insurgent49

November 18, 2005
Alaska Oil and the Middle East
by Brian Yanity, insurgent49

     For the past half-century, Alaska’s economy has been under the influence of perhaps the greatest Outside influence of them all: the oil fields of the Persian Gulf region. Today, slightly less than 900,000 barrels of oil per day flows through the Trans-Alaska Pipeline System (TAPS) from the North Slope to Valdez.

     Dependency on a very small number of oil corporations is obvious: three ‘majors’ control 90% of Alaska’s oil production. The 900,000 barrels a day may sound like a lot, but the peak of Alaska oil production was just over two million barrels a day in 1988. By contrast, the kingdom of Saudi Arabia pumps out about ten million barrels of “black gold” daily. The total daily oil production of the Persian Gulf region as a whole (Iran, Iraq, Kuwait, Qatar, Oman, Bahrain, Saudi Arabia and the U.A.E.) stands at 22 million barrels.

     Persian Gulf oil is also far cheaper to extract than Alaskan crude. At present, total domestic oil production in the U.S. stands at slightly over seven million barrels per day, an amount that makes up only 42% of the nation’s oil thirst, the rest being imported. All told, the Persian Gulf region holds more than two thirds of the world’s petroleum reserves, while all of Alaska (ANWR included) has less than one half of one percent. The Persian Gulf will be producing oil long after the last production wells on the North Slope run dry.

     Since oil is arguably the commodity with the most global of markets, events in the Middle East are the largest Outside factor that affects our state budget, even greater than federal land policy. If our state leadership in Juneau had a bit more foresight, they would establish some kind of ‘Middle East issues analysis office”, or at least a Middle Eastern studies program at one of our universities.

     With both the largest proven petroleum reserves and production capacity in the world, the Saudi monarchy has more control over the state of Alaska than most in Juneau would like to admit.

     During the late 1940s and 1950s, many post-WWII political shake-ups were happening in the Middle East: the creation of the state of Israel in 1948, a de-colonization of most of the region, the Mossadegh revolution in Iran in 1952, the Suez Canal crisis in 1956, and the general rise of Arab Nationalism led by Egyptian leader Gamal Abdel Nasser.

     The instabilities in the region at the time led U.S. oil companies to seek out exploration work in other parts of the world, and within U.S. territory itself. Alaska’s 1957 Kenai oil discovery was a direct result of these efforts. In the October 1973 war, Egypt retook the Israeli-occupied Sinai Peninsula. The resulting OPEC oil embargo was the largest single factor in getting Congressional approval of the Alaska pipeline’s construction.

     The Shah of Iran, installed by the U.S. and Britain in 1953, was finally overthrown in 1979. While a severe blow for U.S. imperialism in southwest Asia, the Iranian Revolution did great things for Alaska by keeping the price of oil high for the first half of the 1980s.

     In the mid-1980s, world oil prices (and thus the Alaskan economy) crashed when the Saudi royal family (and thus the rest of OPEC) decided that they had been paid off well enough by the Western powers to let back open the spigots. However, in 1991, the Persian Gulf War greatly helped the state government’s budget by constraining world oil supply, and thus driving up prices.

     Oil prices slumped in the latter half of the 1990s due to the economic crisis in East Asia, though by the turn of the century, it was once again the Persian Gulf that came to Alaska’s rescue. The current war in Iraq helps keep prices high, enabling the balance of the state budget. Each time an Iraqi insurgent attacks an oil facility, both Alaska’s state budget surplus and the Permanent Fund get larger. The insurgents in present-day Iraq also must be fully aware that the higher the price of crude, the more money stays in the Middle East, and a lower proportion of it winds up in banks in New York and London. The same is true for Alaska.

     Feel guilty about this whole situation? Then we as a nation, and as Alaskans, collectively must phase out our dependency upon petroleum.

For more information:
www.finebergresearch.com
www.opec.org/home

Brian Yanity is a student activist and freelance journalist who resides in an undisclosed location in Southcentral Alaska. He can be reached at byanity@insurgent49.com.

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