Here're the savings from Arctic drilling — 75 cents a barrel

McClatchy NewspapersMay 22, 2008 

WASHINGTON — If Congress were to open up the Arctic National Wildlife Refuge to drilling, crude oil prices would probably drop by an average of only 75 cents a barrel, according to Department of Energy projections issued Thursday.

The report, which was requested in December by Sen. Ted Stevens, R-Alaska, found that oil production in the refuge "is not projected to have a large impact on world oil prices."

But the report also finds that opening ANWR could have other benefits, particularly in Alaska, where tapping the resources in the Arctic refuge could extend the lifespan of the trans-Alaska pipeline. It estimates that if Congress agreed to open ANWR this year, Alaskan oil could hit the market in about 10 years.

"I'm coming away from it saying that this is yet another an indicator that opening ANWR is important to this country and to our energy future," said Sen. Lisa Murkowski, R-Alaska.

The report was unveiled Thursday by the Department of Energy's research arm, the Energy Information Administration and came a day after the Department of Interior said that 60 percent of federal lands that hold potential sources of natural gas and oil are closed to leasing.

It also comes in the midst of a renewed push by Alaska's congressional delegation to persuade their congressional colleagues to open a portion of ANWR to oil exploration. Opening the wildlife refuge is the centerpiece of recently unveiled House and Senate Republican energy plans, which focus on increasing domestic oil production in the face of record oil prices that, this week, exceeded $135 a barrel.

Stevens had no comment about the report, but did speak on the floor of the Senate Thursday in support of opening ANWR to drilling.

Wednesday, his House colleague, Rep. Don Young, R-Alaska, introduced legislation to open the refuge; it was co-sponsored by a former drilling opponent, Rep. Roscoe Bartlett, R-Md. The Senate last week rejected a Republican energy plan that included opening up ANWR.

Even as Republicans have renewed their push, Democrats have warned that there just aren't the votes to open the wildlife refuge to drilling. Congress couldn't muster enough votes to open up the refuge when Republicans controlled the House and Senate. Democrats say it simply won't happen while they're in charge.

The next four years are likely to offer grim prospects, too. All three of the presidential candidates oppose drilling in ANWR, said Athan Manuel, director of lands protection for the Sierra Club.

"Their moment in time has passed," Manuel said of the renewed GOP push. "You look at Harry Reid and Nancy Pelosi, and they're very proud — and justifiably — of holding the line on the Arctic, and not losing that fight while they were in the minority. I don't think they're going to give that up easily."

Pro-conservation groups such as the Sierra Club have braced for a backlash as prices at the pump have continued to rise, Manuel said. But they've found that high gas prices haven't led to a public clamor to open up ANWR or other off-limits and sensitive areas such as the Gulf Coast of Florida.

"The thing that high gas prices has done is make people mad at the oil companies, and not mad at environmentalists for protecting places like the Arctic Refuge," Manuel said.

However, even if drilling has a negligible effect on prices at the pump, opening ANWR to production has other positive effects for Alaska, said Philip Budzik, one of the authors of the report.

For one, it keeps the Alaska pipeline operational past 2030, Budzik said, which means that oil producers might continue to explore smaller, less lucrative North Slope prospects simply because they have a way of getting their oil out of the state. That means oil production will continue to be a mainstay of the Alaska economy.

And if ANWR oil replaces foreign oil barrel-for-barrel, that means the U.S. is importing less oil, Budzik said, and fewer oil imports mean a stronger U.S. dollar.

Also, the Department of Energy found that unlike previous reports on ANWR, U.S. oil consumption is projected to decline, in part because of recently enacted fuel efficiency standards. High oil prices are expected to slacken demand, too.

Still, the Wall Street Journal reported Thursday that the Paris-based International Energy Agency is projecting that worldwide oil supplies will struggle to keep up with demand.

The Journal reported that the IEA is expected to release a report this fall that says worldwide demand for oil will exceed 116 million barrels a day, up from the current 87 million. Some analysts suggest that the IEA report will spur more interest in previously off-limits domestic prospects.

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