I’m sure we all remember the 2008 election, the year of hope, of change, of Palin. It also gave birth to the now famous slogan, “Drill, baby, drill.”
While the slogan has receded in popularity after the BP oil spill, many Republicans still support the idea of increasing U.S. oil production by drilling more, as we saw in recent congressional debates about the Keystone pipeline.
One of the earliest drilling debates started in 1977 and continues today. It centers on the Arctic National Wildlife Refuge (ANWR). ANWR is a national wildlife refuge in Alaska, the nation’s largest and the nesting site of thousands of birds and the calving ground of caribou. Supposedly there are vast tracks of oil in the ANWR which, if recovered, would increase domestic oil production significantly.
Many Republicans support drilling for these reserves, as they argue that the extra billions of barrels of oil will reduce our dependence on foreign oil and reduce gas prices.
In contrast, many environmental groups and most Democrats oppose drilling in ANWR, claiming it will take a long time to come online, have a negligible effect on supply and potentially harm the wildlife.
With the price of a barrel of crude oil over 100 dollars, the price of gas at the pump going up and an increasingly belligerent Iran, might it be worthwhile to exploit the ANWR oil reserves?
The key to this question is how much oil can actually be obtained from ANWR. It is difficult to come up with an exact figure, but the U.S. Geological Survey has released estimates ranging from 5.7 billion to 16 billion barrels.
A study by the Energy Information Administration determined that drilling in ANWR would increase domestic supply of oil by 1 million barrels per day and thus lower the amount of oil imported by about the same amount. This obviously reduces the import expenditure on oil (by about 7 percent) and improves the U.S. balance of trade (by about 135 billion dollars).
While it is true that drilling in ANWR would increase the global and domestic supply of oil, the effect this would have is limited. The EIA calculated that on the low end ANWR would make up 0.4 percent of the total U.S. oil consumption, and on the high end 1.2 percent. According to the Energy Information Administration, this works out to a decrease of 0.41 and 1.44 dollars in barrel prices, respectively. These are very small changes if the price of a barrel is 100 dollars and would have little effect on the price of gas at the pump.
Other factors make ANWR drilling even less appealing. The rest of the world’s production of oil is not fixed; during the ‘70s the Organization of Petroleum Exporting Countries (OPEC) decreased the amount of oil they supplied, which drove the price of oil up. It is quite possible that an increase in oil production due to ANWR would be offset by a decrease in production by OPEC, which would cause the price of oil to remain unchanged.
Even without OPEC interference it is likely that some producers would no longer make a profit at the slightly lower prices and stop production, which would also reduce the amount of oil in the market. While this decrease would not be as large as the increase, it still means that less oil than the estimated amounts will probably enter the market, meaning the effect on price will be even smaller than predicted.
When one looks at the minimal effect drilling in the ANWR would have, it seems foolish to open it up to drilling. The benefits simply do not seem to outweigh the potential costs to the environment.
At best opining, ANWR would only delay the inevitable. Gas prices will ultimately be high, as there is a dwindling amount of oil and increasing consumption. I might support ANWR as a measure to supply oil while we wean our selves off of it, but hopefully it won’t come to that and it is certainly not the situation we face. High gas prices are a signal that our current consumption is unsustainable. I hope the Republicans and the nation listen to what they are trying to say.
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