Public Policy Issues

Part I: Managing our Energy Resources: The Alaskan Arctic National Wildlife Refuge (ANWR)

Today's program is about an energy issue that impacts us all. Oil production is a crucial aspect of modern life. Crude oil inventories have the single biggest effect on gas prices, and the United States and Great Britain depend heavily on foreign oil supplies. For example, in January 2001, the United States imported 273 million barrels of oil. The single largest entity impacting the world's oil supplies is the Organization of Petroleum Exporting Countries (OPEC), a consortium of 11 countries: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

Together, these 11 nations account for 40 percent of the world's oil production and 77 percent of the world's oil reserves, according to the Energy Information Administration (EIA). When OPEC wants to raise the price of crude oil, it simply reduces production. This causes gasoline prices to jump because of the short supply, but also because of the possibility of future reductions. When oil production dips, gas companies get nervous.

Beyond OPEC, there are several other countries that contribute to the world's crude-oil supplies, including the United States, Mexico, Canada, Angola, Equatorial Guinea, Russia and China. The EIA expects that the oil production from these nations will rise by 1.4 million barrels per day over the next two years. OPEC tracks the oil production of these nations and then adjusts its own production to maintain its desired barrel price.

After seeing how much oil the United States imports, it may be surprising to know that the United States is the world's second largest producer of oil. In January 2001 alone, the United States produced an estimated 181 million barrels of crude oil. The biggest production region is around the Gulf of Mexico, and the largest producing state is Texas. The Gulf Coast region is home to two important producing areas: the Permian Basin, located in west-central Texas and eastern New Mexico, and the federal offshore portion of the Gulf. Other big oil-producing states include Alaska, Louisiana, California, Oklahoma and Arizona.

Even with the United States producing so much oil, it is still heavily dependent on foreign sources. It's that dependence that crippled the country during the oil embargo of 1973 and 1974. To make sure that this situation never happens again, the federal government formed the Strategic Petroleum Reserve (SPR). While most domestic oil is sent directly to refineries and then to the consumer market, some of it is held back and sent to the SPR.

The United States federal government is also considering new places to drill for oil, including the Arctic National Wildlife Refuge (ANWR) in Alaska. By tapping into this oil-rich region, the federal government believes that it can lower American dependence on foreign oil. In 2001, a bill (S. 389) was proposed in the U.S. Senate to open a portion of the ANWR for oil development.

The Arctic National Wildlife Range was established in 1960 to protect the unique wildlife, wilderness and recreational values of the area. In 1980, Congress passed the Alaska Lands Act, which renamed the area and more than doubled its size. Today, the ANWR encompasses nearly 20 million acres, which is about the the size of South Carolina. This region is still being looked at as a possible oil-development site, but environmental groups say that any oil production would upset the natural ecosystem within the ANWR.

It's still uncertain just how much oil exists under the ground of the ANWR. A 1998 analysis conducted by the United States Geological Survey (USGS) estimates that there are about 7 billion barrels of profitable oil in the 1002 Area alone, but the price of crude-oil determines how profitable that oil is. If the price of crude oil dips below $16, the cost of producing the oil would offset any profit. Prices were at $28.05 per barrel as of August 13, 2001.

The issue of gasoline prices is often a volatile one. As long as cars and other vehicles run on gasoline, the price of gas will continue to affect every part of our economy. Many scientists are looking at new technologies, such as fuel cells, to reduce our dependence on oil and gas.

Dr. Greenbean: In my opinion, the Arctic Refuge is a unique and unparalleled wilderness, home to 130 species of birds, grizzlies, rare musk oxen, polar bears, and dozens of other wildlife species. The 1.5 million acre coastal plain of the Refuge -- the area where drilling would occur -- is the birthing and nursery grounds for the 130,000 member Porcupine Caribou herd, one of the hemisphere's largest caribou herds. This fragile coastal plain is the last 5% of the entire north slope of Alaska not already available to oil and gas exploration.

With 95% of Alaska's north slope -- an area extending from the Brooks Range to the Arctic Ocean -- already available for exploration, the Arctic Refuge's coastal plain offers no real solution to our energy needs. According to the US Geological Survey, the Arctic National Wildlife Refuge likely contains less than six months worth of oil, and the oil industry has admitted that it would take at least ten years to reach the market. Still, the oil industry and its allies in Congress are lobbying hard to open the refuge's 1.5 million acre Coastal Plain -- the area the U.S. Fish and Wildlife Service has called "the center of wildlife activity" for the entire refuge -- to oil drilling.

We don't have to sacrifice our national heritage to meet our energy needs.

As usual, I completely disagree with you, Dr. Greenbean. The U.S. imports over 55% of the nation's needed petroleum. These oil imports cost more than $55.1 billion a year (this figure does not include the military costs of protecting that imported supply). These figures are rising and could exceed 65% by the year 2005. The Middle East is a politically fragile region. If given a choice, it is best to look for internal resouces druing these troubling times.

Only 8% of ANWR would be considered for exploration. Only the 1.5 million acres or 8% on the northern coast of ANWR is being considered for development. The remaining 17.5 million acres or 92% of ANWR will remain permanently closed to any kind of development. If oil is discovered, less than 2000 acres of the over 1.5 million acres of the Coastal Plain would be affected. Although the oil will go to market many years down the road, it will still be a viable resource for the future.

Between 250,000 and 735,000 jobs are estimated to be created by development of the Coastal Plain. More than 75% of Alaskans favor exploration and production in ANWR. The Inupiat Eskimos who live in and near ANWR support onshore oil development on the Coastal Plain.

Let's stop beating around the bush, and start drilling!

Part II: Sport Utility Vehicles (SUVs): Friend of Foe?

Oh dear. I knew you were a posterboy for the oil industry, but this is getting a little ridiculous! Let's move on to another issue, shall we? The very root of this problem involves society's wasteful attitude toward energy conservation. Insteading of conserving our resources, we take drastic measures that harm our environment and sometimes even lead to war.

In my opinion, nothing exemplifies society's wasteful approach to energy conservation more than America's current love affair with the sport utility vehicle (SUV). Because the government classifies SUVs as "light trucks" rather than cars, SUVs have a license to guzzle more gas and pollute more than cars. In 1975, when fuel-economy standards were first adopted, "light truck" referred to a vehicle used to haul hay on the farm or gravel at a construction site. At that time, light trucks comprised only 20 percent of the vehicle market. Today, SUVs, mini-vans and other light trucks make up nearly half of new vehicles sold. They are far more likely to haul lattés home from Starbucks than lumber from the yard. Even though Detroit has technology that could make them both cleaner and safer, SUVs and other light trucks are still held to low environmental standards, roll over more than cars and pose greater danger to other vehicles than cars do.

Rewind and play again, Harry. Look, it's a free country. If you want to buy a fuel-efficient car, knock yourself out. But using the power of government to punish consumers who don't share your taste in automobiles serves no economic or environmental purpose.

My family and I happen to feel much safer in an SUV, and believe that its presence is a manufacturing innovation.

Yes, SUVs should be made cleaner and safer. All of the automobile manufacturers are currently improving their models, and experimenting with hybrid engines. But this is a matter of personal choice, and the free market should be left to decide what is appropriate.