Arctic Offshore Drilling
Advantages of Arctic Offshore Drilling
National Economic Benefits
Currently, the United States ranks as the largest producer of crude oil. This chart from CNN shows that the US is slightly ahead of Saudi Arabia. In order to keep this up, the US must find new sources of oil. We cannot continue to drill in our current sources and expect to maintain this position. There are many benefits to being first. Our dependence on other countries for oil reduces significantly. We are no longer relying on foreign sources for oil. We can control our market better and reduce most costs (13 Unger).
The nation would also benefit from the massive amounts of taxes on offshore drilling and leases that are sold to oil companies. Production in the Beaufort Sea could generate $97 billion over the next 50 years in federal lease revenues and federal, state, and local government tax revenues (7 Conley).
Local Economic Benefits
Many locals are in favor of Arctic operations because of the enormous tax and revenue benefits they would receive. Through joint venture agreements, many regional corporations have joined Shell's operation. Therefore, a chunk of the profits would circulate through the Alaskan economy. This earned money would stay inside the state and it would help the local economy grow (5 Fuhs).
This opportunity would also create many jobs for locals. Shell is going to need people to run this operation. Since this is taking place in Alaska, it makes the most sense to hire the locals. As of May 13, 2015, about 437 were hired for the project. After more equipment arrives, there is an additional 100-150 jobs expected to be created (6 Garnick). Overall, any new project as large as offshore drilling is expected to bring in hundreds of jobs. This would lower the unemployment rate and boost income, which is a good thing for any state.
Active Pipeline
It is imperative on both a national and local level to keep the trans-Alaskan pipeline active. As for the country, the more oil that goes through the pipeline, the lower shipping costs will be, which produces a ripple effect (5 Fuhs). If costs are lower, then prices can lower and profits can increase. A lower cost simply has more benefits. Additionally, oil could get stranded and wasted in the pipeline if there isn't a continuous flow. Finally, the wellhead value would increase which would increase revenue to Alaska.
An active pipeline would continue to provide substantial property tax revenues to local governments. If the oil ceases to flow through the pipeline, then the revenue from taxes would be lost (5 Fuhs). It is important to find more sources of oil, such as off the shores of Alaska, so that the pipeline can remain active and provide this benefit.
Millions of Barrels per day | Data gathered from US Energy Information Administration
Page Citations
Image - National Economic Benefits: Bergmann, Andrew. “World’s Top Oil Producers.” Image. CNN Money. Cable News Network. n.d Web. 15 Nov. 2015.
Image - Local Economic Benefits: “Living in Alaska.” Image. Alaska Family Medicine Residency. Alaska Family Medicine Residency. n.d. Web. 16 Nov. 2015.
Image - Active Pipeline: “Scenic Alaska Oil Pipeline.” Image. Alaska-in-Pictures.com. Alaska-in-Pictures.com. n.d. Web. 16 Nov. 2015.
5 - Textual Information: Fuhs, Paul. “What’s at stake for Alaska in Shell’s Arctic exploration? Plenty.” Alaska Dispatch News. Alaska Dispatch
Publishing, 2 Sep.2015. Web. 25 Oct. 2015.
6 - Textual Information: Garnick, Coral, and Hal Bernton. “Shell oil rig arriving Thursday is just the start of Arctic drilling fleet.” The Seattle Times. The Seattle TimesCompany. 13 May
2015. Web. 17 Nov. 2015.
7 - Textual Information: Conley, Heather A. Arctic Economics In The 21st Century: The Benefits And Costs Of Cold. 1st ed. Lanham: Rowman & Littlefield, 2013.Web. 27 Oct. 2015.
Google Scholar.
13 - Textual Information: Unger, Jacob D. “Regulating The Arctic Gold Rush: Recommended Regulatory Reforms to Protect Alaska’s Arctic Environment FromOffshore Oil Drilling
Pollution.” Alaska Law Review 32.2 (2014): 263-294. Academic Search Complete. Web. 24 Oct. 2015.
"Scenic Alaska Oil Pipeline" by Alaska-inPictures.com
"Living in Alaska" by Alaska Family Medicine Residency
"World's Top Oil Producers" by Andrew Bergmann