Don't export Alaskan oil
James Bishop Jr., formerly an aide to Energy Secretary James Schlesinger, is a Washington-based energy consultant.
The Reagan administration is reported to be drawing up plans to export Alaskan oil to Japan. This is part of a campaign to achieve greater trade harmony and to narrow the cavernous trade gap between the two nations. If successful, the export initiative would reverse a decade and a half of US energy and foreign policy. Is this wise?
A workable foreign policy, Walter Lippmann believed, consists of ''bringing into balance, with a comfortable surplus of power in reserve, the nation's commitments and the nation's power.'' In the Export Administration Act of 1979 Congress tried to do exactly that by stipulating the conditions under which oil could be exported: (1) It would not damage national energy security; (2) it had to serve consumer interests by lowering prices; and (3) it had to advance the national interest. That was the ''surplus of power'' that Alaskan oil, which represents one-fifth of US oil resources, had to provide before exports would be allowed. By no stretch of anyone's imagination have those conditions been met.
Exporting Alaskan oil would be bad energy policy, bad economic policy, and bad foreign policy. What's more, it would endanger the nation's energy security, still enfeebled after two petroshocks in 1973 and 1979 and currently being weakened further by budget cuts and inattention.
Energy reality, not trade relations, must still be the paramount concern in deciding how to manage US energy resources.
Let's look at the energy facts:
* Today the national oil bill is 50 percent higher, as a percent of GNP, than it was when Congress approved the original stipulations of the law.
* The US still imports one-third of its oil.
* The world oil system is as unstable and unpredictable as ever. Exporting Alaskan oil would weaken America's capacity to deal with that reality.
Exports would idle almost half of the domestic tanker fleet. Apart from the obvious fact that jobs would be lost and billions of dollars in investments in infrastructure would be rendered useless, the proposed deal means that the US might well be without adequate tanker capacity during a national defense emergency or oil supply disruption. The capacity of the US oil system to respond to supply interruptions would be undermined and the Defense Department would have far fewer tankers to call on to transport oil and petroleum products to strategic domestic locations and to US armed forces abroad. Currently, there are no tankers in the US ready reserve fleet. This is no way to strengthen US national security.
The ability of the US to respond to supply disruptions would be affected in other ways. Imports from insecure foreign sources would be increased by as much as 15 percent and the US would become enmeshed in extremely complicated, bilateral oil trade relations. It could be faced with the unpleasant reality of having to cut off the Japanese in the event of a future oil disruption in order to meet domestic needs.
Even if there were ''firm'' agreements about when and how to stop the flow or adjust prices, the US could pay a heavy political price. Frantic political bargaining to abrogate those arrangements will certainly occur. Indeed, it was the abrogation of contracts between Western trading partners that set off the last price spiral.
Any benefits that one believes might flow from a reduction in trade imbalances would pale in comparison to the costs of having to cut off the Japanese during a disruption. It is precisely because bilateral agreements have proven so unstable and so politically charged that we have the multilateral International Energy Agency to handle oil sharing and trading arrangements between the industrial countries.
Finally, support for a wide range of national energy policies would be undermined. The Strategic Petroleum Reserve (SPR), which most studies indicate should be filled twice as fast as the current rate and doubled in size to provide maximum energy security, would certainly be called into question by the spectacle of the US pumping oil for export from a secure and accessible source in the far north at three times the rate foreign oil is being pumped into a strategic reserve in the Sunbelt.
But would there at least be some offsetting consumer benefit from such a transaction? Hardly. The supporters of exports claim that reducing transportation costs by using cheap foreign tankers to export oil would increase the wellhead price of oil in Alaska and even California and therefore raise federal and Alaskan tax revenues.
Not one of the studies conducted in the last three years has ever claimed that consumer prices would fall, because the generally uniform setting of world oil prices makes that impossible. On the contrary, consumer prices might rise because supplies would be dramatically reduced in the relatively isolated West Coast market, while more expensive foreign crudes would flow into the Gulf and East Coast markets.
The stipulations contained in the Export Administration Act expire in September. It is in the national interest to extend them. The US has not regained the degree of invulnerability to petroshocks required for it to be able to unsheath the oil weapon and use it against itself.