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Responding to skepticism, particularly from Democrats, the Congressional Budget Office (CBO) is justifying its estimate of $5 billion in revenue from oil and gas leasing in the Arctic National Wildlife Refuge (ANWR), saying it is based on the economically recoverable oil potential of the area and projected higher oil prices.
CBO Director Douglas Holtz-Eakin provided a detailed explanation of the estimate in a letter addressed to Sen. Russ Feingold(D-Wis.) and ten other senators who questioned the $5 billion figure. Ahead of a crucial vote in the Senate on ANWR drilling in a budget bill last month, Feingold sent a letter to CBO drawing its attention to an analysis by Richard Fineberg, an Alaska economist, that shows CBO's estimate to be overly optimistic.
CBO estimates that after half of the $5 billion in bonus bids for ANWR leases is given to Alaska, the proceeds to the federal government over a 10-year period, including royalties, would be $2.6 billion.
CBO's estimate of bonus bids is based on the US Geological Survey's (USGS) estimates of the mean value of economically recoverable oil in the coastal plains of ANWR. USGS estimates potential oil resources...