This Thursday And $200-A-Barrel Oil

Thursday is it: The big day for the future of our global economy.

It's not a particularly big day for the polar bear, even though its the cause of all that may follow this Thursday's mandated decision by the Dept. of the Interior regarding the proposed listing of the bear under the federal Endangered Species Act. We could devastate the global economy to save the bear and have no effect on it whatsoever, since the threat to it is only theoretical, while the threat to our economy posed by a listing is anything but.

The theory, for those who have been in hibernation, is that global warming is threatening the polar bear due to thinning polar ice. Never mind that this year's icepack is just about the thickest on record. To save the bear, we must SAVE THE PLANET and STOP GLOBAL WARMING.

That means anything, down to turn the key in your Yukon (or your Prius, for that matter) is contributing to the EXTINCTION OF THE CUTE POLAR BEARS and must be stopped. New power plants? Drilling on the North Slope? Forget it.

Here's a nice summary on the economic consequences of a listing from Kevin Hasset of the American Enterprise Institute, writing at Bloomberg:

There are two reasons why that decision, if it is made, will be momentous.

Geographic Reach

The first is the possible wide geographic reach of the global warming argument. The snail darter almost killed a single dam. The polar bear could, in theory at least, stop everything.

Suppose someone wants to build a coal-burning power plant in Florida. Environmentalists might challenge the construction on the grounds that the plant will emit greenhouse gases leading to global warming and an increased threat to polar bears.

It is hard to say how such challenges would play out. My guess is that it would heighten the pressure on the U.S. to adopt a cap-and-trade emissions program or a carbon tax.

The second impact of this ruling is that it will likely end all Arctic exploration for oil and gas, at least in the U.S. Given surging world demand for oil, increased supply is the only thing standing between us and $200-a-barrel oil.

Costly Restrictions

These restrictions will have a large cost. "The U.S. Geological Survey and the Norwegian company StatoilHydro estimate that the Arctic holds as much as one-quarter of the world's remaining undiscovered oil and gas deposits,'' Scott Borgerson, an international affairs fellow at the Council on Foreign Relations, wrote in the March/April issue of Foreign Affairs. "Some Arctic wildcatters believe this estimate could increase substantially as more is learned about the region's geology."

Many biologists believe that global warming is a serious threat to the polar bear. If that leads to the polar bear being listed as threatened this week, then the world you live in will have fundamentally changed.

Calling It

I've worked with the Endangered Species Act for about 20 years now through some of the hairiest listings of the recent era and here's my take on what will happen Thursday.

First, Interior will not list the polar bear as endangered; there is clearly no basis for that.

On the more likely listing as "threatened," Interior will also defer, opting instead to list a few distinct population segments whose numbers have been declining in recent years. The listing will require more study and additional controls on local impacts to those populations, but will be crafted to keep global warming out of the picture.

Science is part of the reason for this prediction, although I've seen Interior ignore science in the past. George Bush is the other reason. If Gore had been elected, the bear would have been listed years ago and we'd be suffering the consequences. If the decision were not to be made before the next president takes office, any of the three candidates could be counted on to list the bear.

So Bush is the final hope for sanity, and the scenario I've laid out is more likely than him denying the listing outright. Such a denial would be justified, but even George has been looking a little green lately. I hope I'm right. $200-a-barrel oil will be just the start of the heartburn we'll suffer if I'm wrong.