As the smoke clears following the Obama administration's announcement that it would reverse the decision to open the Gulf Coast region and other U.S. coastal waters for oil and gas drilling, Louisiana State University (LSU) finance professor and nationally renowned economist Joseph Mason believes this leaves the country in a state of economic uncertainty.
"Uncertainty is a major hindrance for economic growth. Yet, uncertainty has been the hallmark of the administration's energy policy over the past seven months," he said. "(The Obama administration's) default on its promise of expanded offshore access marks only the latest move by administration officials to saddle our still unstable economy with more uncertainty."
Department of the Interior Secretary Ken Salazar announced at a press conference on Dec. 1 that the Obama administration will not allow new drilling in the eastern Gulf of Mexico for at least seven years. The new strategy states that leases in the western and central Gulf of Mexico under the 2007-2012 program will proceed in late 2011 or early 2012, pending the completion of environmental analyses by the Bureau of Ocean Energy Management, Regulation, and Enforcement.
In July 2010, Mason released his study, "The Economic Cost of a Moratorium on the Offshore Oil and Gas Exploration to the Gulf Region," in which he estimated the moratorium would result in a loss of 8,000 jobs and $500 million in lost wages in the Gulf Coast in the first six months. "The moratorium will cost the Gulf Coast region jobs, money, and economic development," he said. "In fact, the moratorium could be more costly than the oil spill itself."
According to Mason, by imposing the moratorium on offshore drilling in the Gulf of Mexico earlier this summer, the administration had cost nearly 20,000 jobs in the region as of September. "While the growing tally of jobs lost as a result of its ongoing de facto shallow-water drilling ban remains unknown, this much is certain," he said. "If the Interior denies U.S. companies the opportunity to buy new offshore drilling leases in 2011, American policymakers will put an astounding amount of economic potential in jeopardy."
In a 2009 analysis, Mason said America stood to gain $8 trillion in additional GDP, $2.2 trillion in tax revenue over the next 30 years, and 1.2 million new jobs annually by opening access to its offshore resources in the North, Mid, and South Atlantic, and offshore Washington, Oregon, and California.
"Given that those estimates were based on federal inventories of offshore oil and gas reserves that have not been updated for decades, the actual economic benefits are likely much greater," he said. "In the same vein, the economic opportunities denied would be much greater too.
"Rather than opening up the pipeline for future economic investment in the Gulf region and other areas with restricted offshore resources, the administration is sealing them off. Washington must steer clear of harmful policies that unnecessarily extend recovery and, instead, focus on efforts which will invite investment, create jobs, and energize our economy."