National Review: The Incredible Economic Opportunities of Offshore Energy Exploration
Originally Published on October 1, 2018
Our outer continental shelf is teeming with potential energy reserves. Harnessing them could be a great boost to American prosperity and national security.
American economic prospects appear increasingly bright. Today, the United States leads the world in the production and refinement of natural gas and oil, delivering major economic benefits to consumers and manufacturers. But unwarranted fear and outdated regulations keep 94 percent of the U.S. Outer Continental Shelf (OCS) closed to energy production, limiting our country’s economic potential and the enhanced national security that comes with it. Boosting offshore exploration would provide economic benefits to American coastal states and local economies, and it could lift the U.S. economy as a whole, too.
Based on current government projections, natural gas and oil will meet an estimated 60 percent of U.S. energy needs by 2040, and responsible offshore development represents one of the best untapped opportunities to sustain, supply, and safeguard America’s future energy security. In a good first step, Secretary of the Interior Ryan Zinke recently announced a proposal to open much more of the OCS to exploration. We should move forward quickly but responsibly to take advantage of the estimated 90 billion barrels of oil and 300 trillion cubic feet of natural gas in potential offshore reserves. In the coming decades, as the global population continues to grow and countries in the developing world become wealthier, worldwide energy demand is projected to jump almost 30 percent. If the U.S. places itself as a leader in the sector, it could reap the economic gains for decades to come.
According to a study commissioned by the American Petroleum Institute (API), opening the Atlantic OCS alone could generate nearly 265,000 thousand new jobs and $22 billion each year in private investment. Estimates suggest that federal and state governments could generate $6 billion a year in new revenue within 20 years of the initial lease sale. While exact state revenues will depend on revenue sharing agreements, coastal states ranging from Florida to Maine could see substantial economic benefits.
The energy sector itself also has a great record of delivering such economic benefits to those Americans who deserve them the most. On average, the industry employs a higher percentage of veterans than the economy as a whole, with about one in ten of its nearly half a million employees having served our country in uniform. While the overall unemployment rate for veterans tracks closely with the national average, a third of all veterans remain underemployed or at jobs below their skill level, and 20 percent of them make less than $15 an hour. Expanding offshore energy exploration could create more well-paying jobs for those brave men and women who served our nation in uniform.
Indeed, natural gas and oil exploration jobs offer average salaries of $116,000 a year, without necessarily requiring a college degree. The industry offers a wide array of jobs to veterans of all different skill sets and military experiences. An Army mapping technician or geospatial engineer, for example, would be able to utilize those skills working in the energy sector. Given the importance of energy security to geopolitics, and U.S. foreign policy more broadly, energy-sector workers also have the capability to continue supporting U.S. national security.
Expanded offshore energy exploration could also benefit sectors far beyond just the energy industry by putting downward pressure on oil and gas prices. Higher gas prices disproportionately hurt low- and middle-income families, who spend a larger share of their disposable incomes on energy. Lower energy prices give consumers more income to spend on all kinds of other goods and services, helping the economy as a whole. Transportation-related industries such as airlines, the auto sector, and shipping companies benefit as well. Finally, at a fundamental macroeconomic level, lower energy prices help keep inflation low, benefiting Americans on fixed incomes the most.
Offshore energy exploration offers incredible opportunities to build on U.S. economic strength. Removing barriers that unnecessarily constrain exploration will lay the groundwork for an American economy that remains strong decades into the future. But the hard work of harnessing the energy waiting in our waters will be time-consuming, so the exploration and quantification phases should start now.
Jim Nicholson is a former secretary of veterans affairs and a former U.S. ambassador to the Holy See. He currently serves as the national co-chair of Explore Offshore.
