This article was published on September 23, 2014 in Investor’s Business Daily.
President Obama’s recent decision to allow exploration of oil and gas resources off the Atlantic Coast raised hopes that the drilling moratorium in place through 2017 won’t be extended once again. For our home states of Virginia and South Carolina, this couldn’t come soon enough.
A new study performed by Tim Considine, professor of energy economics at the University of Wyoming, and released last week by six Atlantic Coast public policy foundations that commissioned it, shows dramatic financial and employment benefits for our states — even when taking into account potential environmental costs that critics raise.
Offshore drilling is controlled by the Bureau of Ocean Energy Management, which leases land to private companies for oil and gas exploration. Both Congress and the president can intervene in this process, however, and consequently the Atlantic Coast has been off-limits since the early 1980s.
Much has been learned since then about how to drill in the ocean more effectively, efficiently and carefully. And new mapping technologies can provide us with a far clearer picture of actual gas and oil reserves than current primitive maps that were last updated three decades ago.
In March 2010, Obama announced that a 167-million-acre swath of the Atlantic — stretching from Delaware to Florida — would no longer be off-limits. But the following month, the Deepwater Horizon oil spill in the Gulf of Mexico put a quick end to all that. Lease plans were abruptly cancelled that May and in December the moratorium was renewed through 2017.
Since that dramatic “blowout” in the Gulf, however, technology and regulation have progressed by leaps and bounds to prevent similar disasters. Because of the Deepwater Horizon spill, ocean drilling is much safer, especially in the Atlantic, where exploration would occur in waters much shallower than the Gulf.
Still, environmental activists are exploiting past tragedies to stymie energy development. Considine predicts in this new report that offshore development would bring a wave of economic and fiscal benefits to the mid- and south-Atlantic states.
Specifically, he predicts that direct economic benefits to the states of Delaware, Maryland, Virginia, North Carolina, South Carolina and Georgia could reach more than $13 billion over the next two decades.
Jobs created range from 31,000 for a low production scenario to up to 171,000 if there is high production off our coast. State royalties would be as much as $3.2 billion by 2035, and state and local taxes could reach $643 million. This means more money to pay for state priorities like education and infrastructure, and more good-paying jobs for our residents who so desperately need them.
The economic benefits would be especially outsized in our home states of Virginia and South Carolina, whose vital ports in Norfolk, Charleston and Georgetown would undergo rapid and extensive development.
Considine predicts that our states’ annual gross state products (GSP) would increase by up to $3.5 billion for South Carolina and $2.8 billion for Virginia, and royalty and tax revenues would increase by $1.3 billion and $635 million, respectively.
Of course, no development scenario is without risk — just like no car ride is 100% safe. But Considine says that even accounting for an increased cost of carbon emissions and the assumed cost of periodic spills (however unlikely), environmental costs are dwarfed by corresponding economic benefits — by a ratio of at least 3 to 1 and likely much higher, even under the lowest production estimates.
Considine’s report illustrates that few single policy decisions could be as economically and fiscally beneficial for our states as opening up the Atlantic Coast to oil and gas drilling. And this doesn’t even begin to address the value to the entire nation of opening up another secure American energy source in our increasingly volatile world.
Obama and his administration should take note as they make their decision on whether to allow drilling for gas and oil off our Atlantic coastline. Our states’ economic vitality — America’s energy future — is on the line.
Weaver is president of the Palmetto Policy Forum in South Carolina. Thompson is president of the Thomas Jefferson Public Policy Institute in Virginia.