Economist disputes number of jobs created by ANWR developmen

Posted: Tuesday, September 04, 2001

ANCHORAGE (AP) -- An economist is disputing claims about the number of jobs that would be created by oil development in the Arctic National Wildlife Refuge.

Development advocates have cited a 1990 study by a Philadelphia economic-consulting firm, the WEFA Group, that said 735,000 jobs would be created by ANWR development. That study said the jobs would come from an economic boom created by a drop in oil prices that would follow oil development in the refuge.

But Dean Baker, co-director of the Washington, D.C.-based Center for Economic and Policy Research, said the estimate sounded too high.

''It is really out of sight,'' Baker said.

He did an analysis of the 1990 study and concluded that a more accurate projection of jobs created is 50,000.

Baker's report was distributed to national news media by the League of Conservation Voters and other environmental groups fighting development in the refuge. Baker said his report wasn't paid for by drilling opponents or anyone else, though he said he personally doesn't favor ANWR drilling.

The 1990 study was used by the Teamsters to help persuade members of Congress to vote in favor of an ANWR drilling bill last month.

''Opening up the ANWR to oil exploration will create 735,000 jobs across the country -- more than 25,000 of which will go to Teamsters,'' union president James Hoffa wrote to members of Congress.

Over the years, a number of economists, some sponsored by environmental groups, have also taken aim at the jobs report.

Alaska Teamsters leader Jerry Hood, Hoffa's adviser on energy, said he doesn't accept the low estimates.

''Who knows more about job creation: the trade (unions) and the Teamsters or the Sierra Club?'' he asked.

John Felmy, chief economist for the petroleum institute, is standing by the 1990 study, which predicted ANWR oil production would lower world oil prices by $3.60 a barrel.

Felmy said jobs would result directly from the oil industry's investment in the Arctic but also would be created nationwide because lower oil prices would spur the economy. With the increased production, he said, the country would buy less imported oil, keeping more money in the United States.

One of the biggest variables in ANWR projections is how much oil lies under the 1.5 million-acre area that would be opened to drilling. The 1990 study assumed 9.24 billion barrels of recoverable oil.

That was optimistic for the time, but since then government geologists have changed their estimate to between 5.7 billion and 16 billion barrels. If anything, Felmy said, the study's assumption turned out to be conservative.

Baker said the WEFA Group study underestimated the world supply of oil by half and thus overstated the impact that ANWR oil would have on the market.

He also said the study underestimated ''supply elasticity,'' meaning it wrongly predicted that other oil producers wouldn't significantly curtail their oil production once the price dropped. In addition, he said the study overstated the effect that cheaper oil has on the economy.

Chuck Logsdon, a state of Alaska oil economist, said the state assumes ANWR will have no effect on world oil prices, even if it is the nation's biggest onshore oil prospect.

''This isn't Saudi Arabia they want to get into up here on the slope,'' he said.

On the other hand, Logsdon said, the job claim doesn't sound exaggerated to him.

''You could probably justify 750,000 jobs fairly easily,'' he said.

Oil is valuable, and if there's a lot of it, it brings money to companies and governments and their spending creates more jobs, he said. But it depends on the size of the find.

''That's the beauty of ANWR,'' he said. ''You can make up big numbers or little numbers and nobody's going to be able to show you any proof.''



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