ANWR

This is not an angry rant, but simply a collection of data gathered from my own amateur internet research. Basically I intend to show the folly of the phony left-right arguments regarding the issue:

To start off, ANWR has a total area of 19 million acres of which 8 million are designated wilderness. The area of oil reserves, officially known as the 10-02 Area, comprises a 1.5 million acre strip along the arctic coastal plain adjacent to the existing oil fields at Prudhoe Bay. The government designated the rest of the reserve as “Minimal Management” (for all practical purposes wilderness containing some native settlements).

To put this in perspective, the Prudhoe Bay oil fields have an area about one third the size the 10-02 Area. Smaller, but not by an order of magnitude, and the area’s worst spill ever in March of 2006 only contaminated a few acres. In terms of environmental destruction over the last three decades, drilling on the North Slope pales in comparison to what happened on one day over a thousand miles away at the other end Alyeska Pipeline in 1989.

Granted, roads, pipelines and drill sites have damaged the natural landscape to the tune of approximately 22,000 acres, according to Pamela Miller of Arctic Connections, with extended impacts on the range of Caribou in their important calving grounds on this coastal plain. But even multiplying those effects four or five times still only affects a small percentage of the their total habitat. Given the larger size of the proposed exploration area, and that the existing capacity of the main pipeline limits the amount of oil that can be extracted, it may be safe to say that the environmental argument against drilling is a little over-stated.

However, the other side is every bit as loose with the numbers. Groups like Arctic Power like to talk about the billions of dollars that can be saved by increasing the amount of North Shore oil. Yet when compared to actual US consumption it would form but a drop in the bucket. The capacity of the existing Pipeline is limited a little over 2 million barrels per day. This was last achieved when Prudhoe Bay reached peak oil in the late ‘80s. Currently the North Slope produces less than 1 million barrels per day, less than 5% of total consumption. If ANWR were opened, and the pipeline used to its full capacity again it would only supply about 10% of current consumption of over 20 million barrels per day. Considering that in the last 20 years daily consumption has risen over 3 million barrels, that increase would only cover a third of the new demand since the system was last at peak capacity. So it’s only “saving money” in the sense that buying something with a coupon “saves” money over buying at list price. It’s still spending money, and in America’s case, spending money that we don’t have.

In order to actually increase North Slope oil production enough to offset the growth in imports, it would require building a new, much bigger pipeline across the largest, most rugged state in the country. The environment is extremely inhospitable, and labor costs in Alaska are astronomically high. Considering that the initial cost of construction was over $8 billion in 1974-1977 dollars, the costs today would be staggering. Not knowing what oil market will be like three months, let alone three years from now, who would risk that kind of scratch? Besides, it’s a Catch 22, releasing that much oil on the market would cause the price to plummet, and they couldn’t recover their investment.

The low hanging fruit has been picked. Even with oil prices at all time highs, the costs of extracting the oil that remains there and upgrading the aging infrastructure does not justify pumping any more oil. Why pay all that money to get it out of the frozen tundra, when you can bribe crooked dictators, use slave labor, and still sell it for the same price? Sure it costs a lot of money to keep those regimes happy, but that’s what the taxpayers are for.

So what is the real value of all that oil if we can’t really get to most of it? One word: Futures. Once an oil company has a deed to a claim all they have to do is put in a few exploratory wells, and they have an instant asset to trade on the futures market. When prices drop they can buy up a whole bunch of theoretical wells. When OPEC tries to play hardball with actual oil supplies, the companies can threaten to throw them on the market as a bargaining chip.

In closing, this whole issue looks like much ado about nothing. If ANWR ever opens the ecological impact would likely be negligible, imports will continue to rise, and the price at the pump would only go down a few cents for a couple of weeks. It’s political theater, folks, and not very entertaining at that. Whatever happens, if you luv your suv, keep a good grip on your ankles and learn to enjoy it, 'cause it ain't gonna get any better.