Back on the Gulf Coast, Folks Continue to Lose Their Jobs

By Wes Helbling
Bastrop Daily Enterprise
Posted Aug 03, 2010 @ 06:00 AM
Bastrop, La. — A recently released study by LSU economist Dr. Joseph Mason concludes the Obama administration’s six-month moratorium on deepwater oil drilling will have grave economic consequences for Louisiana and the nation.

Following the Deepwater Horizon oil rig explosion on April 20, the White House issued a moratorium on exploratory drilling on May 30. Enforcement of the initial moratorium was blocked by a federal judge in New Orleans on June 22, citing a lack of basis for the regulation. The Obama administration issued a second moratorium on July 12 which re-asserts the policies and timeframe of the May 30 moratorium — to be in effect until Nov. 30 — and also includes all floating facilities.

“The Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to the Gulf Region” by Dr. Joseph Mason, a professor of finance and endowed chair of banking in LSU’s E.J. Ourso College of Business, was released in July.

The study was sponsored by Save U.S. Energy Jobs, a project of the American Energy Alliance, and explores how the moratorium on offshore drilling will affect the economies of the Gulf states — Louisiana, Texas, Alabama and Mississippi — as well as the nation.

Mason writes, “My estimates suggest that the moratorium would produce economic losses within the Gulf region and throughout the nation as a whole.

“Given the integrated nature of the U.S. economy, a negative effect in one industry is likely to be felt throughout the country. A significant halt to oil and natural exploration and drilling would not just affect upstream and downstream industries, but could also impact state and local government, as well as small retail stores, education services, healthcare assistance, and a host of other industries.”

The study uses data from the U.S. Department of the Interior, Department of Energy, Census Bureau and Treasury Department as well as figures presented by Louisiana Mid Continent Oil and Gas Association and estimates by Wood MacKenzie Research and Consulting.

Mason reports the effective six-month moratorium on offshore oil and natural gas production will result in the loss of approximately $2.1 billion in output, 8,169 jobs, over $487 million in wages and nearly $98 million in forfeited state tax revenues in the Gulf states.

According to the study, the “spill-over” effect of the moratorium could be an additional loss of $0.6 billion in output, 3,877 jobs and $219 million in potential wages nationwide. Moreover, the federal government stands to lose $219 million in tax revenue.

The six-month moratorium will cost approximately $2.1 billion in the Gulf communities and more than $2.7 billion in economic activity nationwide, according to the study.

Mason writes, “The economic benefits to coastal and state communities from offshore drilling are substantial. The Associated Press reports that offshore workers from Louisiana, for example, ‘frequently earn $50,000 a year or more.’ One in three jobs in coastal Louisiana ‘is related to the oil and natural gas industry [and] many of the workers earn between $40,000 and $100,000 a year.’

“The state of Louisiana estimates that oil and gas production, primarily from the Gulf, supports $12.7 billion in household earnings, ‘representing 15.4 percent of total Louisiana household earnings in 2005.’”

Mason cites an estimate by the La. Department of Economic Development of a loss of 10,000 jobs within a few months of the moratorium, and a prediction that the state “risks losing more than 20,000 existing and potential new jobs during a 12 to 18 month period.”

The report charts decrease in employment as a result of the moratorium in the four Gulf states in 20 different job sectors including agriculture, mining, utilities, construction, retail trade, transportation, educational services and food services. The study shows the moratorium will cause “massive wage loss for workers already hit by recession.”

The report can be downloaded and read in its entirety at

On July 27 Mason testified before the U.S. Senate Small Business Committee regarding the impact of the moratorium, according to an LSU press release.

Mason’s analysis echoes previous warnings by Louisiana Gov. Bobby Jindal that the Obama moratorium will be a “second manmade disaster.” Jindal called for the president to lift the moratorium on June 10.

Jindal is quoted in the press release, “The president’s six-month suspension of activity on 33 permitted deepwater drilling rigs, including 22 deepwater drilling rigs off Louisiana’s coast is a direct hit to our state’s economy that is already suffering from the BP oil spill and its closure of water areas for fishing and our beaches from tourism.”

Jindal responded to the second moratorium in a July 17 blog entry. Against the backdrop of the damage done by the oil spill, Jindal writes “the federal government unwisely chose to add insult to injury by decreeing a moratorium on deepwater drilling in the Gulf.

“This ill-advised and ill-considered moratorium, which a federal judge called ‘arbitrary’ and ‘capricious,’ creates a second disaster for our economy, throwing thousands of hardworking folks out of their jobs and causing real damage to many families.

“Let’s be clear: This moratorium will do nothing to clean up the Gulf of Mexico, and it is already doing great harm to many hardworking citizens.

“We don’t want to see the federal government create a second disaster, an economic disaster, for the people our state … Thousands of Louisianans shouldn’t have to lose their jobs just because the federal government can’t do its job.”


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