What Exxon's Deal With Russia Really MeansGo To Original
This week ExxonMobil scored a deal to explore for oil in the Russian Arctic Ocean, and in exchange, the Russian state-owned Rosneft apparently got the right to become a part-owner of deepwater drilling operations in the Gulf of Mexico.
But what is a win-win agreement for Exxon and Rosneft is a lose-lose for the rest of us.
First of all, this deal will not lower gas prices. Do the Russians, or ExxonMobil for that matter, care about how much Americans are paying at the gas pump? I don't think so.
The oil that Americans find in Russia -- or that the Russians find in America -- will be sold on an international market -- and the price will be set based on global supply and demand. As a publicly traded company, Exxon is loyal to its shareholders and profits -- not to American consumers.
It doesn't matter if it's American oil or Russian oil -- or some combination of both. It's a perfect example of why increased domestic drilling has not and will never lower gas prices at the pump. In fact, if you look at charts of our gas prices guess what they track? If you said domestic oil production you would be wrong. If you said the international price of oil, you would be correct. The price you pay at the pump is set by commodities traders on international markets not by politicians chanting "drill baby drill."
Second, this deal increases the risk of a catastrophic oil spill enormously. Regardless of where you stand on conducting business with the Russians, one thing is for sure: Exploring for oil in Arctic conditions is incredibly risky.
As Rosneft itself told the Wall Street Journal, the exploration will be performed under complicated ice conditions, with temperatures as low as minus 50 degrees Fahrenheit. The ice pack and icebergs threaten drilling rigs and crews, and if an oil spill occurred in the winter, any cleanup efforts would take place in the dark.
Even under better conditions, "cleanup" is a misnomer, since there is no reliable way to clean up oil. The most recent test of oil spill cleanup capability in the Alaskan Arctic was in 2000 and was described as a failure by NOAA since oil skimmers and booms in icy conditions simply don't work. Plus, remember those highly controversial dispersants BP used in the Gulf? Well, even NOAA's own experts say they don't work in Arctic conditions.
And thirdly (and lastly), in the face of catastrophic climate change, drilling for oil in the Arctic, while irresistible to oil companies, is the absolute wrong direction for the future of our planet. The Arctic exploration is set to take place in the Kara Sea, a formerly inaccessible body of water off the northern coast of European Russia that is now in the oil industry's crosshairs due to melting sea ice. It's an ironic victory for the oil industry, which has managed to leverage global warming to drill for more oil, perpetuating the problem in a vicious cycle.
So what does Exxon's deal with Russia really mean? It means that Arctic communities that depend on the ocean for food and cultural reasons will be faced with the risk of an oil spill without any hope of a reliable cleanup method. In exchange, U.S. gas prices will not go down, and the planet will continue to warm. The only upside in this whole story goes straight to Exxon's shareholders -- whose already record-setting profits will go up even higher.