Small Savings for a Big Loss

Red-necked Phalarope at Arctic NWR (USFWS Photo)

Drilling in Arctic NWR is one proposal that never seems to die, even with the change of leadership in Congress. Over the past decade, the stated rationale for drilling has shifted; these days the talk is about how Americans would save money by opening ANWR to the oil industry. To that end, Senator Ted Stevens requested the Energy Department's Energy Information Administration to estimate how much ANWR oil would reduce the overall price of oil.

The EIA released its report this week, with the news that ANWR wells, at peak production, would reduce the price of crude oil by $0.75 per barrel. That's barrel, not gallon. With a barrel producing 44 gallons of petroleum products, that would probably work out to a savings of about $0.02 per gallon of gasoline. Oil from the refuge would not hit the market for ten years, when those values would presumably be worth much less.

Since the cost savings was unimpressive, the report cited other reasons for opening the refuge.

However, even if drilling has a negligible effect on prices at the pump, opening ANWR to production has other positive effects for Alaska, said Philip Budzik, one of the authors of the report.

For one, it keeps the Alaska pipeline operational past 2030, Budzik said, which means that oil producers might continue to explore smaller, less lucrative North Slope prospects simply because they have a way of getting their oil out of the state. That means oil production will continue to be a mainstay of the Alaska economy.

And if ANWR oil replaces foreign oil barrel-for-barrel, that means the U.S. is importing less oil, Budzik said, and fewer oil imports mean a stronger U.S. dollar.

The likelihood of such a proposal passing is now far less than it was a few years ago, but bills and amendments to open ANWR keep getting introduced. The Senate rejected one bill to drill in ANWR last week, but a similar bill was introduced in the House this week. It would be far more useful if our senators and representatives would provide better funding for public transportation or find other ways to reduce oil consumption.

Environmentalists like me oppose opening the Arctic National Wildlife Refuge because it is a wilderness area, one of the few places along the U.S. Arctic coastline that is not yet subject to oil exploration. The red-necked phalarope pictured above is just one of many bird species that occur at ANWR. I may never see it myself, but I, like many other birders, do see species that breed at the refuge every winter. A few such species (with their approximate migration routes) are shown in the image below.

click to enlarge