Public Lands Access and Consumer Prices Are Related

By

Lee C. Gerhard , Lawrence, Kansas

and Logan MacMillan, Littleton, Colorado

     Energy prices are soaring, a direct reflection of increased global and national demand, decreased domestic oil production, and decreased natural gas storage rates. Meeting the national demand for oil and gas is getting to be very difficult. The future looks even more difficult.

     Traditionally, geologists have been the "responsible party" for supplying society with its sustaining resources. The job has been become more difficult as society has become more urban and consequently, less knowledgeable about the origin and supply of resources. Urban demands for-ever-increasing restrictions on public access to federal lands have been met with increased withdrawals of public lands. Presidential designation of national monuments and U.S. Forest Service and Bureau of Land Management administrative withdrawals have restricted public access, and importantly, mineral and energy access to what was the energy resource base of the United States. The coastal waters of the eastern and western seaboard, northern Alaska, and the Gulf of Mexico off Florida have been administratively excised from the national natural gas resource base. According to the recent (1999) National Petroleum Council report on natural gas, more than 200 trillion cubic feet of potential national gas resources are non-accessible from lower 48 states coastal waters and the Rocky Mountains.

     The large amount of the non-accessible reserve base precludes meeting long term future demands for natural gas, and perhaps, even short term demands of a colder than usual winter. Other factors affect supply, including price, diversion of supplies to electrical generation, pipeline capacity, storage amounts, and commodity traders. The current futures price of about $4.50 per MCF is indicative of an impending fall and winter 2000-2001 domestic home heating price shock.

     It is too late to counter any natural gas supply problems for this year. Natural gas storage now is 25% below last year's level on comparable dates.

     To minimize future problems, it is necessary to address access to the domestic resource base. If the United States has difficulty producing and delivering an estimated 22 TCF in 2000, how can the industry deliver 29 TCF in 2010 or 31 TCF in 2015? The answer lies in accessing the resource base that is now off limits.

     Environmental activists have long argued that most human activities should be banned from federal lands, especially those related to resource exploitation. By and large, they have succeeded. Although their complaints are largely about esthetics, recreation, and scenic vistas, nonetheless, many resource activities have been banned from what were public lands. Attacks on the mining law, restrictions on leases, outright bans on access, and other devices have been successfully employed to reduce access for resource development.

     These may be altruistically valuable and socially sustainable access issues. However, most people assume that environmental costs are borne by corporations. Therein lies the fallacy for the people. Gasoline prices reflect domestic production declines and lack of refining capacity. Price of natural gas now reflects the growth of the market because of environmental demands to replace electrical generation coal with natural gas, and an increasing dependence on gas as a boiler fuel and for home heating. The public is correctly told that there are huge resources of natural gas to supply this country for years to come.

     What the public has not yet been told, but will see in their home heating bills this fall, is that someone has to pay the costs of the environmental decisions made in Washington. That someone is the public natural gas consumer. Curtailments are likely in addition to higher costs. The alterantive fuel option is home heating oil, which is more costly now also.

     Earth resources are the basis of our society whether we like it or not. The internet will not heat your home, fuel your automobile, nor supply your electricity. It is crucial that geologists carry the message to the people that they must establish a balance between their esthetic desires, their physical comfort and convenience, and their pocketbooks. The people make the decisions. So far, they have voted for scenery and wilderness. Now the piper is due to be paid.

     We wonder what the choice will be. Maybe it will be to access some of the natural gas resource base.

Lee Gerhard and Logan MacMillan are AAPG Certified Petroleum Geologists.

Submitted September, 2000