaco projected its clean-up costs at a moderate US$5-10 million. In response to the insufficient clean-up gesture, along with widespread environmental degradation and serious health problems among local peoples, a class-action lawuit was filed against Texaco in the United States on behalf of 30,000 people affected by the oil company's operations. Previous suits against Texaco filed in Ecuador failed due to Texaco's political influence with the Ecuadorean judiciary. The exploitation of oil in the Ecuadorean Amazon serves as a particularly negative example of oil development projects in the rainforest. Typically, the oil company cuts roads through the forest in order to carry out operations. These roads are followed by transient settlers who colonize and damage the surrounding forest through slash-and-burn agriculture, the introduction of domestic animals, hunting, the collection of fuelwood, and often the introduction of foreign disease to local forest dwellers. Besides the opening of oil roads, oil companies like Texaco burn off by-product natural gas in the open air, a process known as flaring. The flames, besides adding pollutants to the atmosphere, can cause fires that destroy more forest and threaten the lives of locals. In the late 1990s, such gas burning at an Occidental well in Bangladesh was cited as the cause behind a large forest fire. The oil extraction process can be messy and destructive. Spills result from burst pipelines and toxic drilling by-products may be dumped directly into local creeks and rivers. Some of the more toxic chemicals are stored in open waste pits and may pollute the surrounding lands and waterways. For security reasons, oil operations may have military involvement. Oil spills are of tremendous concern in the rainforest. A severe oil spill could have a devastating impact given the variety of river systems—from floating meadows to swamp forest to oxbow lakes to sand bars—that would be affected. The Exxon Valdez oil spill was difficult enough to clean up even though it was limited to rocky beaches; addressing a similar-sized spill in the Amazon would be magnitudes more complicated.
Despite booming demand for oil and gas, the vast majority of ordinary citizens see little benefit from oil-production activities. In fact, developing countries with large oil reserves have some of the highest debts in the world. During the 1970s when oil prices were extraordinarily high and real interest rates low, many oil-exporting countries looked much wealthier than they actually were and took out large loans from foreign banks. The loans were used to sponsor costly, often economically inefficient development projects. In the 1980s the creditworthiness of these developing countries collapsed with oil prices, and the debt of many oilexporters skyrocketing. For example, the national debt of Ecuador has rapidly accelerated since the beginning of the oil boom in the early 1970s. In 1970, the national debt stood at US$256.2 million, but by 2005 the debt had swollen to $16.8 billion. The sudden inflow of oil can further affect a developing economy by producing a sharp appreciation in the domestic currency which can make non-oil sectors like agriculture and manufacturing less competitive on world markets, thus leaving oil to dominate the economy. The country then becomes vulnerable to wild price swings in the commodity market. Over-reliance on oil can also impact the government's responsiveness to its citizens. Michael Ross, an associate professor of political science at the University of California at Los Angeles, believes that oil-rich countries do less to help their poor than do countries without oil and are plagued with lower literacy rates, score lower on measures like the UN's “$$RHETT. MORE OF THESE SYMBOLS HERE AND BELOW$$"Human Development Index," and have higher child mortality and malnutrition. How is this possible? The Economist explains, "Unlike agriculture, the oil sector employs few unskilled people. The inherent volatility of commodity prices hurts the poor the most, as they are least able to hedge their risks. And because the resource is concentrated, the resulting wealth passes through only a few hands—and so is more susceptible to misdirection." Since oil revenues are sometimes funneled directly to rulers, governments have little need to raise revenues through taxes and be accountable to their citizens. Political and economic considerations aside, oil conglomerates are easy targets for environmentalists. Their operations are highly conspicuous and create a dramatic impact on the local economy and the local social conditions. Since local communities reap few benefits from oil development, while shouldering the bulk of the social and environmental costs, it is easy to see why the contribution of oil development to environmental devastation is often overstated. Review questions:
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