Oil & Gas Industry Exaggerates Economic Benefit of Atlantic Offshore Drilling, New Report Finds
Charlottesville, VA – A new report reveals how an industry-sponsored report, used by drilling proponents to justify support for offshore drilling off the Southeast coast, overestimates the potential economic benefits of this risky endeavor. It also includes data providing county and state breakdowns of the existing coastal economy that would be jeopardized if drilling moved forward. This comes as the Obama Administration reevaluates its plan to make a major shift in federal policy by opening the Atlantic coast from Virginia to Georgia to offshore oil and gas drilling.
“The oil industry is asking our elected officials to jeopardize the tourism and fishing economies that mean so much to the Southeast with promises of jobs that have no basis in reality,” said Sierra Weaver, Senior Attorney at the Southern Environmental Law Center. “Communities all along the coast have already said that there’s too much to lose and too little to gain from offshore drilling. This report confirms what these coastal residents have known, and shows that oil and gas drilling is a bad deal for the Southeast.”
The new analysis from the Center for the Blue Economy at the Middlebury Institute of International Studies at Monterey dissects a 2013 report commissioned by the American Petroleum Institute and the National Ocean Industries Association. Oil and gas proponents often use this 2013 report, commonly referred to as the Quest report, to justify support for offshore drilling in the Atlantic. However, this industry-sponsored analysis significantly overstates the potential economic benefits from offshore drilling by basing calculations on non-existent leasing scenarios, outdated oil prices, and unknown amounts of Atlantic oil.
Key findings from the Blue Economy report include:
- The Quest report assumes drilling in all federal waters in the Atlantic, but the area under consideration is limited to the coasts of Virginia, the Carolinas, and Georgia, and includes a buffer of 50 miles from the coast.
- The Quest report projects that revenue sharing with the federal government would bring in nearly $19 billion to the states between 2017 and 2035, but it’s more likely to bring in $0. Revenue sharing with Atlantic coast states is currently not allowed by federal law, and legislative efforts to change this have failed and remain politically improbable.
- The Quest report assumes annual lease sales in the Atlantic beginning in 2018, but the Administration’s plan only includes one lease sale in 2021.
- The Quest report assumes that a significant percentage of the economic activity related to drilling would take place in the Atlantic region, but much activity is likely to remain in the nearby Gulf region, which already has the existing infrastructure and skilled workforce needed.
In addition, industry projections are based on near record-high oil prices of more than $120 per barrel, which is more than triple current prices.
The report comes at a time when local opposition in the Southeast to offshore drilling is at a fever pitch. Since the Department of Interior announced earlier this year a plan to open the Southeast coast to offshore oil and gas drilling, opposition along the coast has steadily been growing – with more than 80 anti-drilling resolutions passed in communities up and down the South Atlantic coast, including major coastal cities like Charleston, Myrtle Beach, Savannah and Wilmington. Various business associations, including the Virginia Restaurant, Lodging, and Travel Association, the Southeastern Fisheries Association, the Outer Banks Chamber of Commerce, and the South Carolina Small Business Chamber of Commerce have also come out against offshore drilling and seismic testing.
In touting the supposed economic benefits of this proposal, drilling proponents fail to take into account the catastrophic damage to valuable coastal economies that a major oil spill would cause – or even the effects of the industrialization of the coast. The Blue Economy report spells out the importance of the existing coastal economy, providing numbers and county and state breakdowns of sectors and jobs that would be jeopardized if offshore drilling gets a green light. In 2012, there were nearly 250,000 ocean-related jobs in Virginia, North Carolina, South Carolina and Georgia, and the ocean economy contributed $14.6 billion to the economies in the region. The ocean economy provided more than $7.5 billion in wages in the same year.
“Our coast is built around a thriving tourism industry that attracts visitors from around the world to our beautiful beaches and unique coastal towns,” said Frank Knapp, South Carolina Small Business Chamber of Commerce President & CEO. “This report proves that these economic drivers are invaluable to the prosperity of our coastal communities and the entire Southeast region. Offshore drilling is incompatible with our thriving small business coastal tourism economy, and we simply can’t afford that.”
About Southern Environmental Law Center:
The Southern Environmental Law Center is a regional nonprofit using the power of the law to protect the health and environment of the Southeast (Virginia, Tennessee, North and South Carolina, Georgia, and Alabama). Founded in 1986, SELC's team of about 60 legal and policy experts represent more than 100 partner groups on issues of climate change and energy, air and water quality, forests, the coast and wetlands, transportation, and land use. www.SouthernEnvironment.org