The Last, Great Alaskan Oil Rush
When it comes to oil politics and Alaska the Bush administration and the environmental movement are already treading the measures of a familiar dance. President Bush has insisting on the urgency of drilling for oil in the Arctic National Wildlife Refuge. He points to a supposed oil shortage that has somehow darkened homes and business up and down the West Coast. The environmental movement is already ramping up its national mail campaign rallying supporters for the battle to save the Refuge.
The actual game is bigger and more sinister.
Let’s start by disposing of some myths. Start with the ludicrous claim of the Bush crowd that California’s energy crisis can be solved by oil drilling in Alaska. Nationwide, oil provides only 3 per cent of the source fuel used to generate electricity. In California, the figure is less than one per cent.
Bush has offering California exemptions from its supposedly onerous clean air rules, claiming that once freed from such red tape the state’s utilities and power producers could build a new generation of plants powered by fossil fuels,. The Refuge’s oil won’t be much help here, since the US Geological Survey Office estimates that, even on an expedited schedule, oil won’t flow from the Refuge until the year 2015.
Nor is the oil companies’ problem in Alaska a shortage. Recall that back in 1995 British Petroleum, Arco and Chevron entreated President Clinton to cancel the 20-year ban on export of crude oil from Alaska to other countries. Congress had made such a ban a precondition of permitting the construction of the Alaska pipeline. The intent of the ban was to ensure Alaska’s oil would help stave off any shortage of oil on the West Coast of the US. The oil companies wanted the ban lifted because they had a glut on their hands and required new markets.
Clinton readily assented and the oil companies began exporting Alaska crude oil forthwith to Japan, South Korea and China. The extremes to which they went in using Clinton’s waiver to bilk American consumers came to light a few weeks ago when The Oregonian newspaper won a Freedom of Information Act lawsuit, gaining access to 4,000 pages of documents in the Federal Trade Commission’s files concerning the merger of BP-Amoco with Arco.
An FTC economist had concluded that BP-Amoco was selling oil to Asian refineries at prices lower than it could sell to US refineries on the West Coast, in order to manufacture a US shortage. As evidence the FTC had e-mail traffic passing between BP managers who talked about “shorting the WC [West Coast] market” in order to “leverage up” the prices there. Another BP manager called this scheme a “no brainer”. The FTC reckoned that this ploy allowed BP to hike prices at West Coast pumps by as much as 3 cents a gallon.
So the oil companies’ strategy is to exploit the electricity crisis to seize at last a number of long-sought objectives: not just access to the Arctic National Wildlife Reserve, which would be a great symbolic victory, but also tax breaks worth billions for oil and gas extraction from wells across the country.
Just to take Alaska, such tax breaks would mean that the oil companies could start pumping oil out of the West Sak field, near Prudhoe Bay, estimated to contain as much oil (though more viscous and sandy) as Prudhoe Bay itself. The oil companies are also pushing for a reduction in their royalty payments for oil and gas extracted from public lands.
The big prize for the oil companies in North America isn’t The Refuge, but sites off the Alaskan coast and the Gulf of Mexico: “Deepwater,” says Jeff Kieburtz of Solomon, Smith Barney, “is where the real, pure exploration is going in this country.” Here we come to one of the lesser known legacies of the Clinton era. Under the encouragement of Bruce Babbitt’s Interior Department, deepwater drilling operations more than doubled in the Gulf of Mexico in the year 2000 alone.
Among those roaring their protests at this activity is Gov. Jeb Bush of Florida who, three days after his brother’s inauguration, implored the new team to place a moratorium on deepwater wells in the eastern Gulf of Mexico, saying that “Florida’s economy is based on tourism and other activities that depend on a clean and healthy environment.”
Right now the Interior Department is looking at 668 lease applications that piled up in the Clinton years for new offshore oil development, from the Gulf of Alaska, to the Copper River Delta (perhaps the greatest remaining salmon fishery in the world), to Cook inlet (flanked by the Katmai national park and the Kenai peninsula) to Bristol Bay, to the Chukchi Sea up by Point Hope, to the Beaufort Sea.
In other words the entire coast of Alaska is in play. Small wonder that Gov Tony Knowles of Alaska boasted to the press at the start of January that it is his hope to make Alaska “a one stop shopping” site for America’s energy needs.
At the national level the big environmental groups are focussed entirely on the Arctic National Wildlife Refuged, which is indeed in peril. But they would be advised to learn the history of that very refuge. It was originally set aside in 1957 by President Dwight D. Eisenhower. In the same package Ike’s Interior Secretary, Fred Seaton, opened up 20 million acres of Arctic coastline to oil development.
In Alaska there are local groups, from the Gwichin trying to save the Refuge and the National Petroleum Reserve west of Prudhoe Bay, to the Inupiat Eskimos seeking to defend their whale hunting grounds against oil derricks in in the Beaufort Sea to the Northern Alaska Environmental Center in Fairbanks taking on the oil companies’ grand plan. They understand the stakes more clearly than the national green groups, with the laudable exception of Greenpeace.
As for the Wilderness Society, National Audubon and the others, rapt in their fixation on the Refuge, they seem to be ceding without a fight the rest of the Alaska coast, the Gulf of Mexico and maybe even the Rocky Mountain front. Just listen to Deborah L. Williams, executive director of the lavishly funded Alaska Conservation Foundation. She recently journeyed to the Refuge with Lesley Stahl of CBS’s 60 Minutes and vowed that not one oil rig would ever rise on the plains of the Refuge.
But at the same time Williams told the New York Times that she supports oil drilling in the National Petroleum Reserve which is eight times as large and just as pristine as the Refuge, because “I drive a car and use petroleum products and we all have to responsible and balanced.” Williams, it should be added, was working for Bruce Babbitt at the Interior Department as his Alaska specialist when he okayed test drilling in that very part of the Alaskan tundra. CP