The Oil Industry vs the Co-operative Business Model

Jun 06, 2017

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On August 28, 1859 two bushy-bearded men,
George Bissell and Edwin L. Drake, pulled their drill 21 meters out of the ground near Titusville, Pennsylvania. It was coated in a thick, black sludge. Oil.

This well, the Drake Well, initiated the world’s first oil boom. People flowed into Titusville as quickly as the oil flowed out. Within five years, Titusville’s population exploded, growing from 250 to 10,000 people. Fortunes were being made but not everyone was benefitting.

On June 11, 1880 a lightning strike caused 300,000 barrels of oil to catch fire, filling the sky with so much smoke they called it “Black Friday”. Twelve years later, an oil tank exploded, killing sixty people.

But the oil industry pumped on. It grew by private hands and filled private pockets, becoming what it is today: A profit-making machine with no regard for anything but the bottom line.

Nearly 150 years since the Drake Well, the fossil fuel industry hasn’t changed much. Only now the accidents are more frequent, destructive and deadly (BP’s Deepwater Horizon spilled 49 million barrels of oil into the Gulf of Mexico), and it has ballooned from a million-dollar industry to a multi-trillion-dollar industry.

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But imagine a different story unfolded at the Drake well: oil was extracted for profit but with social and environmental consideration. In an alternate universe, there is a society that developed an ethical oil industry.

This ethical oil industry acknowledged climate change and the toxins that fossil fuels release into our air, soil and water (and it didn't make a video about these dangers and try to hide it away). Each company worked with governments to incentivize oil conservation and invested in renewables as a large component of their business. It did not fund anti-science lobby groups, politicians, and publications. It whole-heartedly accepted putting climate-change warning labels on gas pumps instead of developing a counter-campaign against such labels. It grew with the world instead of against it, adapting to what we and our planet needed then and would need today.

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Oil companies benefit only those who profit directly from them. If oil corporations and other limited liability corporations were co-operatives, the interests of our planet and its people would be seen more as a priority and less as a barrier to profits.

Why does it Matter that SolarShare is a Co-operative?
SolarShare is a two-fold response to the fossil fuel industry. Not only are we putting clean and renewable energy into the electricity grid, our co-operative structure allows us to provide benefit to people and the planet in the ways the oil industry never could. Here’s how:

Democratic Finance is Finance from the Will of the People
Finance for multi-million-dollar energy projects traditionally comes come from banks, meaning private interest and the wealth of a few tends to shape our energy landscape. As a co-operative, SolarShare is different because anyone with $1,000 can become an investor. Community bonds, or in our case Solar Bonds, let ordinary Ontarians pool their money to finance big league projects. You could say SolarShare’s solar projects are funded by the will of the people. That’s democratic finance.

Maximizing People, Planet and Profit
SolarShare is a not-for-profit organization. Unlike a corporation, we don’t have a duty to maximize profits to our shareholders. We earn revenue from our solar installations and use it to pay our members 5% and 6% annually on their investments and return their principal at the end of their terms. Any surplus revenue must be allocated to renewable energy projects.

It is not in our best interest or that of our membership to cut corners to maximize profits. So we purchase good quality Canadian-made panels and hire local contractors and service teams, keeping money in Ontario communities.

Democratic Decisions
As a co-operative, we make decisions by democratic process. Once a year we convene for our annual general meeting, where our members vote in the Board of Directors. Any other important business decisions can be brought to the membership for a vote as well. All members—regardless of whether they invest $1,000 or $1,000,000—get one vote. Our diverse membership ensures that no decision is made that does not benefit the majority of members and their wide variety of interests.

Democratization of Power
Swaths of Hydro One were recently sold off to private companies, who can make decisions about our electricity regardless of what Ontarians want. But SolarShare owns and operates several commercial-size solar installations and make decisions about those systems. SolarShare’s business model exemplifies how we’d like to see power owned and managed in Ontario.