Ice-Breaking Vessel in the Arctic Shelves Shell's Oil Drilling Plans Off Alaska: EPA Ruling. Footnote: the Polar Bear!

This should be the top story on CNBC and MSNBC but I doubt we will see it.

If anyone needs more evidence that the EPA is out of control, one does not need to read much more than this report. The EPA has stopped Shell Oil from drilling in the Arctic because of exhaust from an ice-breaking vessel.

Data points regarding Shell Oil's prospects:

• 27 billion barrels of oil (USGS, which is generally conservative in its estimates)
• This represents 2.5 times the total amount of oil that the Trans Alaska pipeline has carried in 30-year history
• The Trans Alaska pipeline will shut down if flow gets much lower
• Current Trans Alaska pipeline flow: 600,000 bopd; one-third of its capacity
• Production on the North Slope of Alaska is declining at a rate of 7 percent/year

Shell Oil's investment to date:

• Five years of exploration
• $4 billion invested
• Beaufort and Chukchi Seas
• Leases alone cost $2 billion

Reason for EPA's ruling:

• Air quality
• "The EPA's appeals board ruled that Shell had not taken into consideration emissions from an ice-breaking vessel when calculating overall greenhouse gas emissions from the project. What the modeling showed was in communities like Kaktovik [population: 245], Shell's drilling would increase air pollution levels close to air quality standards."

Close, not exceed.

Meanwhile, the President has established a task force to see why oil prices are so high. His attorney general is looking into fraud on the part of speculators and traders.

I can't make this stuff up.


What Shell needs to do is ask the EPA if they can put up some wind turbines outside Kaktovik to blow the exhaust from the ice-breaking vessel.

Oh, one more thing, and perhaps this was the tipping point in the environmentalists' argument: it's all about the polar bear.

But environmental groups were ecstatic [over the ruling], saying more study needs to be done before allowing drilling in polar bear habitat.

By the way, the Obama administration agrees with the Bush administration: the polar bear is not an endangered species and remains off the endangered species list.

Meanwhile, WTI oil hit $113/bbl earlier today, but has since backed off a bit. Gasoline is now solidly above $4.00/gallon across much of the US.

Ayn Rand, Atlas Shrugged

• This was all predicted in Ms Rand's book, published in 1957. Absolutely prescient.