Blog: Dermot Cole
While I've long believed that opening ANWR would be a step in the right direction, it's an exaggeration to claim that this would lead to lower fuel prices in the United States.
It certainly wouldn't lead to lower fuel prices in Alaska.
We already have a healthy share of the nation's oil production flowing down the pipeline and that hasn’t made any difference on the local scene.
Increased domestic oil production should be part of a national energy plan, along with conservation and alternative sources of energy, but both Republicans and Democrats have failed to offer a sensible way forward.
The problem with Washington has been that the people advocating opening of ANWR have been reluctant converts to the benefits of conservation, while those opposed to oil exploration in the refuge do not admit that increasing domestic supply will help lower imports from volatile parts of the world.
Both extremes need to give a little.
The president mentioned ANWR drilling today in a press conference in the Rose Garden, citing it as the first specific in a statement blaming all of our nation's energy woes on Congress.
President Bush hasn't had much to say about ANWR during most of his time in the White House, so this sounds like a matter of too little, too late.
He said that opening ANWR “would likely mean lower gas prices." He didn’t mention that this claim is directly contradicted by a federal study his administration released in 2004.
ANWR might lead to increased supply 10 or 15 years from now, but there are so many factors governing the world oil price that it's impossible to say what is "likely" to be the gas price in 2020.
Predictably, the Alaska congressional delegation and the governor applauded his statement with press releases that echoed the price reduction theme.
The political spin game here is that harping on gas prices is the way to get media attention and build political support for opening ANWR.
But it would be better for all concerned to be more circumspect and accurate about the supposed connection with gas prices.
Our leaders should be saying that ANWR might lead to increased production a decade or more in the future, but it would not be enough to markedly change the world oil price.
In a 2004 study, the federal government said that ANWR could be supplying .5 percent to 1.3 percent of world oil consumption in 2025.
That’s when the Alaska field could be turning out anywhere from 639,000 barrels a day to 1.6 million barrels a day. World oil production at the time is expected to be about 119 million barrels per day.
"It is expected that the price impact of ANWR coastal plain production might reduce world oil prices by as much as 30 to 50 cents per barrel, relative to a projected 2025 world oil price of $27 per barrel," the Energy Information Administration said.
"Assuming that world oil markets continue to work as they do today, the Organization of Petroleum Exporting Countries could countermand any potential price impact of ANWR coastal plain production by reducing its exports by an equal amount," the federal agency said.
In other words, ANWR production would not change the world oil price.
It could, however, reduce foreign oil imports, improve the U.S. balance of trade, extend the life of the trans-Alaska pipeline and create jobs in the U.S.
If ANWR drilling is justified, it is on those grounds, not on prices at the pump in 2025.
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