Offshore exploration key to our financial recovery

[peejay 327]

Offshore exploration key to our financial recovery

By JOSEPH MASON

Copyright 2009 Houston Chronicle

Feb. 20, 2009, 8:22PM

Over the past month, Washington pundits have been largely fixated on the political fireworks surrounding the fiscal stimulus and TARP II. While lawmakers have happily fueled this narrowly focused hubbub by painting these convoluted, pork-heavy bills as the answer to removing costly regulations and increasing economic growth, another set of policies — evolving with far less fanfare — promises to efficiently and simultaneously achieve both.

On Tuesday, the House Natural Resources Committee will host a hearing on “State Perspectives” of offshore drilling. It’s important for the public to realize that the energy issues highlighted by this event are directly linked to the stimulus debate. Americans have a lot at stake — in terms of not only energy policy, but also economic growth, jobs and tax revenues ­— in whether or not Congress permanently lifts the moratoria on exploration and production in the Outer Continental Shelf (OCS).

Politicians aren’t the only parties distracting from the potential role of OCS resources in revitalizing our economy. Some of the blame for the disconnect between offshore drilling and economic benefits rests with economists, too. Economic discussions of the topic often focus merely on the value of extracted oil or natural gas, mistakenly assuming that benefits begin only once the resources reach the surface. That, however, is just not the case.

Before any American rig worker sees even a drop of fuel, industry pours huge amounts of money into the U.S. economy for exploration and development.

Once energy companies obtain leases for unexplored areas off the coast, they contract ship builders to start work on special vessels outfitted with high-tech equipment for offshore exploration. As soon as new ships are built, companies employ well-trained and well-paid technicians to staff them and take them out to sea. Then other ships manned by more seamen work to replenish the first crews with food and water. And on top of that, all these vessels employ housekeepers and cooks, receive regular maintenance from maintenance vessels and require other support.

After exploration, companies invest in specialized drilling ships to drill exploratory wells. Like the vessels before them, these ships are also replenished by seagoing grocery stores, maintenance and fuel vessels. And all this economic activity takes place before a drop of oil is pumped out of the well.

Though millions of Americans are aware of the significant energy reserves that lie off the coasts of Florida and California, to name a few, not many link those resources to their own state’s fiscal future. In the case of the Sunshine and Golden states, legislators in both bemoan their lack of fiscal revenues while sitting on vast untapped oil and gas reserves. (Their actions are akin to a child complaining of hunger while standing in front of an amply stocked refrigerator.)

Even fewer Americans have tried to quantify the local economic benefits that OCS exploration, development and production confer on state and local economies. To fill this void, the American Energy Alliance (AEA) recently commissioned a research paper, which estimates that significant economic effects will accrue to those economies. The study found that the impact of permanently opening previously-restricted OCS regions would be significant enough, in fact, to relieve government fiscal burdens in some of the states most affected by the subprime housing crisis.

The study uses Bureau of Economic Analysis multipliers to conservatively estimate output, job, income and tax revenue growth that can be made available by permanently lifting moratoria on offshore exploration, development, and production.

The study also separates the short- and long-run gains. In the short-run exploration and development phases (the first seven years), OCS projects will contribute “only” around $500 billion to our GDP, create 250,000 new jobs, generate $80 billion in federal tax and royalties, and produce $35 billion in state and local tax revenue (all estimates in current dollars). Over the long run, production phase, OCS projects will contribute more than $8 trillion to U.S. GDP, about 1.2 million jobs (each for a 30-year career) and some $1.65 trillion in federal tax and royalty revenues and $600 billion in state and local tax revenue. These substantial economic benefits ­— available with the simple stroke of a deregulatory pen — look even more impressive compared to Washington’s $790 billion tax-funded stimulus.

Americans stand to gain a lot, from both an energy and economic standpoint, if Congress permanently lifts the moratoria on exploration and production in the OCS. But those gains must be accompanied by a broader political discussion on natural resources, lest we continue to needlessly turn away sources of economic growth in the midst of recession.

Mason, a Hermann Moyse Jr./Louisiana Bankers Association Endowed Professor of Banking at Louisiana State University, is the author of a new study on the economic benefits of permanently opening the OCS.

http://www.chron.com/disp/story.mpl/editor...ok/6273679.html

[Ban Hammer 14,269]

good article, but i'm sure someone will come by to dispute something about it.

[peejay 327]

good article, but i'm sure someone will come by to dispute something about it.

Yeah, it's a lot more sexier to hate all the mean ol' greedy oil barons than to see the faces of the multitude of well paid middle class US workers that benefit from the US offshore oil industry. Here are a few of them:

http://www.pbase.com/jkms/off_shore&page=all

[Jasman0717 9]

Let's do it

[Nagishkaw 510]

good article, but i'm sure someone will come by to dispute something about it.

Tree hugging hippies?

[Ban Hammer 14,269]

good article, but i'm sure someone will come by to dispute something about it.

Tree hugging hippies?

and spotted owl lovers.

[I AM NOT THAT GUY 5,715]

good article, but i'm sure someone will come by to dispute something about it.

Tree hugging hippies?

and spotted owl lovers.

What about all the sea kittens?

[Ban Hammer 14,269]

good article, but i'm sure someone will come by to dispute something about it.

Tree hugging hippies?

and spotted owl lovers.

What about all the sea kittens?

all we need now are sea dogs to solve that problem.

[peejay 327]

good article, but i'm sure someone will come by to dispute something about it.

Tree hugging hippies?

and spotted owl lovers.

What about all the sea kittens?

I've been working on offshore production platforms for 25 years and the structures are a magnet for fish and other ocean dwelling wildlife. I see porpoises, sea turtles, sharks, fish, and various sea birds regularly. It's like working in an aquarium.