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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?

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