THE PRUDHOE PRINCIPLE
August 8, 2006
Opponents of opening the Arctic National Wildlife Refuge (ANWR) to oil exploration and drilling have long argued that the supply wouldn't make a difference to prices. But that claim was silenced yesterday with BP's announcement that it is shutting down its operations at Prudhoe Bay due to a damaged pipeline that could take months to patch, says the Wall Street Journal.
The news showed what a supply shock of less than 2 percent of U.S. consumption can do to the energy market:
- U.S. crude soared $2.25 on the news, taking oil to nearly $77 a barrel.
- Many experts are predicting another 5 to 10-cent a gallon price increase at the retail gasoline pump -- possibly to a new high.
Those that argue ANWR's estimated 1 million barrels per day aren't worth the effort might have some currency if oil were plentiful and gas prices were still "only" $1.50 a gallon, says the Journal. But with the margin between global oil supply and demand so thin, any supply counts.
As it happens, House Republicans are mounting yet another effort to get ANWR opened. A majority of the Senate supports it. The latest bill promises to devote federal ANWR revenues to "alternative energy" programs, an enticement that has already gathered some Democratic support. If Congress really wanted to impress voters, it would use the BP mess as an excellent reason to increase U.S. energy supplies, says the Journal.
Source: Editorial, "The Prudhoe Principle," the Wall Street Journal, August 8, 2006
For text (subscription required):
Browse more articles on Environment Issues