In an effort to keep my New Year’s resolution of not driving my readers berserk with relentless diatribes about George W. Bush’s misbegotten Iraq War and his insensitive approach to Social Security, this will be the first in a series of postings on energy and the environment. I consider myself an environmentalist in good standing as, I’m certain, do most of those who temporarily perch on this site. With that guarantee on the table, I’m going to slam both the federal government and the environmentalists.
As for the federal government, I’ve been doing little but calling the president such well earned appellations as the Used Car Salesman in Chief and Bubble Boy for the past year and a half mostly for his failed adventure in Iraq which had its genesis in our profligate national demand for oil. With my anti administration bona fides established, I’m going to begin by goring the goody goodies. As many of my friends will find this an uncomfortable detour from my usual way, I hope that you will read to the end where I will attempt to tie it all together in a rational and moderate fashion.
I’m for opening up the Arctic National Wildlife Refuge (ANWR) for drilling. There are environmental risks to drilling in the refuge, but, as has been shown virtually next door in the Prudhoe Bay oil field, it is possible for oil exploration, drilling, and extraction to take place without the sky falling. Given the backgrounds of many of my readers, it is certain they have been bombarded with the horror tomes created by the many environmental groups. These publications are uniformly doomsday documents showing every possible disastrous possibility as a near certainty and labeling anyone who would consider opening up the refuge as an eco criminal. Dear reader, you have every right to be concerned.
The arguments against drilling fall into a few narrow categories: it will irreparably damage the fragile environment and the resident and visiting wildlife; it will not help the treasury of the federal government but will enrich the rapacious oil companies; and it won’t improve our precarious energy situation as the total production amounts to but a drop in the bucket of our usage. These are difficult arguments to refute since proving negatives and determining whether glasses are half full or empty lies in the eyes of those beholding the vessels.
It is possible that despite the technological advances made since Prudhoe Bay was opened that spills could occur. In fact, spills occur on a daily basis in the field. What is never reported by these doom sayers is that the spills are almost all very small, that they are cleaned up quickly with almost no damage to the environment, and that systematic efforts are undertaken to learn from each event to assure that recurrence is minimized. Rarely, if ever, stated by opponents of Arctic drilling is the fact that all these Alaskan fields were discovered when natural oil seepage was observed by early explorers.
I’ll stipulate right at the top that the refuge is fragile and its wildlife is sensitive. But the arguments being raised are the same as those used by opponents of Prudhoe Bay next door to the ANWR which has very similar geography and wildlife. We were warned that the caribou were sure to be adversely affected in that ecosystem, but the animals have thrived despite the horrible warnings by these same environmental groups. And it is likely that opening up the refuge will produce a similar result.
The gravest danger to the ANWR environment has to do with energy consumption by the modern world and the shift away from oil may be too late as it is. But to turn the environmentalists’ favorite argument back on them, extracting ANWR deposits, which they claim are so small, will do little additional harm to the flora and fauna. They beat us about the head and shoulders saying that the recoverable crude oil and gas in the refuge is but a drop in the bucket of America’s humongous demand, they must believe that even if I don’t.
While I’m no great believer in the truthfulness of federal agencies, two groups, The U.S. Geologic Survey (USGS) and the Energy Information Agency (EIA) have always met my standard of organizations that put out useful and truthful information and data.
The best and latest estimate of the USGS is that at $24.00 per barrel, about market price in 2000, there was a 95% chance of finding 1.9 billion barrels of recoverable oil. Since the Iraq War, as you rediscover every time you fill up your gas tank, the price of oil has skyrocketed. In addition with the emergence of major new consumers such as China and India, it is inconceivable that the price of extraction will fall back to anywhere near the inflation adjusted price of $24.00. In the 2000 assessment, USGS estimated a 50% chance of finding 5.3 billion barrels. I won’t bore you with further upward estimates, but will settle for this argument on not less than 3 billion barrels of recoverable oil which has been making the rounds in popular print. The media has also settled on this being something above six months of total usage by the country. This has been seized upon by opponents of opening up the refuge as simply a drop in the bucket.
Looking at the refuge as supplying our total petroleum needs for something over half a year is not the way to proceed. No single source can be evaluated in those terms. The better way is state that the refuge could produce more than 6% of daily – and, of course, annual – petroleum consumption as specified by the EIA and this would go on for several decades. This in itself would be no justification for going ahead with the program, but we as a people are beginning to see what geologists and economists have been telling us for many years and what American presidents – with the exception of the present incumbent - have been aware of since 1973 when the Arab Oil Embargo was thrust upon us.
The size of the ANWR oil footprint on the reserve is about 2,000 acres, a sizeable chunk of land, but the size of the ANWR itself is almost nine million acres. The oil would be shipped the few miles west to the existing pipeline that carries Alaskan oil from Prudhoe Bay, thus minimizing the physical impact still further.
It is now known to thinking Americans and becoming apparent to millions of ordinary people who have never considered the underlying basis for our modern society that we are now transitioning to an economy and society that will be based primarily on forms of energy other than petroleum (and natural gas). The cost of putting the feedbag on old Paint, our trusty SUV, and for heating out 5,000 sq ft. home forty miles from the general store is staggering to us. Naturally, we can shoot – or scrap – old Paint in the short term from today until it stops on its own in about a decade, but it’s not going to be easy to deal with the tens of thousands of McMansions we’ve built in the exurbs over the past quarter century.
We are at the early stages of conserving energy with a dedication unknown since W.W.II. Soon we’ll be driving smaller more energy efficient vehicles and we’ll insulate like we’ve never done, but that will help only slightly. We have to have additional sources of energy, but even this isn’t easy. My friends in Massachusetts are biting their nails over the need for more and cheaper energy and the environmental degradation likely to be caused by a proposed wind farm for the middle of Nantucket Sound.
NIMBY, not in my backyard, is very real. Every new source of energy from solar and wind farms to nuclear plants or liquefied natural gas ports provides hope and fear. It isn’t easy to site a major energy facility. I know; I spent years working on siting the Yucca Mountain nuclear waste repository in Nevada. I’ve been retired for well over a decade, and the last I heard, Senator Reid isn’t planning on turning the first symbolic shovel in the project any time soon.
What does all this have to do with the ANWR? We are suffering from the dramatic increase in the price of oil, and we are merely in the first stages of making the extraordinarily painful transition to heavy duty energy conservation and to alternative forms of energy. This will be among the most economically agonizing processes ever undertaken by the American people, and, as is always the case, the most suffering will be by those least able to defend themselves, the poor and those on fixed incomes.
If we open the reserve to oil extraction, the world price of petroleum will be impacted, even if only slightly. While this price will not be enough to slow conservation and the shift to other forms of energy it will assist the government in aiding the helpless.
There are two more canards about this project that must be addressed. First, only the oil companies will be enriched while the government gets a pittance from the leases. The leases can be written in a manner than reflects market conditions. The oil companies will be the organizations taking the great risks and they should be rewarded accordingly, especially if we want to feed old Paint until we can afford a battery driven car. The government can defend the rights of the nation by assuring that the contracts cover contingencies such as even sharper rises in the world price of oil.
Second, an even more important argument thrown around by the opponents of opening up the ANWR is that the oil may even be sold to other nations and not kept in the United States. This is truly a bit of flimflam. Oil is fungible and flows to price. If oil from the ANWR is sold on the open market it will flow to where it can be sold and used most economically. If it is cheaper for the oil in the reserve to flow to China, New York’s supply will flow from Saudi Arabia or wherever it is most effective.
Naturally, if there is a crisis brought on by war or political crisis, the leases can be written to assure that the oil from the ANWR is reserved for this country.
If you’re still with me, I still claim to be a moderate and I hope that you believe it. Soon I’ll write about the Bush administration which I consider the least sensitive ever in terms of energy and the environment. Right now, I’m in need of Happy Hour.
Blog on!
Wild Bill
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