Energy Capitals: Local Impact, Global Influence

Conclusion: Comparative Perspectives on Energy Capitals

CONCLUSION 181 The phrase “energy capitals” seems to strike a chord with scholars. In a world of oil shortages and debates over alternatives to oil, it has the ring of importance , the promise of relevance. But does it have analytical power? Can it help explain why some regions have benefited from energy-led development and others have not? In the recent past, a growing literature on the “oil curse” has focused on nations that have not benefited from the discovery of oil, but have instead paid significant social costs.1 The majority of the cases in this volume examine regions in which the production, manufacture, and use of fossil fuels have been mixed blessings , not curses. These successful energy capitals have reaped significant economic benefits while gradually learning to manage the often severe environmental, social , and political costs that have accompanied their growth. To acknowledge the obvious: different sets of cases yield different comparative perspectives. Four of our nine cases (Pittsburgh, Houston, Los Angeles, and the region outside Baton Rouge) are in the United States, where the development of coal and oil went forward under a well-established constitution, a representative democratic political system, and a capitalist economy with considerable freedom of action for individuals and businesses. Somewhat similar conditions prevail in three CONCLUSION Comparative Perspectives on Energy Capitals 182 CONCLUSION other regions included in this volume: Calgary, Perth, and Stavanger. Only in the cases of Tampico and Port-Gentil did oil bring serious long-term problems while yielding few economic benefits. These two regions are quite different from the other seven cases and from each other. Our case studies suggest several key factors in the growth of successful energy capitals. Most significant is the region’s preparedness to participate in the development of resources on the eve of their discovery. Of particular importance is the maturity of political and economic institutions. Is there a government with the legitimacy and the potential authority to assert a measure of control over the promotion and regulation of the resource and to prevent its domination by outside interests? Are existing economic conditions and ideals likely to encourage broad participation by local interests? Does the legal framework concentrate control over resources in the hands of big businesses or government, or does it disperse such control more broadly through concepts such as individual ownership of subsoil rights to those who own the land above oil and gas deposits? Preparedness also includes the capacity of regional political and economic institutions to adapt to rapid growth by defining new regulatory powers when needed, while encouraging participation in the energy sector by local interests. Geology, geography, and timing also have significant impacts on potential energy capitals. The richness of a region’s resource endowment helps determine how long it continues to produce substantial amounts of coal, oil, or natural gas. The location of these resources is also important, since good access to infrastructure, markets, and an adequate workforce shape the pace of regional development. As shown by the extreme case of Houston, timing can be critically important; at the turn of the twentieth century, giant new oil discoveries in the region marked both the birth of modern Houston and the birth of the modern petroleum industry as an important new source of energy. The two then grew together, making Houston one of the most fully developed oil capitals in the world. The timing of the emergence of an energy capital helps determine its place and importance within the global energy industries, thus influencing its prospect for sustained expansion. Energy Capitals: Local Impacts, Global Influence Oil capitals prospered in the long term because they came to play important roles within one of the largest, most dynamic, and most important global industries : petroleum. The expansion of the international oil industry became a potent engine of growth in those regions that were favored by geology, geography, and timing and were prepared by their history to participate in its operations. Both industry and government invested heavily in the global search for oil, and investments in exploration and production created jobs in oil and gas fields and in oil-related manufacturing in most energy capitals. Some of these regions also at- CONCLUSION 183 tracted substantial investments to build and operate refineries, research facilities, and office buildings, and, in the process, created general construction jobs and manufacturing jobs that attracted new workers. Building the vast transportation infrastructure for oil and natural gas...