Time to look past oil
Many of us who grew up watching Saturday Night Live in the 1990s will remember “Deep Thoughts by Jack Handy.” One proverb offered from this segment advises, “If you ever drop your keys into a river of molten lava, let ‘em go… because man, they’re gone!” Wise words in the wake of failing arctic oil prospects.
A few hours after inauguration, President Joe Biden signed an executive order requiring further review of arctic oil leases. This comes after the 11th-hour Trump administration lease sale for oil development in the Arctic National Wildlife Refuge. Alaska can’t keep fighting for the past – this latest challenge shows that it’s time to look beyond oil.
Forty years of pro-oil rhetoric promised the recent lease sale would be the future hope for our economy. As the volume of crude flowing through the trans-Alaska oil pipeline dropped from more than two million barrels per day to fewer than half a million, politicians have put off managing fiscal consequences by promising pay dirt in future wells. The ANWR lease sale came on Jan. 6, only two parcels received bids from the oil industry. No major company even showed up.
Following the advice of former governors Bill Walker and Frank Murkowski, the Alaska Industrial Development and Export Authority (AIDEA) picked up seven leases that they hope to sublet to oil developers (they actually won nine bids, but only got the paperwork in for seven). Much like famed time travelers Bill and Ted, Bill and Frank seem to want to go back in time. While reliving the days of a full pipeline sounds like an excellent idea, the state spent $12 million buying something no oil company had any interest in. Just a few years ago, projections anticipated a windfall in the billions from leases alone. Revenue from this month’s bids will in reality recoup just $7 million to Alaska, and the state now has to defend its leases against mounting legal challenges. At the same time, budget cuts to education, transportation and health care continue.
A resilient economy won’t come from flipping lemon leases to pay next month’s rent. The oil industry is undeniably part of Alaska’s identity, but simply put, this is outdated. Today we produce less crude oil than Texas, North Dakota, New Mexico, Oklahoma or Colorado (and only slightly more than California). Arctic oil costs between $10 and $20 more per barrel. Two-thirds of Americans oppose drilling in the Refuge (including a growing number of Alaskans). The final Environmental Impact Statement (EIS) estimates that ANWR oil would create only 730 direct jobs. BP, one of only two companies that has actually seen the test data from the Refuge, left the state.
Two hundred years ago, passenger pigeons would block out the sun as they flocked in the millions across the Ohio sky; just one hundred years ago, the U.S. had four times as much old-growth forest; today, 75% of our country’s large rivers no longer flow free. Alaska has thus far avoided cautionary tales of degradation common in so many other places: Our greatest resource is not under the tundra, but on it and in it. I first visited the refuge 11 years ago. The mosquitos were biblical, the rivers were cold, the tundra was inspiring. It was one of the reasons I chose to make a life in Alaska. The EIS estimates that drilling in ANWR would come with 84,630 – 581,230 gallons of spilled oil. The refuge is nesting habitat for 157 species of birds, calving grounds for 200,000 caribou, and home to so much of the grandeur that makes our state great. As Frank Murkowski recently said in public testimony, the Refuge is, “a sacred place or whatever.” A spirit of conservation that embraces the natural environment in our corner of the North keeps Alaska’s very identity intact.
Now before you say it, I know: What can possibly replace oil? The honest answer is nothing, nor should it. Boom-and-bust economics has given us opportunity, but also created vulnerability. We should not be looking to replace reliance on one industry with reliance on another. Instead, we need a sustainable, diversified economy that aggregates the many opportunities we have in Alaska without holding our state budget hostage to the next dip in crude prices. Tourism, agriculture, shipping, renewable energy, recreation, sustainable fishing and local industry can offer a better path forward. AIDEA was ready to spend $20 million on leases that could have instead gone to expanding the state’s small business loan program. While chasing oil resources that the industry no longer wants is spending good money after bad, investment in higher education and entrepreneurship would build home grown opportunities, paying far greater dividends in the long run. The failed Refuge lease sale and recent executive order can give Alaska a new lease on our future if we put our mind to new possibilities.
Although cooling tar may not present the same dangers as molten lava, we have dropped our oil economy in, and it’s time to let it go, because man, it’s gone.
Alexander Lee is a philosophy professor at Alaska Pacific University.