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Commentary

Our Trillion-Dollar Cathedral in the Arctic


     
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The McCain campaign has been busy educating the new vice presidential nominee, Sarah Palin, in the nuances of American foreign policy. Palin may not have much experience in foreign affairs, but she does know a great deal about oil development, caribou herds, and other matters affecting Alaska. McCain should listen carefully to what Palin can tell him about the oil, gas, and caribou in the Arctic National Wildlife Refuge (ANWR).

Even though this issue has now been debated for three decades, few American policy discussions have been less informed or enlightened. McCain’s opposition to ANWR oil development is either a crass political concession to strong environmental pressures or reflects a basic ignorance on his part of the actual economic and environmental circumstances of ANWR. If McCain truly wants to bring a new era to Washington, he should sit down soon and let Palin explain the ANWR facts of life.

First, it should be acknowledged that ANWR oil production will not in itself achieve energy independence for the United States. A plausible scenario is that ANWR production might amount to between 700,000 and 1.5 million barrels a day for around twenty years or more (starting about five to ten years from now). Since the U.S. now produces only 5.1 million barrels per day domestically, it must import 12.0 million barrels per day in order to satisfy its total oil demands. ANWR by itself would make only a modest dent in U.S. oil imports.

Second, it should also be recognized that ANWR production alone will not bring down oil prices significantly. Even with the large reserves that ANWR possesses, they are not large enough, relative to the total world oil market, to have much effect on future world prices. Modeling by the Energy Information Administration suggests that, assuming ANWR comes into production, the price impact would be a decline of around perhaps 50 cents per barrel on world markets.

Of course, by itself, no one oil field in the United States could have much effect on U.S. oil import dependence or world oil prices. Achieving progress in those respects requires asserting clear policies consistently throughout the whole nation, including ANWR as one instance.

So what is the strongest argument for oil development in ANWR. This is not complicated. Estimates released by the U.S. Geological Survey in 1998 concluded that there was a 95 percent probability of finding at least 5.7 billion barrels of “technically recoverable” oil, a 5 percent probability of finding 16.0 billion barrels, and a 50 percent “mean” probability of finding 10.4 billion barrels. For the mean probability, this includes 7.7 billion barrels actually inside ANWR on federal lands and 2.7 billion barrels owned nearby by Alaska Native Corporations and the state of Alaska (which could be economically produced only in conjunction with the development of the ANWR federal reserves).

At a world oil price above $100 per barrel, the mean expectation for the federal and non-federal ANWR oil reserves is a gross cumulative market value of more than $1 trillion. It might cost $20 to $30 per barrel to produce the ANWR oil, but the net revenues (after costs) would still be greater than $700 billion (and could turn out to be much higher, depending on the future price of oil). To put this in perspective, the United States could have paid for the entire Iraq war to date with the future oil revenues obtainable from ANWR. Or the U.S. could pay for the entire Defense Department budget for one year.

At oil prices of $100 per barrel, the mean expected value of the oil production in ANWR would amount to around $25 billion to $50 billion each year. This is about $200 to $400 annually per American household. Unlike the income tax rebates of $600 per taxpayer approved by the Congress in January 2008, ANWR “oil rebates” would continue every year for 15 years or more.

The objection will no doubt be raised that ANWR production would benefit oil companies, not average American citizens. Three-quarters percent of ANWR oil, however, is on federal land, and the rest is on Native American and Alaska state land. Like existing federal oil and gas leasing on the outer continental shelf (OCS), the ANWR oil would probably be made available to oil companies by competitive auctions, and the government would also charge a significant royalty—historically 16 percent on the OCS—on any future production.

Throughout the world, the true beneficiaries of oil resources are not the oil companies who may physically extract it but the actual owners of the resource. It is Saudi Arabia, not ExxonMobil or other oil companies, that reaps most of the enormous financial gains from Saudi oil resources. That is one reason the major U.S. oil companies have been lukewarm in their advocacy of ANWR oil exploration—they have much less at stake than the federal government and American taxpayers.

It is true that the residents of Alaska would benefit disproportionately—one reason Palin and virtually every other Alaska politician, Democratic and Republican alike, has strongly favored ANWR production. In past proposed legislation to make ANWR oil available for exploration, any future revenues derived from the federal part of the oil resource would be shared 50/50 with the state of Alaska. However, if oil prices stay as high as they have been recently, it would be reasonable to reduce the Alaska share—say to 25 percent.

In any case I prefer my fellow Alaskans to Hugo Chavez, Vladimir Putin, and Mahmoud Ahmadinejad. As long as the money stays within the United States, it will help out with the balance of payments, act to sustain the value of the dollar, create American jobs, and boost the demand for domestic goods and services and the strength of the U.S. economy overall.

In short, even if it is correct to say that ANWR oil production is not capable of solving the energy problems of the United States by itself, the national economic burdens imposed by leaving ANWR oil in the ground are so large that for many people they defy easy comprehension.

But what about the environmental costs? Remarkably enough, especially in light of the current McCain position (shared with Barack Obama and Joe Biden) that ANWR should remain out of bounds to oil companies, they are modest. The area is so remote and the climate so severe that fewer than 2,000 visitors are attracted to ANWR each year. Environmental opponents suggests that the wildlife in the area will be severely harmed. But, as Sarah Palin (seemingly alone among the four) well knows, the impacts on wildlife are uncertain and may well not be significant—or could even be positive in some respects.

In 2003, the National Academy of Sciences released the most authoritative study to date of the environmental consequences of oil development on the North Slope of Alaska. The study concluded that in the Prudhoe Bay area (on lands owned by the state of Alaska) the extensive past oil development “had not resulted in large or long-term declines in the size of the Central Arctic Herd” of caribou, which had in fact increased in numbers. Addressing potential impacts within ANWR itself, the study noted that the ecological circumstances there were somewhat different and that, without knowing the precise details of future oil development, “it is not possible to predict to what degree the distribution and [reproductive] productivity of caribou herds would be affected,” if at all.

The National Academy found that in Prudhoe Bay, the physical character and visual appearance of the tundra had been significantly altered in many places by the activities associated with intensive oil development. But there was a new recognition in government and the oil industry of the need to limit any such impacts in future North Slope oil development. Moreover, significantly improved exploration and drilling methods now made it possible to impose a much smaller oil development footprint—a although again uncertainties remained. As the National Academy concluded, “The new technology has reduced but not totally eliminated damage to the tundra.”

Ironically, some animal species increased in numbers in Prudhoe Bay due to the oil company presence. Brown bears, Artic foxes, ravens, and glaucous gulls had benefited from “the ready availability of new sources of food from people in the oil fields.” The larger number of predators had, in turn, negatively affected some bird populations. Seeking to reestablish more of a “natural” balance, efforts had been made to limit predator access to human food, but these had had limited success.

The proponents of ANWR oil development have signaled a willingness to divert a share of future revenues to environmental purposes. Even if this is only a small percentage share, many billions of dollars could be committed to building new trails, providing greater visitor services, and otherwise upgrading the National Parks. Additional billions could be made available to compensate private land owners and otherwise take additional steps to protect endangered species. Seen in this light, the environmental impacts of ANWR oil development from the perspective of the nation as a whole would be overwhelmingly positive.

It is possible to argue that, if any adverse environmental impacts at all might be expected with ANWR itself, then the oil resources there should not be developed. In fact, this seems to be the view of many environmental groups—that the presence of any environmental costs within ANWR would necessarily trump any economic benefits, no matter what the magnitude of the latter might be, and even any environmental benefits that might be obtained by applying newly available financial resources outside ANWR. In a 2007 review of the ANWR debate for the members of Congress, the Congressional Research Service thus commented that for many opponents of ANWR oil development “intrusion on such a remarkable ecosystem cannot be justified on any terms.” The opponents of ANWR oil development instead saw the issue as one of a fundamental moral obligation to keep this area “untouched by human hand”—in the same category as the parts of the national wilderness system in the lower 48 states.

Arguments about the future of ANWR at this point shift from matters of economic benefits and costs and ecological science to issues of environmental ethics—and ultimately to environmental religion. Americans generally regard religion as a private matter and prefer to avoid debating religion in public. But the oil in ANWR is on federal land. There is no avoiding the fact that, when the opponents of ANWR oil development seek a trillion-dollar cathedral in the Arctic and refuse any compromise, a religious discussion is inevitable.

Indeed, seen as a religious symbol, the exclusion of all oil development from ANWR is all the more understandable and powerful precisely because of the likely presence of such vast amounts of oil reserves there. Primitive tribes have long made sacrifices as an act of expressing devotion to their gods. Medieval Christians regarded the immense efforts put into building cathedrals such as Chartres and Notre Dame in similar terms. For many Americans today, the immensity of the ANWR sacrifice—perhaps $1 trillion or more—also creates a rare opportunity to make an especially noble sacrifice.

So what kind of environmental god is being honored? Many people may be surprised to learn that this god in many respects resembles a Christian God. The environmental message often employs new metaphors and language but this serves to disguise an essentially Christian worldview (as derived originally from and then further blended with Jewish sources), no doubt the source of the religious attraction for many Americans today, some of them still drawn to a Christian outlook on the world but now unreceptive to its historic institutional forms.

In Christianity, there have been two main ways historically of learning about God. One was by studying the “book of the Bible” and the other was found in the “book of Nature.” John Calvin in the sixteenth century wrote in the Institutes of the Christian Religion that “the knowledge of God [is] sown in their minds out of the wonderful workmanship of nature.” For those able to turn away from the “prodigious trifles” and “superfluous wealth” that normally occupy the minds of fallen men and women, they will be “instructed by this bare and simple testimony which the [animal] creatures render splendidly to the glory of God.” Human beings must preserve and protect the natural environment because it is especially in the presence of nature that they can find “burning lamps” that “shine for us ... the glory of its Author” above.

Such thinking is increasingly found in environmental discourse today. Al Gore preaches that we must cease “heaping contempt on God’s creation.” In a speech remarkable for its religious candor, then Interior Secretary Bruce Babbitt—the public official under whose jurisdiction ANWR fell at the time—said that “our covenant” requires that we “protect the whole of Creation.” Babbitt believed that wild areas are a source of our core “values” in western civilization because they are “a manifestation of the presence of our Creator.” It was necessary to protect every animal and plant species, the Secretary said, because “the earth is a sacred precinct, designed by and for the purposes of the Creator.” When Gore, Babbitt and many other contemporary environmentalists speak openly of protecting “the creation,” they may not say much about “God” explicitly but they are clearly referring to the actions of the same Christian divinity who made the world in six days.

The essential religious argument for preserving and protecting ANWR can thus be summarized as follows. God created the earth and we can now observe his wonderful workmanship by visiting ANWR and those other special places in wild nature that have been least touched by human hand. Owning to rapid economic and population growth in the modern age, however, human beings have been spreading industry and civilization to every corner of the globe. Over much of the earth they have been rapidly erasing the handiwork of God, present since the Creation. But ANWR is among the few remaining places where God’s original design remains in its unaltered form.

If the last few such truly natural places such as ANWR were now to be significantly impacted by human activities, some of the last remaining parts of God’s original creation would then be destroyed. It would be a sin against God of the same magnitude as say the burning of the Bibles of the world—the other main “book” by which God’s thinking and designs are revealed and communicated to the faithful.

Given the longstanding and deep Christian influence in the United States, it is not surprising that this argument resonates powerfully with many Americans. This significantly explains why opposition to oil development in ANWR continues to be so strong, despite the many hundreds of billion of dollars in economic benefits to the nation from developing the oil there. In the end, therefore, the future of ANWR will have to be decided by a consideration of these religious concerns as well as by a weighing of the economic and (other nonreligious) environmental factors. While religion and economics may seem separate domains, no society can afford to commit all its resources to its churches, environmental or otherwise.

To address fully the theological issues raised by ANWR, admittedly, might require a book in itself. I will thus limit the discussion below to several key points. First, the “environmental creationism” implicit in the religious argument for keeping ANWR undeveloped is at odds with the known facts—since at least the nineteenth century—of the geological and natural history of the earth. The current earth is the product of vast physical and biological transformations occurring over billions of years. Except for the believers today in a literal Christian creationism, there is no unchanged natural world to be found which represents an unaltered manifestation of God’s workmanship “at the Creation.” The widespread use of language within the environmental movement of the need to protect “the Creation” thus is more religious myth than scientific fact.

Indeed, by the time Europeans first arrived, Native Americans had already massively altered the fauna and flora of North America. After they arrived from Asia more than ten thousand years ago, they wiped out most of the large mammal populations and used fire to manipulate the vegetative landscape of the Americas. In speaking today of nature untouched by human hand, this is a fantasy of those people who cling to the idea of finding a primitive Eden somewhere here on earth.

Native American impacts on nature, moreover, are only some of the many drastic “disturbance” factors that have always been constantly altering the natural world; there are also drought, disease, floods, hurricanes, and many others. Ecologists believed for much of the twentieth century that nature tended towards a long run equilibrium – towards a natural “climax regime.” The consensus among ecologists, however, has now shifted dramatically to the view that chaos theory is closer to the true state of nature. The natural world we see today is the outcome of a never-ending series of chance disturbance events. There is no such thing as one “true” state of nature—such as in the ANWR environment today—that human actions now threaten to alter (and thus implicitly to corrupt).

There are in fact many other places on earth that are comparable to ANWR in the degree of their wildness—some of them lands bordering on the Arctic elsewhere in Siberia, Alaska and Canada and just as remote. As noted above, ANWR is being singled out, not for its unique environmental qualities, but precisely because it holds such a vast amount of oil. The presence of as much as a $1 trillion or more worth of oil does provide a rare opportunity to make a powerful religious statement. Making large sacrifices of the earth’s resources to God, however, is not a traditional Christian form of worship (at least in the New Testament). Rather, sacrificing ANWR’s vast oil pools is more akin to a primitive tribe burning a prized goat.

In the end, despite the many resemblances of the environmental god to the Christian God, the environmental theology being applied to exclude oil development from ANWR is outside traditional Christian boundaries. For Americans of a more secular outlook, they also will have little reason to favor a new form of “environmental creationism,” preserving ANWR in order to maintain a last remaining place on earth where “the Creation” can still be seen in its original form—and the “book of nature” can still therefore teach us about God.

For other Americans who may wish to avoid such religious issues altogether—which presumably includes both the McCain and Obama campaigns—the “common sense” economics of ANWR, as Sarah Palin is especially well positioned to know, also strongly favor oil development. Given the immense oil value (and a large but unknown gas potential as well), any reasonable economic evaluation of the (uncertain) harm done to caribou, the damage to tundra and other possible adverse environmental impacts will be dwarfed by the immense economic value of the ANWR oil.

Given all this, if the McCain and Obama campaigns persist in opposing oil development in ANWR, there would be no choice but to ask their campaign staffs for clarification: what god precisely are John McCain and Barack Obama worshipping in ANWR?


Robert H. Nelson is a Senior Fellow at the Independent Institute and author of the latest book, The New Holy Wars: Economic Religion vs. Environmental Religion in Contemporary America. He is also of Environmental Policy in the School of Public Policy at the University of Maryland. He received his Ph.D. in economics from Princeton University, and he has been Staff Economist for the U.S. Senate Select Committee on Indian Affairs; Visiting Senior Fellow, Woods Hole Oceanographic Institution; Member of Economics Staff, Office of Policy Analysis, U.S. Department of the Interior; Federal Executive Fellow at the Brookings Institution; Chairman of Interior Department Task Force on Indian Economic Development; and Staff Economist, Twentieth Century Fund.

The New Holy WarsNew from Robert H. Nelson!
THE NEW HOLY WARS: Economic Religion vs. Environmental Religionin Contemporary America
“Economics and environmentalism are types of modern religions.” So says this analysis of the roots of economics and environmentalism and their mutually antagonistic relations in the twentieth and twenty-first centuries. Questions about the proper relationship between human beings and nature have led to the growth of these public theologies, or secular religions, even while both avoid mentioning their derivation from Western Judeo-Christian sources. So while environmentalists regard human actions to warm the climate, expand human populations, and increase economic growth as immoral challenges to the natural order, economists seek to put all of nature to maximum use for the production of more goods and services and other human benefits. Learn More »»






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