EnergyFactor By ExxonMobil | Pespectives has a new home

DOI’s offshore plan: a missed economic opportunity that also weakens U.S. energy security

Despite everything we learned about the effects on jobs, local economies and U.S. energy security caused by this summer’s moratorium on offshore drilling, the Administration has decided to proceed with a more extensive and far more damaging halt on offshore development than we have seen to date.

Today, Interior Secretary Ken Salazar announced that the Administration will implement a de facto moratorium on offshore exploration in the eastern Gulf of Mexico and the Atlantic coast, which effectively means offshore energy development in these areas – and the jobs, tax revenue, economic activity and U.S. energy security they provide – will be put on hold for the better part of the next decade.

And the reason? According to Secretary Salazar, it is because of the need to improve safety and environmental standards as a result of “lessons learned from the Deepwater Horizon oil spill.”

If you’re confused, join the club. After all, this announcement comes despite the fact that Secretary Salazar, when he lifted the temporary ban on deepwater drilling in the Gulf of Mexico in October, said “… [w]e believe the risks of deepwater drilling have been reduced sufficiently to allow drilling under existing and new regulations.”

While the reasons behind this surprising reversal are still unclear, we do know that this decision ignores the industry’s track record and commitment to environmental and safety performance – as well as the overwhelming evidence that the Gulf of Mexico spill resulted from practices far outside industry norms. That’s not to mention the fact that it ignores the visible toll the moratorium took in terms of jobs and economies in the Gulf.

This deeply disappointing decision will have direct, negative implications for our country:

  • Loss of jobs and federal and state revenue that would have flowed from increased resource access: According to a recent study, developing the areas of the United States that have been kept off limits – including offshore — could create more than 160,000 jobs, and generate up to $1.7 trillion in new government revenue – of which $1.3 trillion would be from offshore development. Today’s decision means these benefits won’t be realized anytime soon.
  • Reduced U.S. energy security: According to the U.S. Geological Survey, an estimated 67 percent of conventional undiscovered oil resources and 40 percent of undiscovered natural gas resources are located on federal lands, a good portion of which will not be accessed due to this decision. That means the U.S. will produce less of its own energy and import more.

Today, the U.S. Chamber of Commerce clearly summed up the effects of the decision this way: “The administration is sending a message to America’s oil and gas industry: take your capital, technology and jobs somewhere else.”

In the midst of a prolonged economic crisis, high unemployment rates and soaring federal and state budget deficits, this decision will do nothing to help our economy and put people back to work. In fact, it does exactly the opposite, and it represents a critical, missed opportunity for supporting America’s economic recovery.

  • Worth a deeper look...