Article and Photos
by Arthur E. Berman,
editor@hgs.org
HGS Bulletin From the Editor
May, 2005
The Oil Boom, 1973-1986: A Simple Story?
by Arthur E. Berman
This article is best viewed in Printer Friendly Mode.
After 23 years of contentious public debate, the United States Senate rather quietly approved a measure on March 16, 2005 that could open the Arctic National Wilderness Refuge (ANWR) to for petroleum exploration. I received only one e-mail message from Environmental Defense (formerly the Environmental Defense Fund) in the past month and it did not mention ANWR. I didn’t get any mail about ANWR, in fact, from any of the environmental organizations that I support, or from groups who support drilling there. It seemed peculiar to me that, after so many years of strong opinions on both sides about opening the Arctic to further exploration, news of the Senate’s action scarcely held the interest of the American public for more than one day.Possible opening of ANWR was quickly smothered by news of a special session of the Congress to intervene in the case of Terri Schiavo, a Florida woman who sustained severe brain damaged after heart failure 15 years ago. At this writing Terri Shiavo has died, but the case continues to dominate the news.There are other things I have noticed about oil and public perception that seem unusual.Gasoline reached $2.00 per gallon in March and I haven’t heard any complaints about oil company conspiracies to gouge consumers. One lead article in the Houston Chronicle business section explained that Coca-Cola costs $3.20 per gallon, Windex costs $17.01 per gallon, and a cup of Starbuck’s Chantico coffee costs $56.53 per gallon (Cook, 2005). The point of the article is that gasoline is actually a pretty good deal at $2.00 per gallon!I have thought for years that ANWR would be the strongest and, perhaps, last stand by the environmental community against petroleum exploration. Its 19.6 million acres are so remote that potentially giant oil accumulations may not be economically feasible even if there were no environmental objections to drilling (Berman, 2004). The evidence for large reserves in ANWR is not strong and, over the past decade, many oil companies have abandoned efforts to open the reserve to exploration based on internal reserve and cost-benefit studies. It will take about 10 years after a discovery is made in ANWR before any oil arrives at Unites States refineries. Even the most optimistic supporters of opening ANWR to drilling concede that ANWR’s oil will do little to alter the nation’s dependence on foreign sources of petroleum. While ANWR may supply as much as a million barrels per day to the United States, this is only 5% of our current consumption. The Senate vote does not mean that ANWR is open for petroleum exploration. Democrats, including Majority Leader Harry Reid (D-Nev.), have promised to oppose the bill (Kieily, 2005). The vote on the measure was close, 51 to 49. The bill opens only 1.5 million acres along the coastal plain (Section 1002, Figure 1) of ANWR’s almost 20 million acres. The vote does, however, represent a breakthrough for the oil industry, which has been trying since 1987 to gain access to the refuge''s coastal plain. This is the first time that the Senate, the House and the president agree on what should be done with ANWR.Please God, Just Grant Me One More BoomIn 2005, we are in the midst of an oil boom. On the day that the Senate voted on ANWR, the price of oil reached $56.46, the highest level since this price cycle began in 2001 and about the same level in constant dollars as it was in 1984. For some of us, it is the second period of high oil prices in our lives. The last time was between 1973 and 1986. We have all seen signs and bumper stickers that refer to that period: Please God, just grant me one more boom and I promise not to piss it away! How will we manage that? My own recollection of the 1970s and 1980s is not so clear. I remember high oil prices and a few years when there seemed to be few limits to where a geologist in the oil business might go in the course of a career. I also recall many difficult years of low oil prices and layoffs in an oil industry that seemed caught in an agonizing struggle with death.In the early 1970s, I lived in a rural part of western Colorado. While I remember the Organization of Petroleum Exporting Countries (OPEC) oil embargo, it did not make a strong impression on me, probably because I wasn’t affected by shortages in the same way that many urban Americans were. When I entered the Colorado School of Mines in 1974, admission into the geology program was, fortunately for me, hardly competitive. I was completely unconscious of the petroleum industry. It