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Why Alaska Holds the Key to Continuing America’s Energy Revolution


The opinions expressed herein are the author’s own and not those of Alaska Business Publishing Company, Inc.


About a decade ago, the United States faced what seemed to be a dismal, almost frighteningly bleak energy future. We were on the verge of a large—and seemingly unsurmountable—energy shortage. Our country’s lack of domestic production, coupled with rising imports of petroleum, was adding to our nation’s mounting deficit, not reducing it.

Long-lasting, detrimental impacts were expected to unfold as the direct or indirect result of this shortage. American consumers, in addition to seeing their job security deteriorate, would see their energy costs skyrocket. Our competiveness globally would nosedive, as would our country’s economic stability. Even our national security could be compromised, experts advised.

Most important, the United States would have to rely more heavily on faraway rival nations to provide us with the energy we need to power our communities and fuel our vehicles.

There was no way around this, we were told. It was, in essence, inescapable. However, thanks to Alaska and several other energy-plentiful states and regions, none of that ever materialized.


A New Era in Energy

Consumer Energy Alliance always said the pendulum would swing back the other way if the United States, in an economically and environmentally friendly way, continued to explore and harness its abundant resources.

Fortunately, our nation’s perseverance paid off. New technologies combined with advancements in old hydraulic fracturing techniques have accelerated domestic energy production to heights not seen since the 1970s. Imports have decreased; in turn, so has the US trade deficit. Instead of importing about 60 percent of the petroleum we consume, as we did not too long ago, the United States now imports about 40 percent.

The turnaround has had a domino effect throughout the national economy. Job growth accelerated. We are more energy self-efficient. National security has strengthened. Manufacturing is up, as is consumer spending. Filling up a car has never been lighter on the wallet, and American consumers are keeping more of their hard-earned dollars in their pockets—just as we expected.

Instead of having an energy shortage, our country now has an energy surplus—and it’s changed everything.


Geopolitical Consequences

The avalanche of geopolitical consequences that have resulted from our newfound dominance in energy exploration and extraction is not lost on Consumer Energy Alliance.

The steep drop in fuel costs is not an American-only occurrence; the effects have been felt worldwide. US shale production has unquestionably played a key role in this phenomenon. Reduced demand and increased supply, thanks largely to the abundance of production from the United States, top the list of causes as to why oil prices are mind-bogglingly low for the United States and nations across the globe.

For Americans, the whims of the Organization of the Petroleum Exporting Countries (OPEC) are now of little consequence for the first time in decades. As American production has increased, OPEC’s influence on the global oil marketplace has decreased.

They have a plan for that—and a gutsy and expensive one at that. Rather than cut current production levels, which would have propped up oil prices, OPEC, led by Saudi Arabia, did the opposite. They left production levels unchanged. Why?

Well, since shale production, which now produces 4 million barrels daily, is more expensive than conventional extraction, keeping oil prices bottom-of-the-barrel low will in due time drive out US shale producers, allowing OPEC and the Saudis to reclaim the market share lost to the United States. The Saudis said the kingdom will rely heavily on the billions they have in reserve to help ease the short-term burden of their artificially inflated prices. That’s the theory anyway. In fact most estimates show that American energy companies can weather the low price environment much better than previously thought, making the Saudi’s gambit an expensive and futile one.


Now’s Not the Time to Slow Down

It’s quite evident by now that much has changed over the course of the last several years. We are now leaders, not followers, in the global energy marketplace. Thanks to our abundance of energy, oil prices are low, much to the delight of consumers and motorists countrywide. Instead of overspending on high fuel or electricity costs, Americans are shopping and dining out more and going on those long-awaited vacations that had been on hold for years. This, of course, includes Alaskans.

There’s more: The United States is now the largest oil-and-gas producer in the world, and its record-breaking rate of development has helped spearhead the nation’s economic recovery from the lingering effects of the Great Recession.

Nevertheless, our energy ascendency has also jumpstarted a “geopolitical game of chicken” between Americans and the Saudis-led OPEC. Who will blink first? As long as the United States maintains its supremacy in the global energy sector by continuously diversifying its energy resources, continuing its strong rate of production, and exploring all available natural resources, it will not be us.


Alaska’s Key Role

This is where Alaska and its encircling Arctic region, cluttered with vast amounts of yet-to-be-tapped resources, are critical. According to the Alaska Resource Development Council, there are an estimated 27 billion barrels of oil and 132 trillion cubic feet of natural gas in the Arctic waters off Alaska. These resources, we calculate, could heat every home in the United States for more than thirty years. Similarly, they could dramatically reduce energy costs for millions of households, generate billions in additional revenue, and manufacture countless jobs for all Americans, especially Alaskans.

As such, it’s imperative that we make better use of the Arctic’s vast array of resources. Unfortunately, to date, we haven’t. While energy production in the Lower 48 states has gone up 77 percent in the last five years, Alaska has seen its production drop from a high of 2 million barrels per day in the late 1980s to under 400,00 per day today. On top of government delays and foot-dragging, years-long environmental reviews, excessive and unnecessary litigation, new management plans, and regulatory uncertainty are also to blame.

Make no mistake, roughly 62 percent of Alaska’s mainland and all waterways more than three nautical miles offshore are owned and managed by the federal government, which has been unwilling to lease and permit expanded development on its territory. Consequently, Alaska’s competitiveness has plummeted. According to the Alaska Oil and Gas Association, Alaska oil production accounts for less than 10 percent of US domestic production today. In contrast, it accounted for more than 20 percent before 2000.

It is also important to maintain production even as the state faces a sizeable deficit due to the recent dip in oil prices. Oil has long been the economic backbone of Alaska, with production revenue accounting for more than half of its annual budget and nearly all of the state’s discretionary spending. This, too, shall pass, and when it does it will be important for Alaskans to work together to ensure the long-term budget stability of the state moving forward.

Now more than ever is the time for Alaska to lead the way and demonstrate to the Lower 48 the immeasurable economic and environmental benefits that energy exploration and production, onshore and offshore, can bring to Alaskans and all Americans. The road to American energy security has always run through Alaska. Let’s make sure that continues to be the case. Consumer Energy Alliance will do its part to ensure Washington understands the importance of Alaska energy production and the role it will play in the future. Join us.

Anne Seneca is the Executive Director of Consumer Energy Alliance-Alaska. An Alaskan for almost twenty-five years, Seneca has a passion for safe and economical energy development both within Alaska and nationally. With experience in marketing and public relations, Seneca serves as the key liaison in reaching out to large groups of Alaskans with a strong, succinct message of the benefits of responsible resource development and consumer advocacy.

This first appeared in the March 2015 print edition of Alaska Business Monthly magazine

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