November 3, 2005

ANWR Shall Drilling Opponents Go to Cry?

Hatched by Dafydd

Yesterday, I gave you all a heads up (HT Hugh Hewitt) that the Senate was to have a final vote on drilling for oil in ANWR.

Today the Senate voted -- and pro-energy forces won! The Luddites lost, but narrowly:

An amendment offered by Sen. Maria Cantwell, D-Wash., that would have removed drilling authority for the Arctic National Wildlife Refuge (ANWR), was defeated 51-48. She called the drilling proposal a gimmick that will have little impact on oil or gasoline prices, or U.S. energy security.

And Sen. Cantwell knows this -- how? Since we haven't gone there to explore much yet, all estimates of reserves are really just back-of-the-envelope guesses. They are educated guesses from geologists; but there are equally well educated guesses from other geologists that contradict the ones from the DOE's Energy Information Administration that Sen. Cantwell and other enviromentalist extremists rely upon.

Until we spend some real time there and drill more exploratory wells, we really don't know. The oil companies themselves have done some exploration in ANWR; but they keep the findings a closely guarded secret, since it affects which leases they want to bid on. It may conceivably turn out to be a big bust, as the Democrats desperately hope, since that would hurt the United States (and therefore President Bush); it may turn out to have as much oil as Saudi Arabia (not likely, but that's what Republicans hope); or most likely, it will land somewhere in between... which will still be good for the country.

Here is my favorite part:

Later the Senate in an 86-13 vote, required that none of the oil from ANWR can be exported. Otherwise ''there is no assurance that even one drop of Alaskan oil will get to hurting Americans,'' said Sen. Ron Wyden, D-Ore., a drilling opponent who nevertheless sponsored the no-export provision.

That's a bit stronger than I would have wanted, but it's better than doing all that drilling, then selling it all to Japan, as some here have suggested is just the way things work; with this amendment, we need not continue to depend upon the beneficence of our enemies (Venezuela) and our intense rivals who might become enemies (Saudi Arabia)... at least not as much as we do today.

With that oil flowing here first and only later into the world market, we will have a much more robust supply if OPEC does to us again what they did in 1973, when they decided to punish us (and the the Netherlands) for supporting Israel after the Arabs launched a sneak attack in the Yom Kippur War... a non-market political reaction that drastically affected the market -- which was my point in proposing something like this yesterday.

For every million barrels of oil flowing from 1002 to the country, we would import a million fewer barrels; but the price will not be affected by the non-export proviso, because there is no requirement that the Alaskan oil be sold here for any less than the world market price. (More supply in the market will of course lower the price.) But in the event that we get cut off by OPEC again, at least we will have a flow of crude that the Islamists (and that Communist Hugo Chavez) cannot simply shut off.

Here is the most dishonest argument against drilling:

No oil is likely to flow from ANWR for 10 years and peak production of about 1 million barrels a day would be expected about 2025, according to the Energy Department.

Environmentalists have been making this argument -- for 10 years now, since the 1995 budget vote that President Clinton vetoed.

Hatched by Dafydd on this day, November 3, 2005, at the time of 4:03 PM

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There’s a good post that’ll catch you up to speed over at Big Lizards by Dafydd ab Hugh. The Senate apparently voted today and we’ll now be able to drill in the Arctic National Wildlife Reserve (ANWR). Big Lizards:Blog:Entry “A... [Read More]

Tracked on November 3, 2005 5:55 PM

Comments

The following hissed in response by: FredTownWard

"That's a bit stronger than I would have wanted, but it's better than doing all that drilling, then selling it all to Japan, as some here have suggested is just the way things work; with this amendment, we need not continue to depend upon the beneficence of our enemies (Venezuela) and our intense rivals who might become enemies (Saudi Arabia)... at least not as much as we do today."

Please tell me that you are kidding, Dafydd. Surely you know that oil is fungible, that ANWR oil sold to Japan will replace oil that Japan is buying from other sources making it available to everyone else and thus lowering oil prices both because the total supply will have increased by that much and because the transportation costs will be lower if everyone buys the oil that is most cheaply shipped to them?

The only circumstances under which anyone in their right mind should wish to reserve ANWR oil for US use only would be if we were facing some sort of oil shut off and the issue became one of actual supply not merely of price.

The above hissed in response by: FredTownWard [TypeKey Profile Page] at November 3, 2005 4:42 PM

The following hissed in response by: Dafydd ab Hugh

FredTownWard:

Please tell me that you are kidding, Dafydd. Surely you know that oil is fungible, that ANWR oil sold to Japan will replace oil that Japan is buying from other sources making it available to everyone else and thus lowering oil prices both because the total supply will have increased by that much and because the transportation costs will be lower if everyone buys the oil that is most cheaply shipped to them?

The only circumstances under which anyone in their right mind should wish to reserve ANWR oil for US use only would be if we were facing some sort of oil shut off and the issue became one of actual supply not merely of price.

Yes! That's it! You've got it! My point has nothing whatsoever to do with lowering the price of gasoline. That is why I said very explicitly that we should not insist upon any price break.

My point is solely and only the strategic one, that we do, in fact, need to fear an "oil shut off," as you put it -- an embargo -- and that for strategic purposes, we should not depend so much upon vital oil from countries that are at best uneasy summertime allies whose subjects are Wahabbi radicals... and at worst Communist dictatorships run by paranoid jackanapes desperately buddying up to Fidel Castro.

Is this sinking in yet?

Somehow, somebody uptopic got the cockamamie idea that I was proposing this as some sort of anti-market way to lower the price of gasoline. This was a misapprehension from the beginning. It never had anything to do with price but only raw supply -- and supply not in the normal course of events but if there were to be another act of economic warfare against us, as in 1973.

I believe my words were perfectly clear.

Dafydd

The above hissed in response by: Dafydd ab Hugh [TypeKey Profile Page] at November 3, 2005 5:56 PM

The following hissed in response by: Dafydd ab Hugh

Yep; here is what I wrote yesterday:

I would actually hope for one codicil in this ANWR bill: I want a proviso that says Americans have the right of first refusal to buy the oil and natural gas from this site, at prevailing world oil prices, before it's sold on the world market. In other words, we should first offer to sell American oil to American consumers (at the same price, but of course with lower transportation cost) before exporting it to foreigners. This would encourage energy independence, weakening the Axis of Islam significantly.

(I bolded different words in this version because I want to call your attention to the point that you missed.)

My words were quite clear: the proposal has nothing to do with lowering the price -- I specified "prevailing world oil prices" -- and everything to do with strengthening American security against "the Axis of Islam."

Dafydd

The above hissed in response by: Dafydd ab Hugh [TypeKey Profile Page] at November 3, 2005 6:01 PM

The following hissed in response by: holdfast

Dafydd -but who really cares, if we get into a big shooting war, of course we wouldn't let the oil go overseas, and damn the contracts. Until that point, let the oil flow where it will. Alaska and the Feds still get revenue, oil producers hire workers (who pay taxes) and pay dividends (which are taxed)- all is right in the world and the Caribou get to make new friends. Whether the oil leaves and is replaced by imported oil or stays, America's balance of trade gets better.

This is like the silly stunt where some LLLs in Canada want Alberta to sell oil to Japan instead of the 'States because they don't like Americans. In both case it is silly when involving a commodity that is so fungible and that has the same price the world over.

The above hissed in response by: holdfast [TypeKey Profile Page] at November 3, 2005 8:17 PM

The following hissed in response by: FredTownWard

Well, Dafydd, national security is a perfectly good reason for advocating more drilling in the US, but it is NOT a good reason for silly legal restrictions on who that oil can be sold to.

During normal times it pointlessly raises the price of oil by imposing unnecessary inefficiency costs (which EVERYONE gets stuck with paying), and during an emergency, as holdfast properly points out above, the federal government could impose whatever restrictions were required as fast as someone could get a pencil and paper in the President's hands.

All these codicils (there was a similar one incorporated into Alaska Pipeline legislation) demonstrate is the dangerous state of economic idiocy even among Republicans who unlike Democrats really OUGHT to know better.

The above hissed in response by: FredTownWard [TypeKey Profile Page] at November 3, 2005 8:46 PM

The following hissed in response by: Towering Barbarian

FredTownWard,
With all due respect do you really see no contradiction between saying that "oil is fungible" on the one hand and worrying about "unnecessary inefficiency costs" upon the other? One of the purpose of laws in a free society is to spell out in advance what may and may not be done and thus save honest citizens from running into an invisible wall as it were. Thus, a law like this does serve a practical purpose since it lets honest but perhaps shortsighted businessmen know in advance that we would rather they did not sell rope to those who would hang them as some businesses are currently doing or have done instead of letting it come to them as a Chapter 13 or RICO surprise the way a ruling from a regulatory agency might do.

Holdfast,
Don't underestimate the value of silly stunts. If this one allowed wavering votes to let the drilling go through when it otherwise might not then it would have value for that alone. If Paris was worth a Mass then ANWR was surely worth a talking point. And don't be too sure that we wouldn't let oil go to our enemies otherwise. I would hardly have thought I would see an American prof call dead American civilians "little Eichmans", an American moviemaker compare terrorists to Minutemen, or American computer companies assist a Communist crackdown upon their citizens but these things have come to pass all the same. So there really are times when a good law written in advance may serve to prevent some mopery and dopery that we otherwise wouldn't expect.

The above hissed in response by: Towering Barbarian [TypeKey Profile Page] at November 3, 2005 10:05 PM

The following hissed in response by: Dafydd ab Hugh

Holdfast, FredTownWard:

How old are you two?

Do you actually remember 1973? Because your wild veering between business-as-usual and "big shooting war" makes me think you don't.

Dafydd

The above hissed in response by: Dafydd ab Hugh [TypeKey Profile Page] at November 4, 2005 1:28 AM

The following hissed in response by: FredTownWard

Come on, Dafydd,

"Thus, a law like this does serve a practical purpose since it lets honest but perhaps shortsighted businessmen know in advance that we would rather they did not SELL rope to those who would hang them as some businesses are currently doing or have done instead of letting it come to them as a Chapter 13 or RICO surprise the way a ruling from a regulatory agency might do." (emphasis added)

If logic and economics and geography were taken into consideration here, ANWR oil would be sold to JAPAN, with which we've had a reasonably friendly relationship for SIXTY YEARS!

You can make a better case about some of our foreign oil SUPPLIERS being enemies or potential enemies (Venezuela, Saudi Arabia, Iran, etc.), but reserving ANWR oil for ourselves and refusing to buy from these others just forces our (and Japan's) energy costs HIGHER by shipping the oil further than it has to be. It doesn't hurt the "bad guys" one bit because they don't give a rat's ass who buys their oil. Nor should we (unless we're planning a military operation, like a naval blockade, against them).

Now your response to holdfast was a little better because if this pointless idiocy was necessary to get ANWR drilling passed it's an acceptable price. Unfortunately, the overwhelming vote in favor of it suggests less log-rolling and more pandering to economic ignorance.

And, yes, I'm ld enough to remember 1973 AND the stupidity of our government's response to it: oil price controls.

The above hissed in response by: FredTownWard [TypeKey Profile Page] at November 4, 2005 9:25 AM

The following hissed in response by: FredTownWard

Come on, Dafydd,

"Thus, a law like this does serve a practical purpose since it lets honest but perhaps shortsighted businessmen know in advance that we would rather they did not SELL rope to those who would hang them as some businesses are currently doing or have done instead of letting it come to them as a Chapter 13 or RICO surprise the way a ruling from a regulatory agency might do." (emphasis added)

If logic and economics and geography were taken into consideration here, ANWR oil would be sold to JAPAN, with which we've had a reasonably friendly relationship for SIXTY YEARS!

You can make a better case about some of our foreign oil SUPPLIERS being enemies or potential enemies (Venezuela, Saudi Arabia, Iran, etc.), but reserving ANWR oil for ourselves and refusing to buy from these others just forces our (and Japan's) energy costs HIGHER by shipping the oil further than it has to be. It doesn't hurt the "bad guys" one bit because they don't give a rat's ass who buys their oil. Nor should we (unless we're planning a military operation, like a naval blockade, against them).

Now your response to holdfast was a little better because if this pointless idiocy was necessary to get ANWR drilling passed it's an acceptable price. Unfortunately, the overwhelming vote in favor of it suggests less log-rolling and more pandering to economic ignorance.

And, yes, I'm ld enough to remember 1973 AND the stupidity of our government's response to it: oil price controls.

The above hissed in response by: FredTownWard [TypeKey Profile Page] at November 4, 2005 9:27 AM

The following hissed in response by: Dafydd ab Hugh

FredTownWard:

That was Towering Barbarian, not I.

If you're old enough to remember 1973, then why don't you remember (a) that there was no "big shooting war" between us and the Arabs... they just embargoed the oil; and (b) those "oil price controls" were Jimmy Carter's brilliant idea -- in 1978, not 1973?

The problem the first time was that, after we supported Israel in the Yom Kippur War, the Arab states decided to punish us... so they cut off our oil supply, causing terrible disruptions to our economy and energy policy.

You can make a better case about some of our foreign oil SUPPLIERS being enemies or potential enemies (Venezuela, Saudi Arabia, Iran, etc.), but reserving ANWR oil for ourselves and refusing to buy from these others just forces our (and Japan's) energy costs HIGHER by shipping the oil further than it has to be.

Yes, I understand the hard-core libertarian doctrine. I am little impressed, especially considering how many libertarians have decided that the American State is far more to be feared than al-Qaeda. Libertarianland has a very difficult time adapting to non-market situations in an appropriate way... that's one of its biggest failings: it works great in ordinary circumstances, with an intact market where decisions are mostly made on purely economic grounds. But in situations where people are deciding for irrational reasons to do things that make no economic sense -- but a lot of political and religious sense -- politically correct libertarian doctrine, mindlessly followed, leads to disaster.

Once again, let me reiterate: no matter how many times you keep talking about price, this is not intended as an end run around the market to lower price. Consider this analogy.

Suppose a Jewish family on the frontier has a farm. They grow a bunch of vegetables... but they prefer to have meat and flour as well. So it turns out to be cheaper to sell their entire vegetable crop to local Arab markets, then buy what they need as necessary.

But they would be foolish to sell all of their vegetables, even if canned were cheaper... because at any point, after selling their entire vegetable crop, the local Arabs could go on an antisemitic jihad and refuse to sell them any food, even though it costs the Arab merchants money.

And they could argue until from now until next Rosh Hashonah that this violated the rules of the free market... but they will still starve.

Far better to keep enough of their crop for themselves that, if necessary, they could live off of it, even if that were more expensive, than to sell it all and depend for basic necessities upon people who hate them and may decide to kill them.

Dafydd

The above hissed in response by: Dafydd ab Hugh [TypeKey Profile Page] at November 4, 2005 11:05 AM

The following hissed in response by: KarmiCommunist

cockamamie

Nice word...America has lived in such for far too long. Nasty stuff...

Anyway, it is not to late, especially if American Conservatives kick Liberal bohind in 2006.

America has lots of oil reserves, on-shore and off-shore, but the Democrat Party stops us from getting to it. When the price reaches $5-a-gallon, we will start using our own oil, and the Left-Wing Environmentalists will be exposed for what they are. Look at who we buy oil from, and what we get in return for our money. W should send the Military to drag Hugo Chavez from Venezuela, and put him in the same Prison cell with Manuel Noriega, if Manuel Noriega is dead, then put him in that cell until he dies. i want just one second with this Hugo dude...that will give me enough time to grab his head, and then drown him in his own blood. Hugo wants to fight W, and i want just one second with Hugo!!!!!!!! He will scream soooooooooooo loud...nevermind.

$5-a-gallon...

Karmi

The above hissed in response by: KarmiCommunist [TypeKey Profile Page] at November 4, 2005 4:01 PM

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