A Free-Market Energy Blog

A Tale of Three Pipelines (Part II: Remembering Nixon's Trans-Alaska Pipeline Delay)

By -- December 22, 2011
In yesterday’s post, I discussed how the (near-) universal protection of property rights made possible “industry at the speed of thought” in the 19th century. Unfortunately, in the 20th century, property rights became gradually and then completely subordinate to a supposedly “higher” concern: government’s protection of “the environment.”
Now, if the human environment is one’s concern, then the way to protect it is through private property rights. Property rights enable each individual to optimize his own environment, developing and preserving as best promotes his well-being. Twentieth- and twenty-first century concern with “the environment” amounted to placing the non-human environment–untouched nature–over property rights and the human environment.
Instead of “industry at the speed of thought,” we have “industry at the speed allowed by environmentalists.” And as the story of the Trans Alaskan Pipeline delay in the 1970s illustrates, that can be a deadly slow speed. The pipeline was a vital source of domestic oil. As I wrote in the Wall Street Journal last year:

American oil drillers were working on a variety of major projects off the coast of California and in Alaska that could have provided more than 20% of America’s domestic oil production at the time. In Prudhoe Bay, Alaska, for example, oil companies struck in late 1967 what is still the largest oil field in U.S. history.

The Alaskan oil was expected to come to the market in 1972, transported by a state-of-the-art pipeline custom-engineered to brave the Alaskan tundra, which was alternately rock-hard in winter and sponge-like in summer. It was estimated that the field could produce 1.5 million to two million barrels a day. By comparison, the infamous Arab oil embargo in October 1973 took 1.6 million barrels a day off the market.

But Nixon put a halt to the pipeline. The rationalization was the Santa Barbara oil spill of 1969. But that oil spill was completely irrelevant to the safety of the Alaskan pipeline. Still,

Nixon’s response to Santa Barbara was to cut off the flow of new oil. A president with an appreciation for energy and the freedom its production requires would have put the spill into perspective and defended the development of new oil reserves offshore and onshore. He would have stressed that oil is essential to advanced life, that the freedom to develop oil is vital for Americans to adapt to changing market conditions, and that an accident justifies investigations and improvements—not bans. He could have also pointed out that large amounts of oil enter the ocean every year through naturally occurring oil seeps, and that local wildlife would flourish again (as it did).

Instead Nixon signed a moratorium on California oil drilling, then proceeded to create multiple agencies (e.g., the Environmental Protection Agency) that gave environmentalists the tools to oppose oil development in any “environmentally sensitive” areas—including the proposed pipeline in Alaska. The Prudhoe Bay project had already been threatened by environmentalists, who regarded the entire Alaskan wilderness as off-limits to human development. The Santa Barbara outcry swung political momentum in their favor. They won a federal injunction in 1970 to stop the pipeline.

For Americans, this meant scarcer, more expensive oil. For American companies, it meant the inability to adapt to any disruptions in the oil market, such as the embargo. And to make matters far worse, Nixon blamed rising gasoline prices on oil companies and ordered extended, market-mangling price controls that prevented demand from adjusting to supply, thus creating shortages.

It was only once the Arab oil embargo hit in late 1973 that Nixon signed legislation to let the pipeline go forward. But it was too late to avoid devastation; the Alaska oil only came on the market in 1977.

If today’s “environmental” laws, more properly regarded as wilderness or anti-industrial laws, existed in the 1900s, the Industrial Revolution would have never gotten off the ground. And if these laws are repealed and replaced by laws that truly respect property rights, we can expect another industrial revolution–just what our ailing economy needs. A good place to start is with the Keystone XL Pipeline, which would be a win for virtually everyone except for a small anti-industrial environmental elite.


Alex Epstein is a Principal at MasterResource and Founder of the Center for Industrial Progress.

One Comment for “A Tale of Three Pipelines (Part II: Remembering Nixon's Trans-Alaska Pipeline Delay)”

  1. Craig  

    We are lucky we have railways and roads, because we could never build them now.


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