Lynne Kiesling
So the attempt to attach provisions to drill for oil in ANWR to a defense bill has failed. Should we be bugged about this?
I think it depends on which forecasts you believe. Here’s what I mean: over the past five years I’ve had several different group research projects in which students perform a benefit-cost analysis of ANWR drilling. They attempted to quantify the environmental variables, which is tricky, so depending on how confident you are in your quantification of those intangibles, you may or may not get a net positive. Also, the USGS has performed extensive studies in which they estimate how much oil may be extracted. You know the kind: we are 90 percent confident that we can extract X barrels per day, 80 percent confident we can extract Y barrels per day, etc. Every time my students have analyzed this, the variable to which the result is most sensitive is that estimate of the expected cost of extracting the oil. If you restrict yourself to the amount that has the high confidence, their analyses show that it’s not worth it.
In any case, the ANWR oil is not a sufficiently large amount to induce much change in world oil prices (which is a fancy way of saying it’s little more than a drop in the bucket). There are two things, however, that do bug me about this whole political exercise.
One is this annoying and ridiculous extent to which Congress has evolved toward attaching unrelated pet things to big, crucial bills. From an analytical public choice perspective, this evolution is not surprising. It’s about building the coaltions, right? But from a philosophical perspective, I have to admit that I find it disgusting. The second thing that I’ve always found troublesome about the ANWR debate is that it would not be an issue if the land were privately owned. If we abandon the farce of “public ownership” and if private individuals owned the land, we’d find out pretty darn quickly whether caribou migration or drilling is more valuable, given the available technologies.
So here’s my policy proposal: privatize ANWR. Better yet, have the federal government grant the title to the land to a joint venture of the Nature Conservancy and the residents of the area, and let them figure it out. Then if it’s worth it to drill, let the firms interested in drilling make them purchase offers. That will satisfy those worried about income distribution effects of “big oil” being able to buy their way in. Establish the property right on the other side. But if we believe Coase, establishing the property right and reducing the transaction costs will end up with the optimal combination of drilling and caribou migration.
If ANWR is transferred to private ownership, how do we value the transaction?
My own calculations indicate that the production from ANWR is equivalent to a rather small increase in vehicle fuel economy, which we should almost certainly be pursuing anyway. In short, it’s not worth it.
WSJ did a very interesting article about Ted Turner about 6 months ago. It would be hard to think of anyone more “green” with anywhere close to the amount of assets he has. Turns out that Turner’s big land holdings in New Mexico are sitting on top of a good supply of oil—so,very discreetly the property managers have gone after the oil–after the wells are drilled–that’s the messy part–the production facilities are sited behind trees and other natural barriers. They had a picture of a meadow with something like eight wells within the picture frame–but none visible. Not sure the public understands how much the technology has changed.
WSJ did a very interesting article about Ted Turner about 6 months ago. It would be hard to think of anyone more “green” with anywhere close to the amount of assets he has. Turns out that Turner’s big land holdings in New Mexico are sitting on top of a good supply of oil—so,very discreetly the property managers have gone after the oil–after the wells are drilled–that’s the messy part–the production facilities are sited behind trees and other natural barriers. They had a picture of a meadow with something like eight wells within the picture frame–but none visible. Not sure the public understands how much the technology has changed.
Interesting enough to post about it also.
http://rdrutherford.blogspot.com/2005/12/should-we-be-bugged-about-not-drilling.html
But I think you forget that the State of Alaska owns all subsurface mineral rights.
My suggestion would be that an auction of all people that want the lease for whatever purpose put the money up and that divides the property rights up.
This then leads to the optimal output also. No?
Private ownership of ANWR would automatically lead to exploitation of the resource, for the simple reason that the cost of buying the habitat would necessitate exploitation to achieve ROIC. Further, unless there was an extensive regulatory regime (that was also rigorously enforced – highly unlikely given the demonstrated negligence of the Bush adminstration) there would be little reason to expend more than cosmetic efforts to preserve habitat, i.e. pristine wilderness has little or no tangible value (in this case primarily because of its isolated location), vs. potentially large oil/mineral wealth.
ANWR is a classic example of flaws in using market mechanisms to value wilderness, because the economic value of remote wilderness is often very low relative to its resource value, yet it has often critical indirect/intangible importance to the overall biosphere. In this case loss/disruption of the Porcupine herd breeding grounds would very negatively affect the ecosystem of a very large part of Canadian/US arctic, not just ANWR. What is the value of lost wildlife across the entire arctic that would result from even minor disruption (that multiplies into major disruption over years) of the Porcupine caribou herd? It’s an intangible externality, therefore can’t be figured into a cost/benefit framework.
More interestingly, the expected cost of oil from ANWR is at best ~$15-20/barrel, yet the cost of saving an equivalent amount of oil by investing in energy efficient equipment to replace older more wasteful equipment is ~$12/barrel, according to very conservative estimates from Rocky Mountain Institute. So privatizing ANWR would directly lead to an inefficient allocation of resources, exactly the opposite of the intent of implementing a privatization scheme.
Re: Ted Turner’s property, while it’s apparent that Mr. Turner made extensive effort to conserve the habitat for personal reasons, it’s much more difficult and expensive to preserve/restore habitat in the arctic, because a) it’s tundra, there are no trees/terrain to hide equipment, b) the entire ecosystem is far more delicate (i.e. small changes in habitat can cause large scale disruption/tipping effects) creating significant difficulty in ecosystem presevation/restoration, compounded by the nature of the habitat (primary caribou breeding grounds), and c) it’s far from clear that a primarily profit driven enterprise would have any economic incentives to exercise anything close to the same the degree of care that Mr Turner did for personal reasons.
Private ownership of ANWR would automatically lead to exploitation of the resource, for the simple reason that the cost of buying the habitat would necessitate exploitation to achieve ROIC. Further, unless there was an extensive regulatory regime (that was also rigorously enforced – highly unlikely given the demonstrated negligence of the Bush adminstration) there would be little reason to expend more than cosmetic efforts to preserve habitat, i.e. pristine wilderness has little or no tangible value (in this case primarily because of its isolated location), vs. potentially large oil/mineral wealth.
ANWR is a classic example of flaws in using market mechanisms to value wilderness, because the economic value of remote wilderness is often very low relative to its resource value, yet it has often critical indirect/intangible importance to the overall biosphere. In this case loss/disruption of the Porcupine herd breeding grounds would very negatively affect the ecosystem of a very large part of Canadian/US arctic, not just ANWR. What is the value of lost wildlife across the entire arctic that would result from even minor disruption (that multiplies into major disruption over years) of the Porcupine caribou herd? It’s an intangible externality, therefore can’t be figured into a cost/benefit framework.
More interestingly, the expected cost of oil from ANWR is at best ~$15-20/barrel, yet the cost of saving an equivalent amount of oil by investing in energy efficient equipment to replace older more wasteful equipment is ~$12/barrel, according to very conservative estimates from Rocky Mountain Institute. So privatizing ANWR would directly lead to an inefficient allocation of resources, exactly the opposite of the intent of implementing a privatization scheme.
Re: Ted Turner’s property, while it’s apparent that Mr. Turner made extensive effort to conserve the habitat for personal reasons, it’s much more difficult and expensive to preserve/restore habitat in the arctic, because a) it’s tundra, there are no trees/terrain to hide equipment, b) the entire ecosystem is far more delicate (i.e. small changes in habitat can cause large scale disruption/tipping effects) creating significant difficulty in ecosystem presevation/restoration, compounded by the nature of the habitat (primary caribou breeding grounds), and c) it’s far from clear that a primarily profit driven enterprise would have any economic incentives to exercise anything close to the same the degree of care that Mr Turner did for personal reasons.
Very few people want the public to understand how the technology has changed.
It’s too early for the government to get out of the way – we’re not in a crisis yet. We have to wait. Patience is a virtue, but I’m not feeling particularly virtuous!
Very few people want the public to understand how the technology has changed.
It’s too early for the government to get out of the way – we’re not in a crisis yet. We have to wait. Patience is a virtue, but I’m not feeling particularly virtuous!
Lynne,
I think you are overly optimistic to believe that “it would not be an issue if the land were privately owned”. Environmental permitting can take a very long time, especially if there is a concerted effort to make it take a very long time (forever?).
The land in ANWR which would be affected by E&P activity was set aside for oil & gas E&P when the refuge was created. Now, despite technological improvements, it cannot be “safely” used for that purpose. RIGHT!
With due regard to your students, opening ANWR would allow some of the best financial minds in the country to get serious about cost / benefit studies, which they would do since $ billions would be at stake. Of course, if we insist on achieving the ultimate solution to the environmental externalities cost issue before E&P begins, the crude oil may still be in the reservoir at the time of the Second Coming.
I would love to hear a President promise that he / she would veto any bill which dealt with more than one issue. That way, every program, good or bad, would have to stand on its own merits. I would also love to see a constitutional amendment which prohibits any legislator at any level of government from voting on any bill he / she has not personally read and understood.
There is an old common law axiom that “ignorance of the law is no excuse”. However, it is now impossible for an average citizen to be anything but ignorant of the law. The law is so voluminous and so complex that lawyers have to specialize and sub-specialize. The law is so complex that the court system must include specialized courts. Much of the law is so complex that different appeals courts interpret a specific law differently. Some of the law is so complex that the Supreme Court must consider the laws of other countries to understand what our laws mean. (Yes, I am being insufferably cynical.)
Lynne,
I think you are overly optimistic to believe that “it would not be an issue if the land were privately owned”. Environmental permitting can take a very long time, especially if there is a concerted effort to make it take a very long time (forever?).
The land in ANWR which would be affected by E&P activity was set aside for oil & gas E&P when the refuge was created. Now, despite technological improvements, it cannot be “safely” used for that purpose. RIGHT!
With due regard to your students, opening ANWR would allow some of the best financial minds in the country to get serious about cost / benefit studies, which they would do since $ billions would be at stake. Of course, if we insist on achieving the ultimate solution to the environmental externalities cost issue before E&P begins, the crude oil may still be in the reservoir at the time of the Second Coming.
I would love to hear a President promise that he / she would veto any bill which dealt with more than one issue. That way, every program, good or bad, would have to stand on its own merits. I would also love to see a constitutional amendment which prohibits any legislator at any level of government from voting on any bill he / she has not personally read and understood.
There is an old common law axiom that “ignorance of the law is no excuse”. However, it is now impossible for an average citizen to be anything but ignorant of the law. The law is so voluminous and so complex that lawyers have to specialize and sub-specialize. The law is so complex that the court system must include specialized courts. Much of the law is so complex that different appeals courts interpret a specific law differently. Some of the law is so complex that the Supreme Court must consider the laws of other countries to understand what our laws mean. (Yes, I am being insufferably cynical.)
“In any case, the ANWR oil is not a sufficiently large amount to induce much change in world oil prices (which is a fancy way of saying it’s little more than a drop in the bucket).”
World oil prices, like others are set by the marginal transaction. The presence of one more barrel on the market will push the price down. Any one field may not reduce the price “much,” but its not your money (or the Senate’s either). I would rather have a one cent reduction in the price of gasoline, than any tract of frozen tundra (which I, my children, and my children’s children will never ever see) you can name. The value of all of the caribou in creation means less to me than a pack of chewing gum.
Furthermore, why shouldn’t there be oil drilling in Alaska? Why shouldn’t we drill for oil in Barbara Streisand’s living room? Or, in Central Park? The externalities of oil drilling are absolutely minuscule compared to those of many other common human activities. Start with agriculture as a baseline and move on from there.
Elevating the quality of animals and landscape above the needs and wants of people is not just bad politics, it is anti-political. The proponents of pristine cannot adhere to Cicero’s maxim (and the rubric of Locke’s Treatise): “Salus Populi Suprema Lex Esto.”
“One is this annoying and ridiculous extent to which Congress has evolved toward attaching unrelated pet things to big, crucial bills.”
The reason for this is Senate Rules, under which a budget bill may not be filibustered. In the days of the classic filibuster, the minority that wanted to block legislation (usually Democrats seeking to preserve the peculiar institutions of the South) had to keep talking, because if they lost the floor, the filibuster was over.
When the Grand Klegal Bobby Byrd, revised the Senate Rules in the 1970s, he gave up the 2/3rds vote to stop a filibuster, but he allowed the Senate to move on to other business without ending the filibuster. This meant that 41 Senators could veto a measure without the detriment of having to stand up and talk. As a result, filibusters are easier to maintain and harder to break. Thus the device of attaching non-germain measures to budget bills.
The solution of course, is to abolish the filibuster, which is, at best, extra-constitutional.
I do not think that the central question is whether caribou migration or drilling is more valuable. That is a rather trivial and sarcastic way of framing the issue. The central question should be is drilling in ANWR the best long-term approach to reducing our dependence on foreign hydrocarbons? I believe we need to first take simple non-destructive measures such as forcing higher MPG standards on passenger automobiles and increasing funding for mass transit projects instead of more highways. These are clearly more sustainable measures.
I do not think that the central question is whether caribou migration or drilling is more valuable. That is a rather trivial and sarcastic way of framing the issue. The central question should be is drilling in ANWR the best long-term approach to reducing our dependence on foreign hydrocarbons? I believe we need to first take simple non-destructive measures such as forcing higher MPG standards on passenger automobiles and increasing funding for mass transit projects instead of more highways. These are clearly more sustainable measures.
I do not think that the central question is whether caribou migration or drilling is more valuable. That is a rather trivial and sarcastic way of framing the issue. The central question should be is drilling in ANWR the best long-term approach to reducing our dependence on foreign hydrocarbons? I believe we need to first take simple non-destructive measures such as forcing higher MPG standards on passenger automobiles and increasing funding for mass transit projects instead of more highways. These are clearly more sustainable measures.
Ms. Kiesling,
Conversations about ANWR exploitation may not be ‘the talk’ around the yule log, but that isn’t going to stop me from thinking about it long after everyone in my house has headed off to bed on this Christmas Eve.
The cry that ANWR is just a ‘drop in the bucket’ must be drowned out by all the bells and carols this time of year. Without dropping figures from LATOC, I will just say what we all know: Our energy problem will not be solved or even moderately relieved through ANWR production.
Population growth, increased energy consumption per capita, reserve depletion, production decline…for heaven?s sake peak oil. Now i don’t think i am one of those ‘Peak Oil’ fanatics, at least not yet, but I will say this…
It is not bugging me to not be drilling in ANWR.
P.S. I am from Houston and drive by refineries and pump jacks, I went to Alaska and stayed in a remote cabin near the base of Denali, and oh yeah, I interned for an E&P company last summer.
I have a respect for oil towns and the ANWR….I just also have a desire to keep both of them.
The best long-term approach to cutting need for hydrocarbons is probably to invest in battery technology. We’ve already got lithium-ion batteries with incredible power/weight (5 kW/kg), amazing cycle life (1% degradation at 1000 cycles) and improved calendar life. Get the calendar life to 10 years and the cost down, and you’ve got a technology to replace everything from moped motors to the 426 Hemi.
The best long-term approach to cutting need for hydrocarbons is probably to invest in battery technology. We’ve already got lithium-ion batteries with incredible power/weight (5 kW/kg), amazing cycle life (1% degradation at 1000 cycles) and improved calendar life. Get the calendar life to 10 years and the cost down, and you’ve got a technology to replace everything from moped motors to the 426 Hemi.
Around The ‘Sphere Dec. 26, 2005
Our occasional linkfest from all over Blogtopia (thanks SKIPPY for the word!). Links represent VARY…
Around The ‘Sphere Dec. 26, 2005
Our occasional linkfest from all over Blogtopia (thanks SKIPPY for the word!). Links represent VARY…
I don’t have an opinion on the specific issue of drilling, but it is wrng to say the expected one million barrels per day is trivial.
This is the *same* logic Cheney used to say conservation was unimportant. Because it only solved a fraction of the priblem it should be ignored.
A million bpd is about 5% of usage, it is (whether we use it locally or sell it) ten or fifteen billion less per year in foreign debt.
This is a fraction of the big problem, but the big problem is only going to get reduced when you take out fractions. A few percent here and a few percent there add up.
And as for making a difference in prices last spring prices were driven by the fact that production capacity was only 1 or 2 million barrels above demand. Doubling or even increasing by one third the surplus availioble to sale can have fairly dramatic effects on market prices. And these combined with reductions caused by conservation could be even bigger (despite Cheney.)
Quite greedily we want to reduce the price we pay to foreigners. Especially since many are in the heart of terrorism. I believe in higher gas proces because I think they will increase conservation and spur the development of more efficient alternatives (not just vehicles as alleged environmentalists want to force through regulation.) I also know that environmentalists refused this proposal for decades because it was more convenient to make the consumer innocent and blame the manufacturers for not producing 50 mpg 2 ton SUVs. Despite the fact that many fiscal conservatives said they would support such a tax if it was compensated for by reduction in other taxes. Or we could simply divide the increased payments and send an equal amount to every adult citizen. People could use it to buy gas or public transit or walk and spend it as they chose.
But it would require battling for an initially unpopular idea, so the sneaky way was chosen.
Now environmentalists claim that a 5% reduction in foreign dependance through conservation is important, but the same is insignificant through drilling. There is simply no back bone or integrity.
You are mirror images of Cheney and the “faith based reality” right except you lack the backbone and swagger.
How are
“forcing higher MPG standards on passenger automobiles and increasing funding for mass transit projects instead”
non destructive?
What if adults managed our mass transit system rather than politicians; why would it need funded whatsoever?
JBP
“What if adults managed our mass transit system rather than politicians; why would it need funded whatsoever?”
To quote the current Guinness commercials: “Brilliant!”
Any ideas how we could encourage some adults to run for political office; or, how we could keep some elected adults from reverting?
“What if adults managed our mass transit system rather than politicians; why would it need funded whatsoever?”
To quote the current Guinness commercials: “Brilliant!”
Any ideas how we could encourage some adults to run for political office; or, how we could keep some elected adults from reverting?
Hi Ed,
I think if Mass Transit was privatized the odds of getting adult management would increase significantly. In Chicago, for example, the El (elevated rail) was privately built, and privately run. It was profitable, and had a history of reducing fares.
JBP
just a little curious who anna is assulting….
anyone know?
just a little curious who anna is assulting….
anyone know?
Webb, I really like your typo-word “assulting.” It is nicely multi-suggestive. 😉
I am among those not bugged by not drilling in ANWR. At the time Bush suggested it as a response to the Western Energy Crisis of 2000-2001, I had never heard of the issue, but it became instantly apparent that it was one of those issues that he was in office to push. Frankly, I don’t trust these people to make important decisions, or to be honest in their treatment of the facts, if they are able to understand them. (Go ahead, assult me.) But I digress…
I think we can believe Coase only under a very tight set of assumptions, most of which don’t apply in the case of ANWR. I agree that it is an inappropriate framework for thinking about how these decisions should be made. The value of biodiversity is not really known, much less amenable to discernment by markets. The more we learn about complex systems, the more we realize that we can’t safely predict the outcomes of our actions in the biosphere. We do things blindly, in spite of warnings, and then use science to analyze what went wrong when some crisis happens. I keep hoping we’ll become smarter than that…
“i.e. pristine wilderness has little or no tangible value (in this case primarily because of its isolated location), vs. potentially large oil/mineral wealth.”
And yet somehow, without any market interaction whatsoever, you “know” that the “real” value of this pristine wilderness is higher than the people participating in the market with their own money believe it to be?
“ANWR is a classic example of flaws in using market mechanisms to value wilderness, because the economic value of remote wilderness is often very low relative to its resource value, yet it has often critical indirect/intangible importance to the overall biosphere. In this case loss/disruption of the Porcupine herd breeding grounds would very negatively affect the ecosystem of a very large part of Canadian/US arctic, not just ANWR.”
And what is the value of the ecosystem of the arctic? And how do you know this value without any economic activity revealing this value and without any idea how much of your own money you’d spend on it?
“What is the value of lost wildlife across the entire arctic that would result from even minor disruption (that multiplies into major disruption over years) of the Porcupine caribou herd? It’s an intangible externality, therefore can’t be figured into a cost/benefit framework.”
The value of wildlife in the arctic is zero if human populations don’t have the fuel to visit or settle there.
Yes, we should be bugged about not drilling ANWR because bad logic and bad thinking and lies about the environment won the day. Reality and a better economy lost.
1) The claims that the drilling would have any perceptable envrionmental damage are balderdash.
Rather strict drilling conditions were already
accepted (drill only in certain seasons, impact only 2000 acres of the vast ANWR, etc). Further more, technology now enables most of the exploration phase to be done seismically, no need for many test drills. The upshot is that a large
amount of oil can be extract for miniscule environmental impact.
2) Claims like this are an example of bad thinking: “Our energy problem will not be solved or even moderately relieved through ANWR production.”
That’s the wrong standard to use; it’s a logical error to insist that a solution be a complete one to be a positive solution, or AIDS patients taking ‘cocktails’ of drugs would be dead now. One can likewise argue: Our energy woes will NEVER be solved by energy conservation, since you cant conserve your way down to zero energy use without ending life on the planet. Thus using the logic applied by anti-ANWR people, even energy conservation woiuld be deemed useless.
Why does ANWR drilling have to be the “BEST” or “ONLY” or not use this solution at all? Why the either-or black-and-white thinking? Why cant it be one of ten things we do, all of which have positive impact on many factors (US jobs, oil imports, Govt revenues etc)?
The real answer is – if we want lower energy costs – we need all of the above. More supply and less demand lowers costs.
The better thinking is to understand that it helps in the *margin* as noted in a previous comment.
First, it helps in the margin of oil imports by reducing foreign dependence. the 15 billion barrels in ANWR would be pumped over 20 years,
at a rate of 2 million barrels/day.
First, US oil production is declining from above 7 million barrels a day some years ago to under 6 million barrels a day, so ANWR’s contribution could boost domestic production by 25% or so.
Also,we went from 2 million barrels of excess production per day margin in 2003 to 1 million barrels in 2005, on a daily production rate of 83 million barrels a day. End result? Oil prices doubled in 2 years.
Had we drilled ANWR in 1990 and started producing at even a lower estimate of 1 million barrels a day – the supply/demand ratio would be the same a s in 2003 and oil prices could well be at the same level. That alone could have saved America $50 billion this year alone.
Those who claim this is insignificant are lying, to themselves and others. But they HAVE to do that or their position would be exposed as absurd, consider:
3) If you are looking for cost-benefit, Here’s the real balance-point: There is almost $1 trillion in oil in ANWR (~15 billion barrels x $60/barrel). the environmental destruction
as I mentioned, is minimal, but one could consider the 2000 acres or so as consumed by this activity. So the cost-benefit question is: Is ANWR worth $1 trillion or more as a deserted wilderness? Or inacreage terms if you consider 10,000 acres “lost” (the oil companies and USGS claim only 2000), then each acre must be worth $100 million an acre as a ‘preserve’.
This is why your solution is a political non-starter: precisely BECAUSE it would lead to the correct ‘cost-benefit’ solution, THOSE WHO OPPOSE THE REALITY THAT ANWR IS SUITALBE FOR DRILLING WILL NEVER ACCEPT AN HONEST COST-BENEFIT-BASED SOLUTION.
They will use political muscle to stop it.
They already have.
These are the ‘externalities’ of environmental regulation. We all pay an indirect price out of pocket by forgoing the advantages of utilizing this resource.
4)
“So here’s my policy proposal: privatize ANWR. Better yet, have the federal government grant the title to the land to a joint venture of the Nature Conservancy and the residents of the area, and let them figure it out.”
Hmmm, as an American taxpayer, I have as much right to ANWR as these groups. If the Federal Government wants to give it to those with a stake in it, give it to the State of Alaska and delegate it to them.
Yes, we should be bugged about not drilling ANWR because bad logic and bad thinking and lies about the environment won the day. Reality and a better economy lost.
1) The claims that the drilling would have any perceptable envrionmental damage are balderdash.
Rather strict drilling conditions were already
accepted (drill only in certain seasons, impact only 2000 acres of the vast ANWR, etc). Further more, technology now enables most of the exploration phase to be done seismically, no need for many test drills. The upshot is that a large
amount of oil can be extract for miniscule environmental impact.
2) Claims like this are an example of bad thinking: “Our energy problem will not be solved or even moderately relieved through ANWR production.”
That’s the wrong standard to use; it’s a logical error to insist that a solution be a complete one to be a positive solution, or AIDS patients taking ‘cocktails’ of drugs would be dead now. One can likewise argue: Our energy woes will NEVER be solved by energy conservation, since you cant conserve your way down to zero energy use without ending life on the planet. Thus using the logic applied by anti-ANWR people, even energy conservation woiuld be deemed useless.
Why does ANWR drilling have to be the “BEST” or “ONLY” or not use this solution at all? Why the either-or black-and-white thinking? Why cant it be one of ten things we do, all of which have positive impact on many factors (US jobs, oil imports, Govt revenues etc)?
The real answer is – if we want lower energy costs – we need all of the above. More supply and less demand lowers costs.
The better thinking is to understand that it helps in the *margin* as noted in a previous comment.
First, it helps in the margin of oil imports by reducing foreign dependence. the 15 billion barrels in ANWR would be pumped over 20 years,
at a rate of 2 million barrels/day.
First, US oil production is declining from above 7 million barrels a day some years ago to under 6 million barrels a day, so ANWR’s contribution could boost domestic production by 25% or so.
Also,we went from 2 million barrels of excess production per day margin in 2003 to 1 million barrels in 2005, on a daily production rate of 83 million barrels a day. End result? Oil prices doubled in 2 years.
Had we drilled ANWR in 1990 and started producing at even a lower estimate of 1 million barrels a day – the supply/demand ratio would be the same a s in 2003 and oil prices could well be at the same level. That alone could have saved America $50 billion this year alone.
Those who claim this is insignificant are lying, to themselves and others. But they HAVE to do that or their position would be exposed as absurd, consider:
3) If you are looking for cost-benefit, Here’s the real balance-point: There is almost $1 trillion in oil in ANWR (~15 billion barrels x $60/barrel). the environmental destruction
as I mentioned, is minimal, but one could consider the 2000 acres or so as consumed by this activity. So the cost-benefit question is: Is ANWR worth $1 trillion or more as a deserted wilderness? Or inacreage terms if you consider 10,000 acres “lost” (the oil companies and USGS claim only 2000), then each acre must be worth $100 million an acre as a ‘preserve’.
This is why your solution is a political non-starter: precisely BECAUSE it would lead to the correct ‘cost-benefit’ solution, THOSE WHO OPPOSE THE REALITY THAT ANWR IS SUITALBE FOR DRILLING WILL NEVER ACCEPT AN HONEST COST-BENEFIT-BASED SOLUTION.
They will use political muscle to stop it.
They already have.
These are the ‘externalities’ of environmental regulation. We all pay an indirect price out of pocket by forgoing the advantages of utilizing this resource.
4)
“So here’s my policy proposal: privatize ANWR. Better yet, have the federal government grant the title to the land to a joint venture of the Nature Conservancy and the residents of the area, and let them figure it out.”
Hmmm, as an American taxpayer, I have as much right to ANWR as these groups. If the Federal Government wants to give it to those with a stake in it, give it to the State of Alaska and delegate it to them.