Fred Smith Discusses Oil Exploration In The Arctic National Wildlife Refuge

Fred Smith Discusses Oil Exploration In The Arctic National Wildlife Refuge

August 15, 2001

August 15, 2001

August 15, 2001

 

HEADLINE: HERITAGE FOUNDATION DISCUSSION TOPIC: OIL EXPLORATION IN THE ARCTIC NATIONAL WILDLIFE REFUGE MODERATOR: CHARLI COON, HERITAGE FOUNDATION PARTICIPANTS: JONAH GOLDBERG, THE AMERICAN ENTERPRISE INSTITUTE; DAN KISH, SENATE ENERGY AND NATURAL RESOURCES COMMITTEE; KAREN KNUTSON, OFFICE OF THE VICE PRESIDENT; FRED SMITH, COMPETITIVE ENTERPRISE INSTITUTE LOCATION: THE HERITAGE FOUNDATION, WASHINGTON, D.C.

 

MS. COON: Our next guest is Fred Smith, who's the founder and president of the Competitive Enterprise Institute, CEI, which many of you, I'm sure, are familiar with. It's a public-interest group dedicated to the principles of free enterprise and limited government and is active in a wide range of economic and environmental public-policy issues. CEI works to educate and inform policymakers on the Hill, journalists and other opinion leaders on market-based alternatives and regulatory issues. Fred is a frequent guest on television and radio programs, as well as a prolific writer. I think you've probably seen his articles in some publications, such as the Wall Street Journal, the National Review and the Washington Times, just to name a few. He also is a columnist for the journal Regulation, and a contributing editor to Liberty. Fred, it's a pleasure to have you with us. MR. SMITH: Thanks, Charli. You know, ANWR is kind of a strange place for a fight to break out over. If W.C. Fields was here today, he'd probably be restating that old joke he had of "You know, we're going to have a contest. First prize is one week in ANWR. Second prize is two weeks in ANWR." And yet it has become a very controversial place. I'd like to basically lay out why I think it is. I think the essential element of the conflict, this is a legacy of the progressive era, the idea that government ran everything best, that the public lands are the lands that should be -- that all lands should be public; everything should be controlled by government. That has meant that we have not explored adequately the decentralized stewardship arrangements, Alaska ownership or private ownership, that I think offer a longer-term solution in this area. There's been overstatements on both sides, and I'll try to relate some of those. But the real issue, I think, is that this is not just an economic question anymore. It's what I call the Gaia problem. It's become religious. There's an element of religion in this whole debate. And then I'll conclude with an optimistic note. I think that the Senate will basically go along with the House and we will have open energy sources and more affordable energy for America. First let me say that nothing is new in this. When you've been in public policy as long as I have been, you get a little depressed when you look back at issues like this. The arguments that we're making today were made literally decades ago. R.J. Smith, one of my colleagues, and myself wrote a New York Times piece in 1983 called "Watt versus Peterson," which dealt with the dispute between then James Watt, secretary of Interior, and Russell Peterson, who was the head of the Audubon Society, over what use should be made, if any, of the public lands. Watt, as you remember that demon of the left, believed that land should be used to advance the economic welfare of the citizens of America, that we were squandering our natural resources by locking up these resources, making them unavailable to the poor of America and the world. Peterson believed that the public lands were priceless, that a rich America would need no longer sacrifice environmental amenities to short-term economic considerations. Neither side agreed with each other. Watt saw Peterson as an elitist, caring little about the less fortunate. Peterson viewed Watt as a Philistine, willing to dam every river, clear-cut every forest, strip-mine the world. They didn't agree. Well, politics is that way. Politics doesn't reconcile interests very, very well. In politics, if you're on the losing side, you lose. If you're in the private-property world and you trade some resources, you sell something, you may not like what the person does with those resources, but you've made some money out of the deal. Politics is a lose situation, or one side wins, one side loses. In the private world, there's a tremendously greater opportunity for win-win, and I'm going to talk a bit about that in a second. The environmentalists did get one major thing out of those earlier Jim Watt struggles over how the land should be used, public land should be used. There was a massive increase in environmental funding during the period. ANWR and the other public lands became a symbol of America's loss of innocence, a cry of anguish against the changes of development we were bringing to America, a view of moral superiority over the Philistines who were running America into whatever they were running it into. Jim Watt, some of you know, was satirically elected finance chairman of the Sierra Club. They did very well out of this. They know how to make money out of ANWR. They're doing it again. The progressive legacy basically left us with vast acreage of America in political turmoil, and they still are in political turmoil today, and ANWR is an example of that. That struggle will continue, I think, in this several decades. I think eventually America will recover its understanding of private property and we'll get away with this -- we'll move away from this conflict, but not yet. If the public lands had been private, in my view, none of this would ever have occurred. Environmental groups manage their own lands, even lands in oil-field areas, very, very intelligently. Jonathan Adler (sp), one of CEI's former environmental directors, pointed out in an article that environmental groups -- he was talking about the Audubon Society -- wrote the book on balancing oil extraction with environmental concerns. They had over three decades of developing oil resources in the midst of environmental refuges, their private environmental refuges: The Paul J. Rainey Wildlife Refuge in Louisiana, my home state; the Corkscrew Swamp Sanctuary near Naples, Florida. And the Michigan Audubon Society, a state affiliate, had a refuge called the Bernard Baker Sanctuary in southern Michigan. In all of those areas, they could have prevented any development. But since it was their land, to prevent development would have prevented their getting resources from those lands. They found ways of reconciling oil development, oil exploration and development, and environmental purity. They did it very carefully. They went very thoughtfully into this issue. Let me show you what -- talk about their lease. You've heard a little bit about what leases might look like today. Let me tell you what private leases looked back in the early '89s, on privately- managed, environmentally-sensitive lands. Quote: "The detailed eight-page lease contains stringent safeguards to protect the refuge." The drill site was located off the sanctuary property, using off- site or directional drilling, in 1980. The drilling was permitted only between the 18th of December and the 10th of March, to avoid disturbing the sand cranes, the birds on the site. No seismic or geophysical testing was permitted. To minimize the possibility of spills, only one hole was permitted. Circulation of drilling fluids, et cetera, had to be handled in very high-level ways. To prevent the possibility of sub-surface water contamination, an in-ground casing system had to be cemented from the surface down to the bedrock, and on and on and on. Effectively, they drew up a contract that ensured we had oil development and environmental protection. They knew how to do it when it was their lands. It was only when it became the public lands that they decided we didn't know how to do it. They know how to have mutually advantageous development and environmental protection. If it were decades ago, I think it would be far better off if we just transferred ANWR to the environmental groups, the Audubon or someone. But things have changed. It's not so easy today, as I like to say. Both sides in this debate overstate their case. The pro- development crowd basically point out that ANWR is vital. It's important. "Vital" is sort of a harder way to argue here. It's an important source of oil. You've heard the numbers; 5 (billion) to 16 billion barrels of oil. Who knows? Probably more than that, if past experience is any example. But that alone is not going to solve an energy crisis. And given the developmental times of any field, it's going to take a while. They won't solve California's black-out or gray-out problems, I guess. But affordable energy, if we ban ANWR, if we don't develop there, will become somewhat less affordable in the future. We'll import more. We'll pay higher prices. We'll be somewhat more vulnerable to energy disruptions. Alaska and the local economies there will be somewhat poorer. And, because we won't be getting any federal revenues, taxes will be somewhat higher than they would otherwise be. Those aren't things we should walk away from without consideration. There's a lot of money we'll be losing if we lock up ANWR forever. The environmentalists, however, have been far more guilty of overstatement. As you've heard before, ANWR is a tiny area. Most of ANWR is in the coastal plain, where the oil is likely to be. And most of the coastal plain, it has already been decided, we're not going to develop. Less than a few thousand acres will be developed out of this massive array. The caribou are doing fine in Alaska and are likely to do even finer if we warm up the environment with some nice local warming sites. There's little likelihood that any of the ecosystem is going to be harmed. The Audubon Society has told us how you can develop these resources in much more sensitive areas without such harm. The U.S. government should be able to at least emulate the experience of private groups 20 years ago. Well, we are told, it'll destroy the wilderness. Well, if wilderness means no humans there, it's already been destroyed. We have military bases there. We have offshore oil development there. Con trails go over it, like the rest of the planet. And there are Eskimos there, unless we think Eskimos aren't human. And that racist element is part of, I think, the environmentalist concept that indigenous peoples are somehow not like us. (Inaudible) -- fight. Why are we fighting about something when the facts seem so weak or so in dispute? Well, we'll argue that it's not really the trade-offs between environmental concerns and oil development. Those trade-off questions can be resolved. They were resolved by the Audubon Society 20, 30, 40 years ago. But there can be no trade-offs when religion is involved. If the real question is not about economics but about disturbing the sanctity of the wilderness areas in America, then we have got a problem, and I think that is our problem. It's what I call the Gaia hypothesis, the Gaia problem. A lot of Americans, having given up God, or having lost their faith in God, have adopted Gaia. The Earth may no longer be the Lord; the Earth is the Lord. We have this strange eco-theology emerging in America where in effect we prove our virtue by denying economic development. And if we are wealthy, it's a lot easier to deny economic development, isn't it? The major voices in this area, the major work in our area in this field, has been from Dr. Robert Nelson, who wrote a book recently, Economics is Religion, and has done a series of articles in the Weekly Standard and elsewhere on this environmentalism is religion thing. And ANWR has become a crystallizing element in this religious fervor. The cathedrals of wilderness believe that nature is sacred. The former director of the National Parks, Robert Kennedy, noted, "Wilderness is a religious concept. We should conceive of religion -- of the environment as part of our religious life." Now, that's about taste. And that can be about taste. It's about religious beliefs -- no real dispute. People have a right to believe in what they want, and eco-paganism has as much right to proselytize as does any religion. But does any religion have the right to demand that the political funds -- political funds -- be spent to protect and create its cathedrals? After all, the cathedrals of God are magnificent, and their loss would also cause great pain to the American people, to the peoples of the world. Yet we do not use political funds to maintain the cathedrals of God. Why should we use political funds to maintain and preserve the cathedrals of Gaia? There's a major element of hypocrisy in all of this too. Part of it is belief and part of it is sheer elitism. Recently I was debating this topic on a radio program against the owner/manager of an Alaskan wilderness tour company. She was discussing the nature of her tours -- you are flown in by light plane, you are landed, Snow Cats pick you up, you are put in tents, you have gourmet cooks there. It wasn't your average weekend tent trip. But opening ANWR to commercial uses she said -- that is, other commercial uses -- would be wrong and immoral. The idea that somehow the elites can go to these temples of nature but the rest of us can be denied any fruits of them is immoral in my opinion, obscenely wrong. There are many people in the world who still need energy. There are many people in the world who still need the opportunities the development of these lands can provide. But we do have this other theme in America and around the world, the Calvinist theme, that somehow the view that consumption is somehow immoral -- wrong -- that fasting is good for us, restraint is good -- and it's especially good for other people. We have this concept of cheap virtue. We feel guilty about our over consumptive ways, our SUVs, our trophy homes, our refrigerators in every room. Let's have them use less energy. Vice President Cheney noted, in a remark he hasn't repeated, that energy conservation can be a sign of personal virtue, but it's not the best way to run national energy policy. Well, it's a sign of personal virtue if you do it to yourself. It is not a sign of personal virtue if you mandate that others experience those deprivations that you are not experiencing yourself. And, remember, the problem with this way of looking at the policy debate is that if ANWR were more valuable -- if there were 20 billion barrels of oil there, or 40 billion or 100 billion, then it would be even more virtuous to deny the use of that resource. So, in a weird way, all of the arguments of industry and the administration's theory are counterproductive. The more there's there, the more virtuous we are by not using it. And since it's not on our shoulders -- we don't pay for it -- we can have cheap virtue, hypocritic virtue, at the same time. Remember that the environmental movement, environmentalism generally, is an income-sensitive good. When you're starving to death, you don't get very concerned about the quality of the trees and the bugs and bunnies in your vicinity. It's good that we are rich enough to be environmentalists in America. But there is something hypocritical about some of the wealthiest people in the world telling others that they really don't need to waste so much energy; i.e., use it. And that's even more obscene when you go abroad, and you are dealing with the Rain Forest Alliance, you are dealing with the Alaskan tundra where some of the poorer people in the world live, and America's attitude, or the attitude of our environmental elite, seems to be that we want to make sure that those areas stay petting zoos so the rest of us can go and observe them on our wilderness eco tours. Would environmentalists persist in such debates, at least -- in such demands -- if they own the lands? If the Audubon Society or the Sierra Club owned ANWR, would we be better off? I don't know. I think it would have been true when they were less wealthy and less politically powerful. Today they might just lock it up and spit in our face. We don't know, and I am not willing to trust that today. In an early era we would have given it to someone -- anyone -- somebody would have done a better job than the political mismanagement we have seen. Today we are not sure because of this growing religious fervor. We have to attack both the cultural value elements of this, and the economic policy one. In time the church of Gaia may lose its favorable treatment, and America can move forward to end the progressive distortions and transfer the public lands back to the people. The House bill in effect goes a long way in doing exactly that. After all, it sort of splits the land up into two parts. Nineteen million -- what is it, 16.5? -- 19 -- 19,598,000 acres are given to the greenies and 2,000 acres are given to the rest of the people of the world. Now, that's not a perfect split, but it does suggest at least that we are willing to go a long way in reading the religious beliefs of the environmental movement. And maybe this will begin to make us aware that there is a tremendous cost in not applying the First Amendment equitably to all religious beliefs, the church of God and the church of Gaia. Thank you.