After shattering record after record through the first few months of this year, the price of oil has corrected somewhat in recent months, settling to around $125-a-barrel after hitting highs of nearly $150 in June. 

While this price reduction should eventually translate into lower gas prices for consumers, it’s important to note that the current cost is roughly twice what it was at this time last year, and reflects investor concern over the ability of Americans to buy gas during the present economic downturn. Economic recovery and increased demand due to heating oil this winter may yet send the oil price higher, and though renewable technologies become a larger part of America’s energy picture every day, it’s clear that the high oil prices remain a source of hardship for many American families. 

The Bush Administration and others have suggested additional offshore drilling to increase Americas access to oil, but an even larger oil asset may lie further north: a recent USGS survey indicates the Arctic region contains over 90 billion barrels of oil. Put in real-word terms, this find, if all other oil sources were cut off, could fuel the United States at its current level of oil consumption for well over a decade. Clearly, this enormous source of non-OPEC oil could be a valuable asset in relieving the current American fuel crunch. 

However, even with recent advances in environmentally-friendly offshore drilling, drilling in the Arctic could carry more burdens than its ability to relieve high oil prices are worth. For starters, the claims to the seabed in the Arctic—and thus the oil beneath it—are extremely unclear. Russia, which is already one of the world’s largest oil producers, and whose economy depends heavily on the oil industry, has already staked a claim. If the past foreign policy of the current Russian government is any indication, they will not relinquish it easily.

Furthermore, there is something of a perverse incentive to Arctic oil production. Until recently, Arctic drilling was an economically unrealistic option. Not only was the price of oil lower, so less profits could be eked from new operations, but weather and ice conditions in the Arctic region presented huge engineering challenges to any prospective extraction.  Only the recent recession of the Arctic ice sheet, a phenomenon widely associated with the warming effects of oil-combustion byproduct carbon dioxide, has made Arctic oil operatons economically feasible. 

So while the temptation may be high to boost domestic oil production by using such a large resource, the negative effects should prevent any Arctic “gold rush.” Instead, a better use of the Arctic petrochemical resource might be as a source of liquid natural gas fuel, which, while it still produces substantial amounts of carbon, reduces many of the smog, ozone, and particulate matter problems associated with traditional gasoline and diesel fuels.  While it may not be a fix-all solution to the current energy crisis, the recent natural gas finds in the Arctic can still play a major role in America’s clean energy future. 

Photo by Flickr user Arni Valur