KUFM / KGPR
T. M. Power
Jobs and Drilling in the Arctic National Wildlife Refuge
President Bush was able to win House approval for his proposal to open the Arctic National Wildlife Refuge to oil development only because important elements of organized labor lobbied environmentally oriented Democrats and Republicans in support of the proposal. To win on this issue, Bush reversed himself on another: He agreed that the federal government would lend its support to a requirement that all of the development and construction jobs be union jobs. By wooing the elite of organized labor, Bush was able to pick up the votes he needed to win in the House.
For almost a decade now, those promoting industrial development of these vast arctic wildlands that most Americans thought had been permanently dedicated to wildlife have been trying to drive a wedge between those who are concerned about the environment and those who are concerned about American workers. The proponents of industrializing this wildlife refuge have been arguing that doing so would generate an additional 800,000 jobs for Americans. It is hard to imagine any other single project for which the employment impact could be so large. It is not surprising that this has caught the interest of some who are worried about the limited employment opportunities that many Americans face.
Unfortunately, the job claims are mere fantasies that have been generated by imagining a world where basic market economic forces conveniently do not operate.
Of course, the proponents of industrial development in the Arctic National Wildlife Refuge do not claim that 800,000 workers are needed to develop whatever oil might be found there. Their argument is that the flood of cheap oil coming from ANWR would reduce the cost of energy in the United States and that those lower energy prices would stimulate job creation throughout the economy.
There are several fundamental errors in this argument. First, whatever oil is found and produced in ANWR will be sold at market prices into the world market, not to US consumers at the cost of producing the oil there. The commercial companies who develop that supply will not be not doing so as a charitable effort to subsidize American’s SUV use. Those market oil prices will still be set by the unstable mix of world supply and demand and OPEC’s efforts to manipulate world supply to keep prices profitably high. The ANWR production, when it comes on line a decade or more in the future, will represent only about one-half of one percent of world production, not anywhere near large enough to change overall world petroleum markets or OPEC’s ability to manipulate world prices. OPEC’s recent manipulations of world production were eight times larger than the projected peak output of ANWR. OPEC could easily cancel out the ANWR increase in supply.
So turning ANWR from a pristine wildlife refuge into a heavy industrial facility will not have a significant impact on world petroleum prices or the prices we pay at the gasoline pump. For that reason, it will not stimulate the economy by lowering energy prices. But there is still another major economic flaw in the job creation argument even if oil production in ANWR could cause a long term lowering of world oil prices.
Over time, and we have to be talking about a relatively long time frame given how long it would take before oil could actually start flowing from ANWR, over time our economy tends towards full employment. Of course, during a national economic slowdown such as we are now going through, we tend to forget that as we worry about all the layoffs that are being announced. But no one would be foolish enough to suggest that additional drilling in the arctic will prevent the inevitable future cyclical slowdowns that are simply a part of a market economy. When we take a longer view, we see an economy that tends to fully employ the resources that are available. Even now, despite all the layoffs nationwide, the national unemployment rate is only 4.5 percent and in Montana, despite the layoffs due to the electric deregulation fiasco, the unemployment rate is even lower, 4.3 percent. During the 1990s firms talked about labor shortages, not unemployed workers who needed to be put to work.
Over time the national economy does not develop a growing reservoir of unemployed workers for whom a national rescue program is required. There are, to be sure, at all times, disadvantaged workers who continue to have trouble getting and holding a job. But very specialized and targeted programs are needed to draw these folks permanently into the workforce. National economic forces, by themselves, tend to leave those persistent long-term unemployment problems untouched.
If we do not have a growing pool of unemployed workers sitting idly by waiting for oil drilling in the arctic to put them too work, who is going to fill the 800,000 jobs that that arctic drilling is supposed to create? The answer is that 800,000 new people will not be put to work. Firms will compete for workers, workers will move from job to job, and firms will find ways of reducing their need for additional workers by deploying still more labor-saving technology. Whatever the impact of ANWR oil development may be on the national economy, it will not be to put otherwise unemployed people to work.
This jobs argument for industrializing the Arctic National Wildlife Refuge is just another example of the regular misuse of economics. It seems that everything these days has to be justified in terms of the jobs it will create. We try to justify the arts and humanities, the university system, health care, recreation activity, you name it, in terms of the jobs they will create. Soon, no doubt, religious services and sacred rites will be justified in terms of putting people to work too. In almost all cases, these job claims not only involve bad economics, they also demean the very things they are trying to defend.
The point of the economy is not to put everyone to work forever for as many hours as can be squeezed out of the day. The point of the economy is to help us pursue the full range of values we have. Denominating the economy in terms of jobs does not help us do that. Instead it distorts public policy and keeps us from effectively pursuing our values, trapping us instead on the inefficient treadmill of one gigantic make-work project.
The conflict in values at stake in the Arctic National Wildlife Refuge debate is stark: continued protection for spectacular and pristine wildlife habitat or a few more gallons of gasoline to feed an embarrassingly inefficient, gas-guzzling, economy. Do we irreversibly sacrifice this irreplaceable gift of nature for something so cheap and common that we regularly waste it for no or for trivial purposes? Dressing up the choice by imagining an energy or economic or national security crisis only seeks to obscure the stark ethical choice at issue in the effort to industrialize the Arctic National Wildlife Refuge.