With our economy continuing to falter, the discussion of leveraging our nation’s vast energy resources to create jobs is taking on renewed importance. Despite a well-established link between energy production and job creation – just observe the unemployment rates of North Dakota (3.3%) and Oklahoma (5.5%) and you’ll see it – some have sought to downplay the economic opportunities provided by the development of our abundant offshore and onshore resources, while others strangely claim that the opportunities for offshore production have actually increased.
For example, Duke University’s Bill Chameides recently wrote that “drilling activity in the [Gulf of Mexico’s] deepwaters has been steadily increasing.” Others claim that the risks of offshore drilling exceed any potential economic benefits. The anti-development ThinkProgress blog went so far as to blame the victim, suggesting those impacted by the Gulf drilling moratorium were using "violins and lies" when they told their very real stories.
While nothing will change the minds of those who want to cease all development of America’s resources – whose opinions are grounded in misunderstanding and misinformation – it’s time to discuss something that’s lacking from the debate: supportable facts.
First, those who refuse to acknowledge the dramatic slowdown in permitting in the Gulf often note that U.S. oil production is at or near historical highs, so obviously the Gulf of Mexico – one of the largest sources of domestic oil production – is doing just fine.
But not so fast. The Energy Information Administration noted in its recent Short Term Energy Outlook that production in the Gulf of Mexico will actually decline to an average of 1.47 million barrels per day in 2011, and even further to 1.39 million barrels per day in 2012. In 2010, by comparison, the Gulf of Mexico produced 1.63 million barrels per day. A decline of 240,000 barrels per day through 2012 is hardly reason to cheer – unless you have an agenda that hinges on stopping domestic production.
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Moreover, a major driver of recent increases in domestic production has been onshore production, particularly oil found in shale deposits. It’s important to note that many of these production sites are on private lands. Production is increasing in spite of an Administration trying to clamp down on development, not because of it.
Second, the Gulf of Mexico permitting slowdown is still very real, and Americans are suffering every day as a result. While some may boast that 113 permits have been approved since the end of the moratorium, this does not account for the fact that one well requires multiple permits. In reality, only 34 permits have been approved for unique wells since the lifting of the moratorium, according to the Bureau of Ocean Energy Management (BOEMRE). An additional 40 permits, however, are waiting to be approved or have been returned for additional information.
According to New Orleans, Inc., Gulf permit approvals have suffered a 26% monthly reduction from last year's monthly average and a 39% reduction from the historical average over the past three years. Shallow water permits are also lagging: In the past three months, a monthly average of about 4 shallow water permits were issued, far below the historical average of nearly 15 permits per month over the past three years.
Luckily, there is a clear path forward.
A recent study conducted by IHS-CERA found that resuming oil and gas production in the Gulf of Mexico to levels that existed prior to last year’s incident would create 230,000 jobs in 2012 and an additional 199,000 jobs in 2013. The study also suggests that under a slow return to traditional production rates, the Gulf would yield 1.68 million barrels per day in 2011 and steadily increase to 1.97 million barrels per day in 2013. The difference between current EIA projections and the potential in the Gulf as outlined by IHS-CERA (more than half a million barrels of oil per day) represents oil that we will otherwise have to import from other countries.
Of course, oil and gas alone will not be enough to meet our future energy needs. America needs a realistic, long-term plan to diversify our energy portfolio with an ‘all of the above’ strategy. Too much of the current rhetoric by some, however, makes it appear that alternative energy is ready to meet all our energy needs. Unfortunately, this is not yet true, no matter how much some may wish. We need it all, but we need jobs and economic growth now.
Distorting the facts about offshore energy production and ignoring the realities of alternative energy development do not move us forward as a country; they only serve to maintain the status quo of high unemployment, increasing dependence on foreign sources of energy, and a stagnant economy.
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