The best thing that ever happened to Newfoundland (well, St. John's, anyway)

High oil prices:

Newfoundland has been reaping a windfall from its three offshore oil developments on the Grand Banks, particularly since the price of oil began its unprecedented climb in the spring of 2007.

Last year the province collected $1.5 billion in oil royalties alone, and is expecting at least another $1.7 billion in 2008 - the kind of money that allowed the government to post a huge, $1.4-billion budget surplus this year, an amount equal to five per cent of the province's GDP.

"Scale that up to the size of the national economy and you'd get a $77-billion surplus, nearly four times the highest ever actual federal surplus on record," said a report by the TD Bank in April.

Once an economic misfit, Newfoundland and Labrador was the country's hottest economy in 2007. Its real GDP growth of 9.1 per cent was more than three times the national average.

Rural Newfoundland is not sharing in the wealth, and hundreds of outport communities are still trying to recover from the closure of the cod fishery in 1992, in which a $700-million enterprise, plus 30,000 jobs, were wiped out overnight.

But the province's urban economy, particularly St. John's, is being transformed by petro dollars and by the promise of Hebron, a fourth, major offshore oil project expected to be in development by the end of summer.

St. John's brims with confidence. Flashy convertibles prowl along Water St., where oil executives lunch at trendy new restaurants, and hotels and condos stand on what were once derelict city lots.

The affluence is also shared by a string of satellite towns - Paradise, Mount Pearl [my hometown - DP], the Goulds and Torbay - where dozens of local oil industry supply firms have their offices and fabrication yards, and an influx of money is fuelling a home-building boom unlike anything in the province's history.

I remember the early 1990s, when Water Street looked like I Am Legend, with fewer zombies. (The zombies spent most of their time on George Street.) The transformation is something I never thought I'd see in my lifetime.

Damian P.

Posted by damian at July 21, 2008 07:18 PM