BCT Editorial – 12/30/05

This page was last updated on December 30, 2005.

Dead end; Editorial; Beaver County Times; December 30, 2005.

There is not a scintilla of logic in this editorial. For the sake of the Times, I hope its management knows more about newspaper publishing than the editorial author knows about the energy and oil industries.

Below is a detailed critique of the subject editorial.

“Drilling in wildlife preserve will not reduce our nation’s reliance on imported oil

“The wrangling over drilling for oil in the Arctic National Wildlife Refuge serves as a poster child for how out of touch with reality the U.S. Congress has become, mainly because special-interest politics and ideology are driving this issue, not practicality.”

[RWC] If drilling in ANWR is not practical, why are oil companies willing to spend their own billions of dollars to buy the leases, drill the wells, and construct the production and transportation facilities required to get the oil to market? This is the same argument used over 40 years ago when some people said it was impractical to produce oil on Alaska’s North Slope (Prudhoe Bay, Kuparuk, et cetera). If it weren’t practical to produce ANWR crude, oil companies wouldn’t invest their money.

As a reminder, we currently produce between 900,000 and 1,000,000 million barrels per day (MBPD) of ANS crude. That’s about 150 miles north of the Arctic Circle on the Arctic Ocean. The portion of ANWR where production would occur is also on the Arctic Ocean about 100 miles to the east of Prudhoe Bay. All of the same environmental arguments were made against the original North Slope oil fields, and none of them proved to be true.

“In terms of the nation’s long-term energy needs, ANWR is a dead end. Even if it were to be exploited, the estimated 1 million barrels of oil a day it is expected to produce would have no impact on our nation’s reliance on imported oil. Rising energy usage is going to take care of that.”

[RWC] Using this logic, shouldn’t we stop drilling everywhere in the U.S.? After all, if new oil from ANWR won’t help, why would new oil from the Gulf of Mexico help?

The author wants us to believe the impetus for drilling in ANWR is to reduce “our nation’s reliance on imported oil.” It’s not. The reason is to increase oil supply to slow down price increases that will occur as demand eventually outstrips production.

“Drilling in ANWR might be acceptable if it were part of a national energy strategy aimed at reducing our reliance on imported oil through conservation and innovation.

“But our nation has no strategy, other than doing whatever it takes militarily and diplomatically to keep oil flowing in the Middle East. (And don’t even think about what would happen if Venezuela’s crazy-aunt-in-the-attic president turns off the tap.)

“In fact, much of the oil coming out of ANWR might never make it into gasoline and heating oil for Americans. China, whose energy demands are voracious, could end up as the main beneficiary of ANWR drilling because most refineries in the United States are on the Gulf Coast.

“New York Times columnist Thomas Friedman has pointed out that ‘realistically, ANWR would be better for China than the United States - it’s much easier to get Alaskan crude to China than America. You’d have to take that oil from Alaska down through the Panama Canal up to Houston, where the majority of refineries are. This whole notion that it would be a boon to America is absurd.’”

[RWC] When someone quotes the typical New York Times columnist (read: opinion writer), you know it’s time to hold your nose. Both Friedman and the editorial author conveniently ignore the fact that the oil market is a worldwide market. If increased oil production helps slow the price rise for anyone, it helps everyone.

The editorial and Friedman also forget the U.S. West Coast (USWC) has refineries with a 2005 capacity of about 3.2 MBPD. For a second, let’s look at Friedman’s ridiculous conclusion. According to Energy Information Administration data from 2004, USWC refineries imported about 1.2 MBPD of crude. Therefore, the ANWR production cited in the editorial could replace most of the imported crude used by USWC refineries. In reality, not all crude is the same. As a result, the ANWR crude would likely go to refineries – in the U.S. or elsewhere – that could refine it most efficiently. Whether the ANWR crude would go to USWC refineries or Timbuktu, only economic studies can determine. In any case, increased supply helps everyone regardless of where the crude is ultimately refined.

“The fight over ANWR is so bitter because it’s no longer about doing what is best for the country. It’s about special-interest politics and ideology.”

[RWC] All politics are “special-interest politics.”

“The United States will never drill its way to energy independence. The only way to do that is to conserve more and to develop alternative sources of energy.”

[RWC] No one has ever claimed the “United States will … drill its way to energy independence.”

The idea that we can conserve our way to energy independence is ridiculous. While I’m all for conservation, it only makes sense as long as it makes economic sense. For example, it makes no sense to spend $1 to save $0.50 of oil.

The editorial author appears to believe our ultimate and overarching goal is “energy independence.” While that’s desirable for national security reasons, it would not necessarily make for more stable U.S. energy prices. Why? Whether or not we could produce all of our energy requirements, the energy market would remain a worldwide market. As a result, energy production decreases/increases anywhere in the world would still affect U.S. energy prices.

Finally, the author doesn’t acknowledge the price of conservation and alternative sources of energy must be less than or equal to the price of oil if the U.S. economy is to survive. If we become “energy independent” but the cost of our energy exceeds that of the rest of the world, our economy won’t be able to compete with the rest of the world.