Sunday, May 01, 2005

The False ANWR Solution

One of the central features of George Bush's energy plan has been the achievement of so-called energy independence. Of course, since the only significant source of foreign energy is derived from petroleum, what we are really discussing is foreign oil independence. Not that that would be a bad idea. The instability of the Middle East makes our reliance on their oil exports economically risky, to say the least. Moreover, our foreign policy is driven, at least in part, by our voracious petroleum appetites. Our concern over the free flow of oil has frequently led us to pursue policy tailored to achieve that narrow end while ignoring the long-term consequences of such actions. Much of the terrorist threat that we today face can be directly attributed to our pursuit of such short-term policy goals. Clearly, producing energy independence would pay dividends on many fronts.

That said, there are many ways to skin a cat. And, to continue a rather morbid analogy, there are ways that actually get the skin off and there are those that don't. If it's a skinless cat you want, you want to make sure that you pick a method that can produce that result.

Thus far, Bush has been promoting a two-pronged attack on our foreign oil dependence. First, he's pushing technological innovation designed to increase efficiency and develop new domestic energy sources. These are all excellent ideas and worth pursuing aggressively. Then, he endorses enhancing the domestic energy infrastructure. This is where things get a little bit more problematic. An increase in the amount of domestic energy produced by coal and nuclear power would indeed reduce demand for foreign oil. Unfortunately, the environmental consequences of such a shift mitigates the attractiveness of this option.

As you are no doubt well aware, there remains one final aspect of the domestic energy infrastructure under discussion: increasing domestic oil production, specifically by tapping the ANWR petroleum reserve. This has been a controversial proposal for some time now, with most of the squabbling turning on the size of the reserve and the environmental consequences of the project. While these are issues that should play a role in our deliberations, they have, I feel, obscured a larger question: Will ANWR, under even the most optimistic productivity predictions, reduce our dependence upon foreign oil?

Not likely.

The key to this issue is realizing that petroleum is a global commodity. Kevin Drum pointed this out quite recently.
But as long as we're on the subject, I want to pick a nit: short of either a major catastrophe or a dramatic scientific breakthrough, we will never reduce our dependence on foreign oil. Period. Oil is a global commodity, and even if we reduce our use of oil, the oil we do buy will come from the cheapest producers. And the cheapest producers are all in the Middle East.
The reality is that our oil supply will always come from whoever is offering the best price. If ANWR oil is somehow less expensive than oil extracted in the Middle East, our dependence upon their oil will decrease. Otherwise, there won't be any change.

That isn't to say that having ANWR up and running wouldn't be advantageous in certain respects. It would increase the amount of oil on the global market and thus drive down the cost of energy and of other petroleum-based products. This would provide an economic boost to petroleum-based economies across the globe. The degree of impact revolves around the ultimate productivity of the project and is therefore open to question. However, at least some positive effect would be realized.

But, let's be clear: it is highly unlikely that our dependence on foreign oil will be affected by increasing domestic oil production at ANWR or at any other domestic location. That just isn't how the global oil market functions. So, there are reasons to like ANWR, just as there are reasons to hate it. But, if you were looking there for energy independence, look elsewhere. It simply isn't there.
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