Monday, November 23, 2009

Oil: The Alaskan Issue

I am not enthusiastic about drilling the ANWR, but I think we’d be better off drilling it before the panic than after, when we will desperately grant every concession and overlook any abuse.

Conundrum No. 1
If I am right, then it would be better for a “green administration” to do the oversight on the  “Not-green” thing.

Conundrum No. 2:
We could only hold fast to green conditions during a market upsurge in price, because green drilling is more expensive to accomplish—the price has to make the effort worthwhile. However, a price upsurge means panic mode, when we want product and don’t care about method.

Conundrum No. 3:
If I was in charge, I would drill the ANWR as greenly as possible, and commandeer it as part of a strategic reserve for the Pacific coast and Hawaii. This would make sense for the nation, but private oil is a more efficient upstream operator, and they won’t want to have anything to do with a plan like that.

So the USG would join a joint venture with independent oil companies (many partners, but one turnkey operator), where the U.S. takes its lease price in barrels. That is what the rest of the world does, and it works.

Except the government has this huge deficit, and the invitation to sell oil rather than bank it strategically would be huge.

By looking at these three conundrums, you can extrapolate how our polarized politics is not doing us any good at all in many critical areas—not just energy. But I’ll take it further:

Conundrum No. 4:
The answers to the first three conundrums lies in getting a statesman rather than a leader or a politician. However, it’s still politics, and the political capital spent on this one would be massive. Your statesman must be a politician, or she won’t be a statesman very long.

So we will drill the ANWR when it is expedient and we are desperate and don’t pay attention.

Therefore, I am not enthusiastic about drilling the ANWR . . . but . . . .

Anti-Drilling, ANWR: Defenders of Wildlife site, and there are others, none of whom appear to study economics  . . .  .

Pro-Drilling, ANWR: Independent Oil's site, which, how efficient of them to get the .org site that signifies non-profits . . . . Map courtesy US Fisheries & Wildlife Service.


Slamdunk said...

I think you support your argument well Ann. As a conservative I am supportive of drilling up there, but certainly am cognizant of the environmental concerns.

In my non-urban area, natural gas drilling is now the next big boom. Many folks here were around to see what the coal industry did to the land a few decades ago. They have strong reservations of what things will look like in 50 years when the natural gas has been removed from the land and all that is left is the mess.

Ann T. said...

Dear Slamdunk,
My original comment response got lost--I will try to recreate--but it won't be as elegant.

1.It's an area with not just beauty but a natural fish hatchery, other things that support Alaska/Canada's economy. A lose here would be a bad one.

2. The tundra is fragile, which they learned developing Prudhoe Bay. Even a car going across--the tracks don't go away, but break the surface permanently. A very tricky set of circumstances to work with.

3. Generally, oversight by oil companies is best at the onset of projects, and not when the project is waning. And there is recent history of BP (who has been environmentally conscious) not watching over the Alaska pipeline, which leaked significantly. The oversight has to be constant, throughout the life of a project.

4. The World Bank insists that in emerging economies, the contract with the state includes the cost/responsibility of capping off and dismantling infrastructure. We should do the same. That adds more to the cost at the beginning, but helps with #3 above. We should apply World Bank standards to our own.

In no way will accessing this reserve make us energy independent. I don't care who says so: oil company rep, elected official, or pundit.

It will not affect the price of gasoline or heating in an appreciable way. It's not enough supply for that. But, it would be great to get it for the strategic reasons.

Thanks for your interest!
Ann T.