To Drill or Not to Drill?
FOR environmentalists trying to block oil and gas exploration in the Arctic National Wildlife Refuge, the battle seemed all but lost a few weeks ago. The powerful Senate Energy and Natural Resources Committee moved legislation to the Senate floor that would settle the dispute once and for all by allowing exploration in the refuge to proceed unhindered. But with the recent grounding of the Exxon Valdez in Alaska's Prince William Sound and the environmental destruction it has wrought, the refuge controversy has again become a focal point of national debate.
This debate pits two powerful interest groups - environmentalists and the energy lobbies - against each other. As a result, the debate has unfortunately been characterized by simple arguments, half-truths, and unsubstantiated assertions.
The central issue is whether or not the expected future value of the oil and gas that may be found in the refuge outweighs the economic and environmental costs of tapping it. In short, will the nation win or lose by exploring for energy in this region?
Drilling advocates argue that increasing domestic petroleum production will reduce American dependence on foreign oil and help to close the trade gap.
This argument is only half true. For some time, United States oil producers have cut back on domestic production, because imported oil is cheaper to buy than domestically produced crude. And, while decreased oil imports may ultimately help ease the trade deficit, this is no reason to drill in the refuge.
Instead, Congress could raise domestic oil output 500,000 barrels each day simply by lifting the current export ban on Alaskan crude. Because transporting Alaskan crude to the Lower 48 is expensive, producers refuse to pump from marginally profitable Alaskan wells. By lifting the ban, producers will no doubt pump North Slope oil for export, easing the US trade balance.
And if safeguarding national security is the issue, we ought to urge legislators to appropriate funds to fill the nation's Strategic Petroleum Reserve - before going to drill for oil and gas in the Arctic.
All of these arguments obscure the heart of the issue. What Congress must decide is whether the nation will gain from drilling for oil and gas in the refuge when all the costs and benefits of exploration are tallied up.
What are these costs and benefits? First, one must include as cost of exploring there the value lost by the several hundred wilderness enthusiasts who visit the refuge each year - the ``user value.'' In addition, any serious analysis must include as costs the ``option value'' thousands of individuals place on the opportunity to one day go there, and the ``existence value'' that perhaps tens of thousands of Americans ascribe to just knowing a pristine place like the refuge still exists. Hard numbers to come by, I'll admit, but sophisticated economic and statistical methods exist to roughly estimate them.
And let's not forget the value of hunting to the native population as well as the immeasurable value of the native culture that might be lost through oil and gas exploration. These admittedly non-quantifiable values must also be factored into the decision.
``Economically recoverable'' quantities of oil may indeed exist beneath the frozen tundra of the refuge, and the benefit to the nation of finding another North Slope gusher might well justify the costs of exploration.
But before Congress decides the fate of the refuge, our legislators should first answer the fundamental question: Are the expected national benefits of exploring for energy in the Arctic National Wildlife Refuge significantly greater than the associated cumulative economic and environmental costs?