What are the economic significances of discovery of oil in Arctic Sea and its possible environmental consequences? (UPSC 2015)

Discovery of oil in the Arctic Sea has major economic value because it adds a huge new frontier of energy supply. The Arctic is estimated to hold about 90 billion barrels of oil and vast gas reserves, with most deposits offshore.

• Energy security: It can diversify global supply and reduce dependence on politically unstable regions.
• Revenue and jobs: Arctic states such as Russia, Norway and the US can earn large export revenues, taxes and employment.
• Trade and technology: Exploration supports ice-class ships, drilling technology and wider use of Arctic sea routes, cutting shipping time between Asia and Europe.

Environmental risks are severe. Oil spills in icy waters are hard to contain and break down slowly. Drilling and flaring increase black carbon, speed up ice melt, and worsen climate change. Roads, pipelines and seismic surveys damage fragile tundra, marine mammals and indigenous livelihoods.

Thus, Arctic oil offers economic gains, but these are outweighed by high ecological risk unless strict regulation, spill response and climate safeguards are ensured.