Drilling in ANWR

The United States economy has taken an economic downturn for the worst and entered a recession, consequently causing crude oil and gas prices to skyrocket. To add to the recession and the economic instability, war has also adversely impacted the price of energy that the United States consumes. Moreover, the amount of imported crude oil that the United States has become primarily dependent on has significantly decreased. In Alaska, the economy is highly dependent on business with the lower United States, consequentially resulting in a downturn of their state economy as well. Being that oil currently supplies more than forty percent of the United States’ total energy demand and more than ninety nine percent of the fuel used in all automobiles, it has become its primary economic driver and lifeline (“Oil”). One of several proposed resolutions to alleviate the current economic crisis is to drill for and recover an estimated six to sixteen billion barrels of crude oil and natural gas liquids situated under the coastal plain of the Arctic National Wildlife Refuge in northeastern Alaska (“Arctic Refuge drilling controversy”).

ANWR, the Arctic National Wildlife Refuge, has been the center of attention for environmentalists, conservationists, economists, entrepreneurs, and politicians alike for several years now. Originally established with the primary goal of preserving unique wildlife, wilderness and recreational values, the reserve contains approximately nineteen million acres and is located north of the Arctic Circle and 1,300 miles south of the North Pole (“What is ANWR and where is the coastal plain”). Notably, exploration would not take place throughout the entirety of the reserve. ANWR’s coastal plain area, comprised of 1.5 million acres on the northern edge of the reserve, is the primary focus of oil exploration. The National Petroleum Reserve, commonly referred to as the NPR, is located just west of ANWR and has been one of the primary drivers of Alaska’s economy and energy production. According to the official energy statistics from the United States government, this past August, the Alaskan field production of crude oil totaled 17,733 barrels of oil, accounting for only a minute fraction of United States total oil imports.

Environmentalists and conservationists are concerned that drilling for oil will degrade and possibly destroy the surrounding natural wildlife and undisturbed ecosystems. However, economists and entrepreneurs have maintained that the benefits of drilling and exploration are far greater than the possible adverse effects which are often blown out of proportion. Additionally, ANWR is being tossed around as a political tool by both the democratic and republican parties for political interest and gain. The question of whether to drill for oil in ANWR has been an ongoing controversy since 1977(“Arctic Refuge drilling controversy”). A decision, whether pro or con, on drilling for oil in ANWR is ultimately a decision that should be made soon.

Marion Clawson, a distinguished resource economist, has established an approach to conflict resolution based on five criteria of analyses: Physical-biological feasibility and consequences, Economic efficiency, Economic equity, Cultural acceptability, and Operational practicality. Each of these options must be thoroughly examined and questioned. Additionally, Thomas M. Bonnicksen, a professor of the Department of Forest Science in the College of Agriculture and Life Sciences at Texas A&M University in College Station, Texas, has put together a method to approach resource management using a selection of standards based on process rather than terms and outcomes. Using a minimum set of standards that foster cooperation and reduce the chance for conflict and injustice, Bonnicksen has termed his method the “Iron Law of Consensus” that is used to mean a principle that is based on the predictable consequences of an act (Hamilton). Ultimately, regardless of the process used, the iron law of consensus forms a series of tests through which each alternative must pass if it is to build the foundation for a durable consensus (Hamilton).

Establishing a physical-biological feasibility and consequences analysis is considerate of the proper and efficient extraction and allocation of natural resource conflict according to policy option decision. Even though the probable consequences of either option may be premeditated and extensively planned out, it is irrational to compare a probable result of a decision based on its current condition because all conclusions are inevitably subject to change (Clawson). It is vital to both establish the inputs required to gain a respectable output and to consider potential physical tradeoffs along with the probable environmental effects. In the same way, Bonnicksen’s first test, protect life-sustaining processes, is similar in that it is a standard based upon what is generally known as common sense. Notably, it is important to understand that this standard does not apply to small-scale or local processes that affect the sustainability of an alternative, but that it only applies to large-scale regional and global processes (Hamilton). With both parties subject to analysis, it is also important to recognize that mitigation achieving protection is permissible, however, it is impossible to reach agreement on a decision that would jeopardize human life.

The general consensus of proponent’s standpoints gathers that with many technological advances in petroleum exploration concerning wildlife habitat protection and ecosystem sustainability, that they are not depreciating any part of the wildlife ecosystem. Proponents have also argued that alongside taking wildlife into consideration in the development of exploration techniques, the only natural resource being depleted does not take away from ANWR’s ecosystem.

Opponents have persistently stressed that the proposed exploration area is the most sensitive in the entire refuge and that potential habitat loss will impact the entire Arctic Refuge (“Wildlife Impact from Oil Drilling in the Refuge”). Even with opponents extremely concerned about the wildlife about its welfare being depreciated, the Alaska Department of Environmental Conservation’s Industry Preparedness and Pipeline Program has developed an extensive oil spill response plan with a program mission to prevent and mitigate oil and hazardous substance releases through government planning and rapid response (“Alaska Pipeline Spill Prevention”). Additionally, Alaskans have found that North Slope caribou herds have grown and remained healthy throughout more than three decades of oil development, and that most of the year, the coastal plain is frozen solid and characterized by low biological productivity (Palin).

With drilling given a green light in ANWR, supporters emphasize that new oil development technology, developed over the last 30 years, on Alaska’s North Slope, will allow exploration to tap into underground producing reservoirs with a much smaller “footprint” on the earth’s surface (“Today’s drilling leaves a small footprint”). Technological advances in extended-reach drilling, 3D seismic, well spacing, drilling mud disposal, as well as the creation of ice roads and ice pads have all contributed to an environmentally friendly drilling location along with a reduction of physical input required to gain the same, and in some cases an added, output (“Technology”). As the benefit of drilling technology and innovations continually advance, the cost of energy production and the development process decrease. The benefit of cutting edge technology also has crude oil transport tankers raising their bar to meet higher standards and expectations and reducing the room for error and cost. ANWR sits within a 20 million-acre refuge (the size of South Carolina), but thanks to advanced technology like directional drilling, the aggregated drilling footprint would be less than 2,000 acres (about one-quarter the size of Dulles Airport), this is like laying a 2-by-3-foot welcome mat on a basketball court (Palin).

Proponents have also proposed the placement of flexible pipelines that are both eco-friendly and wildlife considerate and are cost reductive, in turn increasing output. Furthermore, proponents claim that the cost of the visual change in appearance, from natural undisturbed land to a drill site, is minute and that the benefits are far greater and that the probable negative environmental effects of drilling throughout ANWR’s coastal plain are minute even at its best thanks to extensive precautionary measures taken during the process of engineering to guarantee environmental friendliness.

In rebuttal, with drilling at idle, opponents argue that the large estimates of oil available for production will merely add a minute fraction of aid to the current oil crisis. Opponents also claim that drilling will harm the environment by means of carelessness and degradation resulting in wiping out the associated wildlife. It is said that the total amount of input pertaining to labor, capital, and entrepreneurship required to drill the coastal plain is a losing battle. Opponents have concluded that it will only cost the United States rather than provide future benefits, declaring that drilling will increase the demand for oil, continue current oil dependency, not lower oil or gas pump prices, and harm the environment.

In order to determine the economic efficiency of either option, the monetary costs and benefits of the identified resource developments that the physical-biological analysis has identified as possibilities must be evaluated (Clawson). Furthermore, adverse environmental effects should be included when determining the costs and benefits. In addition, Bonnicksen’s fourth test, ecologic and economic sustainability, is highly similar in that the most important factor that needs to be figured into a policy option is if it can generate revenue to pay for associated management costs.

Given that both the United States and Alaska are currently experiencing an economic downturn, pro drillers have gathered that drilling would mutually benefit both economies by increasing employment rate, increase the distribution of wealth, and increase the amount of oil available for purchase. It is estimated that the oil in ANWR has a value of 374 billion dollars, July 2007 with an assumed long-term price of 53 dollars per barrel, and that it would cost 123 billion dollars to extract and market it with a net return of 254 billion dollars that is divided and consists of industry rents of 90 billion dollars, Alaskan tax revenues of 37 billion dollars, and Federal tax revenues of 124 billion dollars (Muse). It is also estimated that the loss of environmental amenities of the coastal plain is valued at less than 1,141 dollars per American (Muse). Among the many technological advancements of drilling, during the process of engineering a new and improved crude oil transportation system, exploration companies have factored in both cost and probability of negatively affecting both ANWR’s wildlife and environment and have designed new equipment that is beneficial to both man and beast. To allow for a variety of wildlife migration and survival, the placement and position of these revolutionized pipelines are able to comply with and meet the needs of surrounding wildlife and environmentalists expectations.

On the contrary, being that it costs more for the Unites States to physically drill for oil than to pay the inflated oil prices in the market, opponents have gathered that it will only weaken an already weak economy. Ultimately, opponents deem that the only way to lower prices is to reduce the dependence on oil, foreign or domestic, through fuel economy and a cap on carbon emission expected to spur innovation and shift the United States into a green energy economy (Canter).

Economic equity is best justified by stating that the people that bear the costs of a natural resource conflict are in no form or fashion the same as, or in any relation to, the people that gain the benefits. Given a natural resource conflict, not only does the disassociation of costs and benefits apply to monetary value, it applies to its environmental results as well (Clawson). For example, given a proponent viewpoint, the economic efficiency of the energy exploration in ANWR may be low, but if it gains much of the benefit and pays very little of the costs, it would be highly profitable. It is imperative to question both opponents and proponents motives behind their reasoning in order to determine who will gain the benefits and which one pays the costs. Likewise, Bonnicksen’s second test, enhance human well-being, is a standard that satisfies the consensus of the iron law where a decision should provide benefits to all groups, and more importantly, it is important to realize that economic statistics hide unnecessary human suffering (Hamilton). Generally speaking, a policy option will fail when it reduces the common welfare of many groups in order to provide benefits to a select few.

As multiple opponents have stated that drilling will not reduce the price of oil and gas, proponents have stated that lowering the price of oil and gas is not the only benefit of drilling. Many economists have created extensive evidence that shows benefits of drilling will not only slightly reduce petroleum costs, but that it will decrease US dependency on petroleum imports from the Middle East and Latin America, boost the revenue of American oil companies, create jobs and boost the current economy and lower the percentage of unemployed workers significantly, lower the price of oil for American oil consumers, increase federal, state, and local tax revenues, and lower the US trade deficit.

Opponents have also gathered that it would take far too long, several years, for drilling to have a significant effect on petroleum prices to be considered and that even if it did, it would only last for a minimal amount of time. Bryan Walsh of Time Magazine for CNN states “Even if we drilled the entire state of Alaska and pulled new refineries out of thin air, the impact on gas prices would be minimal and delayed at best” (Walsh). Even with leasing beginning in 2012 and production starting in 2016, opponents have collected extensive research created by the Energy Information Administration (EIA), the official energy statistics from the U.S. Government, showing projections in the Outer Continental Shelf, OCS, access case indicating that access to the gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030 (Martin).

On the other hand, proponents have gathered otherwise. Sarah Palin, previous Governor of Alaska, has stated “Oil from ANWR represents a huge, secure domestic supply that could help satisfy U.S. demand for more than 25 years” (Palin). The State of Alaska receives 85% of its annual revenue from oil taxes and royalties, helping to fund education, infrastructure, and needed community projects, illustrating which in turn identifies Alaska’s dependency on resource development, Alaska’s Congressional Delegation, Governor’s Office, and Alaska Legislature (“Local Governments Support opening ANWR”).

Cultural acceptability, principally defined, is the degree and extent to which any policy option is able to be accepted by the affected culture. Culture, basically, is what molds an individual, resulting in the establishment of associated cultural “grass-root” values and beliefs that accompany it. For that reason, cultural attitudes toward natural resource use are often deep-seated and held with high emotion by those who possess them, causing an attitude likely to be defended as logical and natural (Clawson). For example, if an individual were to travel to Germany, it would be to their advantage to speak German in order to better understand and communicate effectively. In the same sense, it is particularly vital and beneficial to have a basic, and in some cases a thorough, understanding and knowledge of the culture you are communicating with. Likewise, Bonnicksen’s third test, respecting humans and all other living things, is basically a standard in of itself. Respect is a moral philosophy, or at least that requires people to act with thoughtfulness and kindness toward one another as well as other living things (Hamilton). Paralleling the standard of enhancing human well-being, it principally states that not only should a policy option decision reside in the wellbeing of one aspect of an option but in others as well.

Proponents have recognized individual testimonies in Kaktovik, Alaska, home of the only people native to the Arctic coastal plain of ANWR, that the Inupiat natives believe that the debate over potential oil development is both a marvelous rhetoric and a stunning incursion of alien perspectives and language into a world never before visited by such seemingly noble sentiments (“People”). Alaskan natives have also stated that since the initial invasion of their rightfully owned homeland by the disillusioned creation of a national wildlife refuge, without proper consultation, they now suffer not from the pollution or harm brought on by the oil and gas industry, but rather from the disrespect shown toward the positive, progressive people that they are, rather more importantly the pollution of lies spread far and wide to advance a seemingly genocidal agenda that they do not understand (“People”). However, former North Slope Borough Mayor Benjamin P. Nageak has agreed with opponents by stating that he fully understands their fear of wildlife disruption with presence of the oil industry on the coastal plains (People).

Upon determining the administrative practicality, each party must decide if it can finally and collectively do what it has decided it wants to do (Clawson). This final analysis is primarily dependent on the conglomeration of the previous analyses that are melded together to create a final consensus. Notably, this final part of Clawson’s analysis is neither fixed nor final due to the fact that a final decision is at any stage subject to change. The relationship between the profitability and the opposition should be factored into the final policy decision as well. Similarly, Bonnicksen’s fifth test, acceptability to stakeholders, goes to state that any plan that generates so many lawsuits from such a variety of interests cannot represent a consensus and that a plan should be acceptable to any interests other than those of the planners. With both proponents and opponents have strong and firm standpoints on drilling, it is acceptable to both sides according to each ones terms. Given research of numerous articles, it seems both sides cannot reach an agreement on which decision to proceed with. If drilling does not take place, several Alaskans Both parties have questioned the cost and effect and the trade-offs of drilling for some time now. Opposing parties find the difference between the inputs and outputs and trade-offs to be too small to be of practicality. Yet, proponents have stated that ANWR oil is a highly profitable resource not only in reducing gas costs, but in many other areas of the economy as well. With the previous analyses as a guide, it is ultimately up to each party to calculate which decision is most practical.

In conclusion, it is important to determine the best possible decision for a given policy option that is comprehensive and considerate of all the associated factors. By means of thorough investigation of information from numerous articles and both Marion Clawson and Thomas Bonnicksen’s analyses, I personally have decided that drilling is the most practical decision. As can be found in the main body of this paper, I completely agree with the proponents in every way. Unreasonably though it may seem, it was brought to my attention that opponents have been using media propaganda in an attempt to sway popular opinion by displaying pictures of Alaskan mountains and wildlife that are in no way or form related to the designated exploration area in ANWR. Opponents, most of which do not reside in Alaska, argue and stress far too much importance on the wildlife of the area and have shoved aside the human beings that actually depend on the land and all its resources to live. Ultimately, I believe it should be Alaska’s decision whether it should continue drilling.