Obama's Offshore Drilling Deal

Here’s a deal for you.  You give me a million bucks right now.  I promise to pay you the million back in fifteen years.  But in two years I’ll be leaving town and will have no authority or ability to pay you back.  And by the way, I promised to pay you back on a similar deal five years ago and reneged on the deal.  But trust me, trust me.

That’s the deal the Obama administration is offering the oil and gas industry.  Give up drilling in the most promising areas in Alaska right now in return for the right to explore a portion of the offshore Atlantic in 2030 (the same general area promised and then withdrawn following the 2010 Deepwater Horizon oil spill).  It’s one of those “heads I win, tails you lose” arrangements, and the oil and gas industry would be fools to accept it.

Under the administration’s proposal, 12 million acres of the Arctic National Wildlife Refuge (ANWR) and much of the Beaufort and Chukchi seas would be “protected” from drilling.  In fact, no protection is needed, since modern “low-footprint” drilling practices require only 1.5 acres after partial reclamation.  Even a thousand wells would disturb no more than 0.000125% of the proposed wilderness areas of ANWR.  And yet this minute portion of the arctic has the potential to fuel a significant percentage of America’s energy needs for the next half-century.  The idea that America can simply chuck this resource aside is madness, but madness is what we’ve come to expect.  

In fact, Obama stated last Sunday night that he intended to permanently restrict all commercial activity, including oil and gas drilling, on almost two thirds of ANWR, no matter the country’s energy needs in the future.  It is an extremely reckless course, reminiscent of similar moves on immigration and foreign policy – all of which are driven by a determination to reward ideological supporters on the left. 

ANWR and the Beaufort and Chukchi seas are known to contain tens of billions of barrels of oil reserves.  The U.S. Geological Survey estimates that ANWR contains 10.4 billion recoverable barrels of oil.  Estimates for oil reserves in the Beaufort and Chukchi seas range as high as 30 billion barrels.    

By contrast, energy reserves in the offshore Atlantic region are largely unknown, because government has never permitted exploration using modern technology.  Surveys conducted 30 years ago estimated 3.3 billion barrels of oil offshore from Virginia and the Carolinas.  The actual number may or may not be higher.  It is also impossible to predict the course of future regulation, though it seems certain that offshore Atlantic drilling would face years of environmental review, political opposition, and obstructive lawsuits.

Surrendering 40 billion barrels of known reserves for the uncertain right to drill a portion of 3.3 billion barrels in the distant future is not a very good deal.  In return for permanently relinquishing leases known to hold vast quantities of oil, energy companies are promised future access to an unspecified amount of lease acreage containing an unknown quantity of oil and gas, if any.  If the president wished to ensure American energy security for decades to come, he would promote drilling in both the offshore Atlantic and ANWR/offshore Alaska regions.  Instead, he seems to be offering a false bargain designed to disguise the extent of his assault on fossil fuels.

This discussion leaves out the critical question of Alaska’s rights as a state.  While the federal government, following an appropriate comment period and review, can designate federal lands as wilderness, it cannot do so to the significant detriment of one state over others.  Not only does the Constitution prohibit “tax or duty” on goods or services exported from one state to another, but it prohibits “preference” by way of “any regulation of commerce” of “one State over those of another.”

The president’s proposal would, by restricting flow beneath critical levels, result in the dismantling of the Trans-Alaska Pipeline, thus shutting down much existing oil production in the state – an action that clearly would grant “preference” to other states over Alaska.  A ban on offshore Alaska drilling in exchange for permitting offshore Atlantic drilling would also clearly grant preference to Virginia and the Carolinas over Alaska.  To single out one state for restrictions, just because California environmentalists have some quixotic idea of the sanctity of polar bears and caribou, is unconstitutional.  Alaskans have as much right to engage in lawful commerce as citizens of any other state.  For the Obama administration even to propose such a limitation on commerce shows the incredible arrogance of Washington at this time.     

What stands out is in this proposal, as in so many of the administration’s actions since the autumn election, is the extraordinary disregard for the rule of law.  The Constitution protects the rights of individuals and corporations to engage in legal contract, and it guarantees the property rights of all citizens.  Leases that are legally obtained, such as those still in effect offshore from Alaska and in ANWR, cannot simply be invalidated by presidential fiat.  That is the kind of action one would expect of thuggish communist leaders in Latin America.  It is unacceptable in the U.S., and, like so much of what Obama has done by executive order, it must be opposed.    

The proposal to trade Alaska drilling now for highly uncertain drilling in the distant future is not just a bad deal – it’s also an indication of what to expect during the last two years of Obama’s presidency.  Like immigration, like the proposal to tax educational savings accounts, like the president’s sympathy for Ferguson-inspired looters across the country, Obama’s offshore drilling deal is an outrageous overreach of authority.

The best course for energy companies is to defend their lease rights in the courts.  For Congress, the best course is to block all Interior Department appropriations related to the proposed actions.  As Obama’s interior secretary recently admitted, the administration intends to set 20% of America’s land mass, containing a sizable percentage of its known oil and gas reserves, off limits.  That is not a good deal for the nation’s oil and gas producers.  It’s not a good deal for America, either.        

Jeffrey Folks is the author of many books on American politics and culture, including Heartland of the Imagination (2011).

Here’s a deal for you.  You give me a million bucks right now.  I promise to pay you the million back in fifteen years.  But in two years I’ll be leaving town and will have no authority or ability to pay you back.  And by the way, I promised to pay you back on a similar deal five years ago and reneged on the deal.  But trust me, trust me.

That’s the deal the Obama administration is offering the oil and gas industry.  Give up drilling in the most promising areas in Alaska right now in return for the right to explore a portion of the offshore Atlantic in 2030 (the same general area promised and then withdrawn following the 2010 Deepwater Horizon oil spill).  It’s one of those “heads I win, tails you lose” arrangements, and the oil and gas industry would be fools to accept it.

Under the administration’s proposal, 12 million acres of the Arctic National Wildlife Refuge (ANWR) and much of the Beaufort and Chukchi seas would be “protected” from drilling.  In fact, no protection is needed, since modern “low-footprint” drilling practices require only 1.5 acres after partial reclamation.  Even a thousand wells would disturb no more than 0.000125% of the proposed wilderness areas of ANWR.  And yet this minute portion of the arctic has the potential to fuel a significant percentage of America’s energy needs for the next half-century.  The idea that America can simply chuck this resource aside is madness, but madness is what we’ve come to expect.  

In fact, Obama stated last Sunday night that he intended to permanently restrict all commercial activity, including oil and gas drilling, on almost two thirds of ANWR, no matter the country’s energy needs in the future.  It is an extremely reckless course, reminiscent of similar moves on immigration and foreign policy – all of which are driven by a determination to reward ideological supporters on the left. 

ANWR and the Beaufort and Chukchi seas are known to contain tens of billions of barrels of oil reserves.  The U.S. Geological Survey estimates that ANWR contains 10.4 billion recoverable barrels of oil.  Estimates for oil reserves in the Beaufort and Chukchi seas range as high as 30 billion barrels.    

By contrast, energy reserves in the offshore Atlantic region are largely unknown, because government has never permitted exploration using modern technology.  Surveys conducted 30 years ago estimated 3.3 billion barrels of oil offshore from Virginia and the Carolinas.  The actual number may or may not be higher.  It is also impossible to predict the course of future regulation, though it seems certain that offshore Atlantic drilling would face years of environmental review, political opposition, and obstructive lawsuits.

Surrendering 40 billion barrels of known reserves for the uncertain right to drill a portion of 3.3 billion barrels in the distant future is not a very good deal.  In return for permanently relinquishing leases known to hold vast quantities of oil, energy companies are promised future access to an unspecified amount of lease acreage containing an unknown quantity of oil and gas, if any.  If the president wished to ensure American energy security for decades to come, he would promote drilling in both the offshore Atlantic and ANWR/offshore Alaska regions.  Instead, he seems to be offering a false bargain designed to disguise the extent of his assault on fossil fuels.

This discussion leaves out the critical question of Alaska’s rights as a state.  While the federal government, following an appropriate comment period and review, can designate federal lands as wilderness, it cannot do so to the significant detriment of one state over others.  Not only does the Constitution prohibit “tax or duty” on goods or services exported from one state to another, but it prohibits “preference” by way of “any regulation of commerce” of “one State over those of another.”

The president’s proposal would, by restricting flow beneath critical levels, result in the dismantling of the Trans-Alaska Pipeline, thus shutting down much existing oil production in the state – an action that clearly would grant “preference” to other states over Alaska.  A ban on offshore Alaska drilling in exchange for permitting offshore Atlantic drilling would also clearly grant preference to Virginia and the Carolinas over Alaska.  To single out one state for restrictions, just because California environmentalists have some quixotic idea of the sanctity of polar bears and caribou, is unconstitutional.  Alaskans have as much right to engage in lawful commerce as citizens of any other state.  For the Obama administration even to propose such a limitation on commerce shows the incredible arrogance of Washington at this time.     

What stands out is in this proposal, as in so many of the administration’s actions since the autumn election, is the extraordinary disregard for the rule of law.  The Constitution protects the rights of individuals and corporations to engage in legal contract, and it guarantees the property rights of all citizens.  Leases that are legally obtained, such as those still in effect offshore from Alaska and in ANWR, cannot simply be invalidated by presidential fiat.  That is the kind of action one would expect of thuggish communist leaders in Latin America.  It is unacceptable in the U.S., and, like so much of what Obama has done by executive order, it must be opposed.    

The proposal to trade Alaska drilling now for highly uncertain drilling in the distant future is not just a bad deal – it’s also an indication of what to expect during the last two years of Obama’s presidency.  Like immigration, like the proposal to tax educational savings accounts, like the president’s sympathy for Ferguson-inspired looters across the country, Obama’s offshore drilling deal is an outrageous overreach of authority.

The best course for energy companies is to defend their lease rights in the courts.  For Congress, the best course is to block all Interior Department appropriations related to the proposed actions.  As Obama’s interior secretary recently admitted, the administration intends to set 20% of America’s land mass, containing a sizable percentage of its known oil and gas reserves, off limits.  That is not a good deal for the nation’s oil and gas producers.  It’s not a good deal for America, either.        

Jeffrey Folks is the author of many books on American politics and culture, including Heartland of the Imagination (2011).