In the late-1970s, Alaska’s oil output was on the rise. The ascent was timely, coming in the wake of the Opec-engineered oil crisis of 1973, which announced to the world (and the U.S. in particular) that the days of counting on cheap, accessible supplies were gone, though not necessarily for geological reasons. By 1978, Alaskan crude production exceeded one million barrels per day on average for the first time, Energy Department numbers recount. That was roughly 14% of America’s domestic oil production in 1978. Alaska’s output eventually doubled in absolute terms, hitting slightly more than two million barrels a day in 1988.

It’s been downhill ever since. In 2003, Alaska pumped an average of 974 million barrels of oil a day. More declines are coming, reports The Washington Post today. “[Alaska’s] oil keeps flowing through a maze of aging wells, pumps and pipelines that poke through the snow on this desolate North Slope tundra. But this vast field is ailing: Output has fallen by nearly 75 percent from its peak in 1987 and is expected to continue dropping.”
The rise of Alaska’s oil output in the 1970s was no trivial factor in offsetting the growing clout of Opec. But where will the new Alaskas come from?
It’s a timely question, and one that lacks a satisfying answer. Nonetheless, offsetting falling oil production from Alaska’s existing fields promises to be among the leading energy challenges for America for the foreseeable future. All the more so since Alaskan crude offered the dual benefit of being ample and safe, i.e., within U.S. jurisdiction.
To understand just how valuable Alaska has been to the U.S. oil consumer, consider that in 1978, the average of 1.23 million barrels of crude pumped from the state represented 14.1% of America’s total domestic output. In 2003, Alaska’s production fell to 974,000 barrels a day, although that smaller absolute output represents a larger share of U.S. total domestic output (16.9%) compared to 1978.
The reason: U.S. production ex-Alaska continues to fall, a trend that’s been in place since the early 1970s. Alaska’s rise as an oil producing state all those years ago helped fill the gap for America’s ever-rising appetite for energy. But the Alaska solution is fading.
So where will the next Alaska come from? Theoretically, the best bet is still Alaska, namely, the Arctic National Wildlife Refuge (ANWR), which is about 100 miles east of the lion’s share of Alaska’s current production base known as Prudhoe Bay. Average estimates put recoverable reserves in ANWR at about 10 billion barrels. Alas, the prospects of drilling for oil in ANWR are clouded by politics. Although Congress passed a budget resolution recently that procedurally enhances the possibility of drilling in ANWR, it remains to be seen if any crude ultimately flows thanks to ongoing political opposition to the project.
More troubling is the fact that 10 billion barrels doesn’t go as far today as it did 30 years ago. America’s daily consumption of oil is 20 million barrels a day and rising. That’s up by around one-third since the mid-1980s.
Tapped or not, ANWR remains America’s last big oil resource, short of some grand new discovery yet to be found. But even if ANWR development started today, “tangible benefits to consumers” are likely to be a decade away, according to a UPI article last month via In the meantime, it’s a safe assumption that U.S. domestic production will continue to decline and dependence on oil imports will continue to rise.
That future is increasingly front and center among movers and shakers in Washington. The latest example comes in comments from Christopher Hill, the State Department’s assistant secretary for East Asia and the Pacific. “China’s energy needs are going to be enormous in the future,” he said to a Senate Foreign Relations subcommittee, according to Reuters. “The question is, are they looking to develop energy or are they looking to take it off the market.”
Politics and geological fate are conspiring to derail America’s quest for developing significant new reserves that are at once safe and accessible. In turn, that’s forcing oil companies to pursue the next best thing, or in some cases, the least worst thing. That ranges from braving the political hazards of drilling in forbidding locales to suffering national leaders who otherwise deserve something less than a warm embrace.
But times are tough in the discovery business, and tough times require tough actions that sometimes fall short of noble acts. Or so we’re told. One indication of the new new world that dominates comes from a report last month that the U.S. lobbyist for Libya’s Muammar Gaddafi had a seat on the Energy Department’s top advisory board, Reuters relates. Libya, of course, still casts a dark image for many Americans, some of whom blame the North African nation for the terrorist act that brought down Pan Am Flight 103 over Lockerbie, Scotland in 1988.
Oil, of course, has long been the bridge that brings rogue nations into formal, and not so formal agreements with the U.S., the mother of all oil-consuming nations. No less is true today. Indeed, Spencer Abraham, the former energy secretary who appointed the Gaddafi lobbyist, was serving on the board of a large U.S. oil company (Occidental Petroleum) that’s at the forefront of cutting new drilling deals in the oil-rich Libya, according to the Reuters story. Indeed, as a story published a few days back in the Los Angeles Times observes, Libya has recently awarded Occidental with a sizable, lucrative oil deal. That’s one reason why the L.A. Times wonders if Occidental is now “ripe for a takeover.”
None of this should come as a surprise to any one who follows the Great Game. Nonetheless, some are still shocked, shocked to find such intimacy between oil-laden regimes of questionable integrity and the United States. “Do we really want someone advising the U.S. energy secretary on energy policy who has literally signed up to put Libya’s interests first?” Mary Boyle of the watchdog group Common Cause asks in the Reuters story. The answer depends on how bad we want to replace Alaska’s fading oil supply.
Indeed, the low-hanging fruit may have been picked in Alaska, forcing oil companies to focus on lesser, and riskier targets in the state, including heavy oil, icWales reported last month. Much as the hungry man looks at food that the rich man ignores, America and the oil consuming nations of the world are officially in the business of turning over rocks that formerly held little or no interest.
Nonetheless, American consumers are going to miss Alaska’s crude. Lest any one forget, a constant reminder is sure to arrive from time to time in the form of the occasional, if not permanent bull market in crude prices.


  1. Mr. Econotarian

    Who cares? Oil is oil, regardless of whether it comes from Alaska, Saudi Arabia, Venezuela, Nigeria, Canadian oil sands, or if it is replaced with alcohol fermented from corn straw through the use of genetically engineered cellulase.
    Sure, oil will become more expensive for everyone on earth over time, and will be replaced with biofuels and nuclear power.

  2. Ray

    It’s not about oil, it’s about influence.
    America may be big bad and ugly, but we’re a very comfortable big, bad and ugly.
    Like Paul Simon said, “God bless our standard of living, . . and let’s keep it that way.”

  3. JP

    Who cares? Someone cares enough to pay more than $50 a barrel at the moment. Yes, oil’s fungible, but the point is that as Alaska’s oil production fades, America’s oil imports necessarily rise. In a perfect world of ideal free markets, it wouldn’t matter. But we live in a less than perfect world, and so imported oil and domestic oil, while one in the same, carry different geopolitical levels of baggage. As for alternative energy taking the place of oil, yes, one day. But not today.

Comments are closed.