Next Big Oil Spill Disaster Set for the Arctic

Shell Oil is on its way right now to a location less than 15 miles from the Arctic National Wildlife Refuge in Alaska. “Shell has proposed drilling up to four shallow water exploration wells in Alaska’s Beaufort Sea this summer, beginning on July 1,” Subsea World News reported last month.

The potential harm from a BP-scale spill is almost beyond comprehension,” David Yarnold, president of the National Audubon Society wrote at the Huffington Post.

If there is a spot on Earth as sacred or as critical to the future of our wild birds as the Gulf of Mexico, it is probably the unspoiled Arctic. Here, hundreds of bird species arrive every spring from all four North American flyways — the superhighways in the sky that birds use to travel up and down the Americas. Here, they mate, lay eggs and raise their young. Here also, many of America’s remaining polar bears make their winter dens along the coasts.

Siri wrote earlier today on Daily Kos on how the BP-spill in 2010 has caused unprecedented mutations and deformities in ocean life in Gulf of Mexico. Today, I’ll look at how our government and Big Oil are setting the stage in the Arctic for the sequel to Deepwater Horizon disaster. The script is already written and the leading actors are already on their way to the set.  


First, I support A Siegel for his many articles on energy issues — Get Energy Smart! NOW!!! and his article Whitehouse Drills Drilling has prompted this from me.  (Well, to be honest, it’s been on my mind a lot as it is, anyway!)


THE very most important issue facing us right NOW is global warming — it concerns the survival of the universe, itself!

We need more (Sen. Sheldon) Whitehouses who would state emphatically

. . . do any of you seriously contend that drilling for more oil is the number one issue facing the American people today?

As we know, WE have the technology right now to turn our energy consumption into other alternatives, windmills, solar panels, alcohol (derived from numerous non-edible sources, such as sugar beets, hemp, cattails*, etc.) for use as fuel for our motor driven vehicles.  It’s clean and efficient.  *Cattails also can serve as a “filter” to prevent “dead zones” in our waters.

The ANWR Trust Fund

   What are the benefits?  Kotchen and Burger estimated that the oil had a value of $374 billion (writing in July 2007, they assumed a long-term price of $53/barrel), but that it would cost $123 billion to extract and market.  The net return of $254 billion is divided consists of industry rents of $90 billion, Alaska tax revenues of $37 billion, and Federal tax revenues of $124 billion.

Under the authors’ understanding of incidence, consumers wouldn’t benefit much at all because oil prices would not fall noticeably.  Still, drilling makes economic sense if the loss of environmental amenities is valued at less than $1,141 a person (per American, not per Alaskan) and that was with a price of oil roughly half of today’s price.

At today’s price of oil, a rough estimate of the benefit — not counting environmental costs — is over $600 billion.  So the whole issue seems much more important than I had thought just one hour ago.  Some approximation of taxes and transfers and auctions are available, so these gains can be redistributed to some extent if you wish.

That’s economics professor Tyler Cowen at his blog, Marginal Revolution.

The point that Cowen brings up is a profound one.  The common argument against expanding oil drilling both off-shore and in ANWR has been twofold: the amount of oil is not significant enough to alter the world price (which will always be true), and the value of the oil does not significantly outpace the amount of environmental damage that would be caused.

But when the price of oil changes, the value of the oil does as well.  Indeed, if the price of oil continues to rise in the long term, the value of the oil will be significantly more than the value of the environmental damage (to the extent that any value can be placed on that – but, it is easily imaginable that at future oil price X, the profits will be significant enough that huge sums from it could be used to finance environmental cleanup in many places).

Therefore, I predict that at some point, the value of the oil in ANWR will be large enough that it is politically irrational not to exploit it.  The oil in ANWR will become a sort of national trust fund, where at a certain expected value, the government is certain to exploit it.  I see no way of avoiding this, or by which this is not the rational course of action.


OMG, these Republican morans never learn.

Some of you with memories longer than a fruit fly’s may recall that, oh, last week (and, for that matter, every week since September 11, 2001), every right-wing neocon legislator screamshow host Supreme Court justice  BushCheney clone was fulminating about how Islamofashionists posed an imminent  threat to your personal safety and that of your children and dog.