A budget showdown in Washington, D.C., gives oil and gas companies a chance to resist environmental hypocrisies that have long constrained their work in the U.S.
Budget reconciliation bills passed by the House and Senate contain measures to allow leasing of the Arctic National Wildlife Refuge coastal plain in Alaska. Interior Sec. Bruce Babbitt struck hypocritical cords when, in a press conference, he called ANWR leasing "one of the most important environmental issues that will be decided this year (see p. 31)."
THE TRUE ISSUE
All that can be decided this year, in fact, is whether or not Congress approves leasing. The true environmental issue resides in the question whether oil and gas work, which would serve important national interests, can occur on the coastal plain without damaging its ecology.
A compelling and growing body of evidence answers yes to that question, which is why Babbitt and other leasing opponents don't like anyone to ask it. They have a cause on which to focus at the expense of everything else. It is to keep anything from happening anywhere on ANWR, starting and, they hope, stopping with leasing.
One major consequence of this obstinacy is absence of government revenues from ANWR. The leasing issue thus is not unrelated to federal fiscal problems, as opponents such as Rep. George Miller (D-Calif.) want everyone to believe. Miller has complained about attachment of the leasing measure to the budget bills. He apparently hopes no one remembers how he spent the past 10 years helping to maneuver offshore leasing and drilling moratoriums through Congress by tucking them into appropriations bills.
That the U.S. government would make money if ANWR's coastal plain were leased is not in dispute. But no one knows how much. The Congressional Budget Office (CBO) puts the figure at $1.3 billion. Alice Rivlin, director of the Office of Management and Budget (OMB) and formerly a director of the Wilderness Society, cites a controversial U.S. Geological Survey resource estimate and says that a better figure is $850 million.
The current ANWR initiative probably will live or die within the bounds of this futile contest of estimates, which means it probably will fail. A conference committee will reconcile the House and Senate bills. Many Republican lawmakers will approach the process willing to trade a measure promising the government only $1.3 billion, if that, for something bigger, like entitlements reform.
This is a pity because neither estimate measures enough. CBO and OMB assessed only direct receipts from ANWR leasing, such as bonuses and rentals. Yet those are hardly the only sources from which money would flow to government if leasing took place.
To whatever extent companies explored ANWR, leasing would immediately raise employment and taxable incomes. If successful, exploration would lead to production, more direct payments to the government, more jobs, more taxable incomes. If ANWR lived up to even part of the hope that the industry has for it, government revenues from production and people performing work associated with ANWR soon would dwarf bonus and rental receipts.
A LOST OPPORTUNITY
By not leasing ANWR, the U.S. government deprives itself and its citizens of an economic opportunity because an environmentalist cause forecloses discussion of what few real environmental questions apply. The policy has major fiscal consequences. An effort to correct it must not be bargained away on the basis of cramped revenue estimates.
The government spends more money than it makes. Politicians responsible for the imbalance agonize over program cuts and tax changes. Yet most of them refuse to even acknowledge the major revenue gains possible from development of a highly prospective but off-limits resource. Their refusal is a triumph of obstructionist environmentalism. Of all the many hypocrisies at work in the ANWR debate, this one is the greatest.
Copyright 1995 Oil & Gas Journal. All Rights Reserved.