Fuel Prices: US Can Open Taps of Trans-Alaskan Pipeline for Others, but Will It?
US does not want global oil supplies to fall - leading to a rise in oil prices and inflation across the world.
One September afternoon, I was standing at latitude 70 degrees north, at the rim of Arctic Ocean in Alaska, 400 km above the Arctic Circle. Twenty-four km of shallow, frigid waters separated me from the Arctic Ice Cap.
During the winters, even this water freezes, making it possible to walk to the North Pole. I was in Prudhoe Bay at the top end of Alaska’s North Slope, a huge swathe of land afloat in oil.
“The Russians must be hitting their head against the wall for having sold Alaska to the Americans at such a cut-rate,” said Watso, a chubby security officer, a half native Alaskan Indian, guiding me through Prudhoe Bay’s eastern oilfields.
His job for the last two years had been to keep a look-out for polar bears and alert the oil workers if there was a sighting.
Alaska: 'Seward’s Icebox'
When America bought Alaska from Russia for $7.2 m in gold (for two cents an acre) in 1867, some called it “Seward’s folly.” After the American Civil War was over, President Lincoln’s Secretary of State, William Seward, turned his attention to expansionism. One senator declared his support for the Alaska purchase on the condition “that the Secretary of State be compelled to live there.”
Ridiculing the government, Alaska was referred to as “Seward’s icebox” and President Andrew Johnson’s “polar bear garden.”
The senate ratified the treaty for its purchase by a margin of only one vote. Roughly one-fifth the size of the rest of United States, Alaska has been a boon to the country’s economy. Gold, fish, lumber, and oil have propelled a continuous boom.
“Do they know how much oil reserves are in here?” I asked Watso.
“Am sure they do but they are definitely not going to tell us – because if they tell us there is a whole lot, it will bring down the energy price,” he opined.
“But I am sure there is plenty of this stuff. Since the original find in Prudhoe Bay, oil has been discovered 70 miles east and west of it. A huge chunk of Alaska has been set aside as a National Petroleum Reserve.
"When the companies discovered oil here, the US Navy got interested and said ‘Hey, if there is oil there, we could use it as a reserve for our military’.”
Western North Slope as a 'Super Basin'
Alaska’s North Slope have produced more than 18 billion barrels of oil since production commenced in 1977 in the 777 sq km Prudhoe Bay oilfield, the largest in North America. About 40 to 50 billion barrels of conventional oil still remains to be tapped.
New discoveries in the Nanushuk formation have been so promising that geologists have branded the western North Slope as a new global energy "super basin."
It will add hundreds of thousands of barrels per day to current production. There are other known untapped oilfields on state land that could hold billions of barrels. Unexploited federal areas, like national parks, may contain up to 40 billion barrels of oil.
Advancements in drilling technology and the use of enhanced oil recovery through gas injection could produce further billions of barrels. Natural gas reserves could be as high as 124 trillion cubic feet (tcf) – 110 years’ worth of India’s current production.
Watso is correct in assuming that the Russians must be hitting their heads against the wall for having sold Alaska to the US.
Impact of Ukraine-Russia War
In the context of the ongoing war in Ukraine and the changing geopolitical situation, USA is bent upon squeezing Russia’s oil revenues and crippling the country’s role in the global energy economy. It is encouraging its European allies to wean themselves off Russian oil. Others have been threatened with punishing sanctions that will block them doing business with not only US companies but also trading with its allies.
At the same time, the US does not want global oil supplies to fall, leading to a rise in oil prices and inflation in the US and across the world. It can surely prevent that looming possibility by turning on the taps of its Trans-Alaskan pipeline and sharing their oil reserves with countries that are being stopped from buying Russian oil. But will it? Unlikely.
As they did with the excess COVID-19 vaccines, the US would rather hoard the stocks for their own future consumption.
However, when it comes to others sharing their resources, the US is extremely encouraging. India, ranked 101 out of 116 countries on the World Hunger Index, is being prodded to release its wheat stocks for exports to compensate for the Ukrainian supplies that are stuck due to the war.
For ensuring continuous supply of oil, the US is mending fences with Iran and Venezuela by easing sanctions that, over several years, have crippled their economies and politically isolated them from the rest of the world.
As Henry Kissinger, the former US Secretary of State, once said, “America has no permanent friends or enemies, only interests.”
(Akhil Bakshi is the author of Autumn in Alaska and Arctic to Antarctic: A Journey Across the Americas. This is an opinion article and the views expressed are the author's own. The Quint neither endorses nor is responsible for them.)
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