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The former U.S. National Petroleum Reserve

Alaska's Protected Oil Reserves The US National Petroleum Reserve is being split, with half destined for conservation and half destined for drilling. In a below-the-fold headline last week,  Interior Secretary Ken Salazar announced the new management plan which preserves sustenance resources and wildlife areas while capturing 72% of recoverable oil. The plan also allows pipeline development connecting the reserve with the Trans-Alaska Pipeline in Prudhoe Bay, AK. The National Petroleum Reserve in Alaska (NRP-A) was established in 1923 to ensure the military had ample petroleum if ever a global oil crisis arose.

While this is a highly intelligent development plan, it comes at an inconspicuous time. There is no global oil crisis: the hydrocarbon market is highly diversified and  well buffered at the moment.  There is no political uproar clamoring for this development, and while gas prices are high they’re not record-setting high. It does follow Obama’s campaign promises for lowering our dependence on foreign oil, but he’s traded considerable leverage for apparently no political gain. Every president since Nixon has touted the need to reduce U.S. dependency on foreign oil, but Obama is the first to do it. Furthermore, this increase in domestic production is unlikely to lower domestic gas prices. The only thing accomplished is the continued short selling of the environment. It’s probably inevitable that NRP-A will be drilled, but of all times to do so, why now?

Categories: Energy, Politics Tags: , , ,

The Implicit Laws of North Carolina

26 February 2013 Leave a comment

Last week, A North Carolina newspaper editor made a request for publicly available records of local concealed carry permit applications. The local sheriff Keith Lovin, who is legally obligated to provide those records, denied the request and posted the letter of request on facebook. This lead to public outrage, not for the law violation, but for the request of public information. Several days later and after numerous death threats to the editor, the newspaper retracted its request and issued a profuse apology. Furthermore,  this editor, a last patron of a dying industry, has now resigned and plans to leave the state because of the ferocious hatred he has received. Full details of the story are available here.

In a period of increased gun violence, dialog, and sensitivity (or arguably insensitivity), this level of outrage against a law abiding citizen is absurd. Instead of using this request to highlight what they see as an invasion of privacy and potentially creating a movement  to correct a state law they disagree with, they attacked the media, the one actor who could actually help publicize such a movement.  Furthermore, the lack of outrage or even acknowledgement of the sheriff’s violation is appalling. Our rights exist because the rule of law prevails. If we subjugate one law in order to protect another, then we have created a new set of standards with no guidelines for enforcement. I support the second amendment, but I also support the first amendment at its freedom of the press, for without the first, we will have no idea of when the second is actually being threatened. These implicit laws of North Carolina highlight the problems with single issue voting and lobbying, and reinforce the need for a well informed citizenry.

Categories: Politics Tags: ,

Prospecting on Greenland: Speculations on Economics and Sovereignty

13 September 2012 1 comment

The island of Greenland has a long and storied past. It has been inhabited continuously, though sparsely, for over 800 years, and intermittently since 2500BC. Long falling under the Kingdom of Denmark, in 1979, Greenland was granted Home Rule allowing it to exercise semi-autonomy on some political, economic, and social issues. In 2008, Greenland passed a referendum reaffirming home rule and acceding to Self-Rule, moving one step closer to sovereignty.

Greenland is a fascinating island in that it has a huge but mostly uninhabitable landmass. It’s 25% bigger than Alaska, but with 1/6th the population. It’s not only a very small country by population (~55,000 inhabitants) it’s also a very young country, only having semi-autonomy for 33 years. This politically young, environmentally dynamic country will face unique and complex problems brought on by climate change. Not only will they face enormous challenges in managing their own systems and resources, they are also likely to face an influx of outside pressures as to how they should proceed.

From what’s known about Greenland’s coastal geology, it is likely that the island contains significant amounts of precious metals and minerals (in addition to the substantial known hydrocarbon reservoirs). Climate change, through receding glaciers, is likely to expose large tracts of land bearing these coveted reserves. This is already piquing global interests from Europe to Australia, within both governments and mining companies alike.

The economic potential for Greenland is huge. Currently, Greenland is economically dependent on its fishery. Opening of its frontier to mineral exploration will present an economic boom. Revenue from increased mining will bolster Greenland’s government, giving them a much firmer hand in political discussions with Denmark. One foreseeable path is that this will lead to further self-governance and ultimately independence from Denmark.  There will reach a point when Denmark has little left to offer that the Greenland can’t secure for itself either through trade or collaboration with other Arctic nations. This path requires strong leadership and firm negotiations with mineral companies to make sure that Greenland receives an appropriate amount of mining revenue and that regulations are followed. It may also be preferable that the mining be conducted by domestic companies thereby forcing the development of manufacturing and support industries which may help diversify the economic base. This will require great foresight and adept policy making; the kind forged through years of hard fought progress. This path may provide an equitable and environmentally balanced approach to the future of Greenland as it continues to grow into a major player on the world stage.

A second, more problematic path feeds on the weakness of burgeoning political institutions. Though they have strong political models to follow, it is always tempting for new governments to slip into the curse-of-natural-resources. With great economic wealth on the horizon, it may be easy for Greenland’s leaders to open up bidding to the highest company, outsource the manufacturing, development, and planning jobs; get paid for their resources; and have nothing else to show for it. Nascent governments may have undeveloped or underdeveloped regulations and/or enforcement mechanisms that allow for excessive contamination and recklessness that may result in environmental impacts, and squandered opportunities.

The third, and most likely approach is that Greenland will take advantage of both its mineral assets and its political relationship with Denmark to develop a hybrid, balanced approach building off established regulation models. Greenland does have a Bureau of Minerals and Petroleum and has already established a progressive exploration block licensing program. Legislation has been passed in 1965, and updated in 1978, as well as 1991 (a nice, though dated summary of Greenland Mining Policy see here). Current legislation focuses more on rent recovery and taxation with less emphasis on environmental protection and enforcement measures.

There are many complex questions associated with mining development.  Mines require technical, intellectual, and physical workers; more than a small population can support. Managing boom-towns is always a difficult proposition.  Mines also require support and service industries, possibly furthering the rapid, short-term, short-lived growth. Finally, there is always an environmental legacy of mining.  Whether it be accidents, pollution, contamination, or just landscape reshaping, Greenland will be forever shaped by the next chapter in its history.

Managing natural resource wealth is immensely difficult. There are few examples of safe, effective, and equitable resource nations, and with the size of Greenland’s economy, it will undoubtedly become dominated by the resource industries. Greenland is being presented a great opportunity to become economically advanced and diversified. Attaining that economic development in balance with its unique cultural and physical environment is monumental challenge. The rest of the Arctic is looking to Greenland, for how Greenland proceeds will set a precedent for the rest of Arctic development.

Categories: Economics, Politics Tags: ,

Fairness in balance: The Fairness Doctrine

The oft cited “Fairness Doctrine” has been stripped from the FCC rulebook.  In a decision handed down yesterday August 22, FCC Chairman Genachowski announced that 83 FCC regulations that have been deemed inefficient and unnecessary would have been stripped from the books.  This streamlining initiative is part of the larger Obama promise of regulation reform, aimed at removing unnecessary government intervention in the private sector.

The Fairness Doctrine, initially crafted in 1949 to mandate equal coverage of all sides of controversial issues, has been deemed obsolete since 1987.  It has been long decried by conservatives as infringing on freedom of speech.  However, recently, the fairness doctrine has seen a resurgence of citings, mostly from the right in criticizing media coverage of climate change; their idea being that if the media is presenting evidence for climate change, they must also give equal air to the dissenters who argue that the science is still undecided.  In light of this, it’s interesting to see so many republicans claiming this initiative as a conservative victory.   

All in all, this seems to be a fairly bi-partisan decision, that was long overdue, and will probably have little impact overall.  Probably the best thing to come out of this decision is that it managed to draw an actually fair and balanced report from FoxNews.