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2011 April 25 Monday
Obama Blocks Arctic Oil Drilling

As the price of oil approaches levels guaranteed to bring on a recession the Obama Administration has decided to block approval of drilling for oil in the Arctic Ocean.

Shell Oil Company has announced it must scrap efforts to drill for oil this summer in the Arctic Ocean off the northern coast of Alaska. The decision comes following a ruling by the EPAís Environmental Appeals Board to withhold critical air permits. The move has angered some in Congress and triggered a flurry of legislation aimed at stripping the EPA of its oil drilling oversight.

Shell has spent five years and nearly $4 billion dollars on plans to explore for oil in the Beaufort and Chukchi Seas. The leases alone cost $2.2 billion.

This decision won't affect Peak Oil Recession #2 (coming soon), or #3, or even #4 or #5. Exploration and creation of oil production infrastructure will takes years. Even if the the Obama administration didn't use air quality permits as a convenient excuse (the drilling site is 70 miles from closest human village of Kaktovik) we probably can't expect a substantial amount of oil from Arctic offshore for 10 years. Well, in 2021, definitely after world oil production peaks, exports from oil-producing nations will go down so much that oil from Alaska will be worth far more than it is today and it will make a big difference in our (lower) living standards.

Obama's opposition to Arctic oil development will only delay the inevitable. Once the price of oil goes above $150 per barrel and stays there the public will swing much more strongly in favor of oil drilling. This delay might even turn out to benefit us if we still haven't developed much better substitutes for oil by 2030.

Share |      By Randall Parker at 2011 April 25 11:03 PM  Economics Energy


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Comments
bbartlog said at April 26, 2011 9:05 AM:

In the long run it may work to our advantage to hold this oil in reserve, as it should be worth even more in twenty years. But that doesn't really help us now.

Black Death said at April 26, 2011 10:44 AM:

From the article you cite:

The EPA did not return repeated calls and e-mails. The Environmental Appeals Board has four members: Edward Reich, Charles Sheehan, Kathie Stein and Anna Wolgast. All are registered Democrats and Kathie Stein was an activist attorney for the Environmental Defense Fund. Members are appointed by the EPA administrator. Alaskaís Republican senator thinks itís time to make some changes.

....

This perfectly illustrates the "let them eat cake" attitude of the Obama administration and the liberal beltway elites. Ordinary Americans are being screwed by rising energy prices, but these folks are worried about the (probably nonexistent) environmental effects on a remote native village with 245 residents. Well, speaking of eating cake, an old proverb says that you can't have it and eat it too. We can't have lower energy prices and maintain all these goofy feel-good environmental regulations. I've been to Alaska many times, and everybody I've talked to there, including the native populations, are strongly in favor of these drilling projects. Jobs and tax dollars for Alaska!

If the projects were to start today, I have no idea how long it would take until we got the first oil. This is one of the most hostile environments on the planet. By comparison, the Alaska pipeline took about three years to build, but those drilling sites are on land. But whatever the time frame, we will certainly need the oil when it finally appears. If we'd started this ten years ago, we'd have it now.

I wonder if Obama gives any thought to this at all, or if he's too other-worldly for these concerns of mere mortals. Certainly gas prices will be a big issue in next year's campaign, and the Republicans will beat this drum for all it's worth.


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