As costly as that has been (estimates range upward to several billion dollars), the long-term loss of jobs of offshore oil industry workers and the loss of business for related companies may be even worse, says a report by the Houston-based Institute for Energy Research.
More than 8,000 jobs and about $500 million in wages will be lost if the moratorium continues longer than six months, according to the report titled âThe Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to the Gulf Region.â This will result in a total economic loss of about $2.1 billion to the area.
Joseph Mason, a professor at Louisiana State University in Baton Rouge, says that economic losses in Texas will be about $622 million, about half that of Louisiana. However, he says the data suggests that, âThe moratorium could be more costly than the oil spill itself.â
There is no doubt that the oil spill will lead to tougher regulations on Gulf of Mexico drilling, and this may drive some drilling contractors and operators to other countries where the rules governing drilling arenât as onerous to the petroleum industry. So the long-term loss of jobs and tax revenue from operators, industry vendors, and employees may be very detrimental to the economies in Louisiana and Texas.
One industry veteran told me recently, âWe have come back from Katrina, from Gustav, from Ike, and from other natural disasters. However, I donât know if the industry will ever recover if the government chases off [operators]. The oil and gas industry is the basis for our livelihood, and I donât know what can take its place.â
The major Gulf of Mexico players like BP, Shell, Chevron, and others are large diversified corporations with worldwide operations. They will survive whatever the government throws at them. However, many of the independent operators that are focused almost exclusively on the Gulf may not. Neither will some of the family-owned and smaller suppliers to the offshore industry.
This is not obtuse economic theory. To those of us who live along the Gulf Coast, it is tangible and easy to understand. If the White House truly wants to turn the economy around and stop the loss of jobs, it must consider lifting the drilling moratorium immediately.