ANWR:

Peter Huber and Mark Mills, authors of The Bottomless Well, weigh in today on the question of drilling for oil in ANWR:

What We Could Gain in Alaska

Wednesday, June 15, 2005; Page A24

People who love nature, as Jonathan Waterman clearly does [“What We Would Lose in Alaska,” op-ed, June 6], harm their cause when they get key numbers wrong.

Mr. Waterman noted that Americans consume about 7 billion barrels of oil a year. Then he said that 1 million barrels a day of new Alaskan oil would represent only a “0.5 percent annual increase in domestic supply.” Our domestic production is just over 9 million barrels a day; the increase therefore would be more than 10 percent. Moreover, Mr. Waterman offered his erroneous 0.5 percent figure to refute the argument that Alaskan oil would make the United States “less dependent on oil imports.” The imports that concern everyone are those from the Persian Gulf. The United States imports about 2.5 million barrels of Persian Gulf oil a day, so new Alaskan oil would cut those imports by 40 percent. If the Arctic National Wildlife Refuge contains as much as 16 billion barrels of oil, as Mr. Waterman acknowledged it might, that would be enough to cover 100 percent of current Persian Gulf imports for the next 18 years.

PETER HUBER
Bethesda

MARK MILLS
Chevy Chase

Given that vanishingly few Americans have the time and money to replicate Waterman’s 1,700 mile kayak trip across the Canadian Arcti to enjoy the spectacular views, surely Waterman’s original column should have been titled “What I would Lose in Alaska,” rather than “What We Would Lose in Alaska.”

On the other hand, everyone gets to pay for Waterman’s trip through higher energy prices, especially lower-income consumers because demand for enery consumption is highly income inelestic. Now don’t get me wrong–I am perfectly happy to pay a bit more at the pump in order to preserve parks and unaltered landscapes. On the other hand, I can’t see why I should be allowed to force others to subsidize my preferences. It is hard for me to justify as either a matter of efficiency or equity forcing low-income consumers to give me free or heavily subsidized environmental amenities, when they will never have the opportunity to experience this amenities (but still also have to pay higher energy prices to subsidize my preferences). So it seems to me that it is time to get off this question of “what upper-middle class kayakers would lose in Alaska” and start seriously thinking about doing something about the shameful subsidies by poor people for those like Waterman and me.

We need to think about taking some of the politics out of these decisions by coming up with some scheme for pricing these goods in such a manner that the opportunity cost of various different uses is more transparent. The goal, I think, is to make all of us who enjoy the outdoors to put our money where our mouths are and make us pay for our entertainment, just like everyone else has to pay for tickets to movies, football games, and Disney World. Its all fine and dandy for Jonathan Waterman to take a 1,700 mile trip across the Canadian Arctic, but it is hard for to see why I should bear the cost of that at the pump while receiving no benefit. I’m going to the DC United soccer game tonight–maybe Mr. Waterman wants to send me a check to subsidize my entertainment as well?

Update:

John Baden gives a good example of what I am suggesting (Hat Tip: Commons Blog):

For example, Defenders of Wildlife created a Wolf Compensation Trust in 1987 to pay ranchers for livestock losses due to wolves. The trust functions by shifting “economic responsibility for wolf recovery away from the individual rancher and toward the millions of people who want to see wolf populations restored.” By restructuring incentives, the trust has helped decrease ranchers’ resistance to wolf-reintroduction.

P.S.: Seeing the wolves at Yellowstone was one of the most awesome sights I have ever witnessed.

Update:

A reader reminds me that Jonah Goldberg’s visit to ANWR awhile back suggests that the costs and benefits of preserving ANWR’s “pristine” nature may not be all that it may seem at first thought.

Update:

A reader notes that Huber and Mills appear to have misinterpreted the use of the term “supply” in Waterman’s original column:

Our nation consumes 7 billion barrels of oil per year, and even if the refuge provided the hoped-for 1 million barrels per day, the resulting 0.5 percent annual increase in domestic supply would not significantly lessen our dependence on foreign oil.

When I first read this, I read the mention of “supply” as Huber and Mills did, namely supply from domestic oil fields, whereas it appears that Waterman meant supply to the the domestic market. So it appears that they misunderstood what Waterman was saying in making their calculations (although the confusion seems reasonable to me).

Having said that, it appears that the increase in domestic supply would be 5%, not 0.5% percent. The math is here.