Drilling backers claim that deciding the fate of the Arctic Refuge as part of the massive federal budget bill is appropriate, in part, because leasing the area will generate new revenue for the treasury – which is what budget bills are supposed to do. They estimate such lease sales would generate $2.4 billion, which admittedly sound like a lot.
But, according to Dr. Richard Fineberg, a former oil and gas advisor to the State of Alaska, it’s unlikely even a fraction of this revenue would ever materialize. That’s because big oil corporations like BP and Exxon are bidding less than $100 an acre for leases on the North Slope. Similar bids for the Arctic Refuge coastal plain – assuming all 1.5 million acres are leased – would only generate $150 million. However, proponents plan initial leasing for between 400,000-600,000 acres. To arrive at the $2.4 billion figure then, oil industry bids would have to average 40 to 60 times the going rate on the North Slope.
Of course, drilling proponents will argue that the prospects for a big discovery in the refuge make these seemingly wildly inflated revenue projections realistic. Yet lease sales for areas immediately offshore and adjacent to it on-shore, have yielded either no revenue or sums well below the North Slope’s going rate.
With Congress inching ever closer to this fall’s budget debate, we’d hope that those who claim to be fiscal conservatives – no matter how they feel about the merits of Arctic drilling – would at least agree that the budget of the United States should be built on real, honest accounting and not a pipe-dream.