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February
19, 2001
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
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