Not surprisingly, the new study Economic and Environmental Impacts of Oil and Gas Development Offshore the DelMarva, Carolinas and Georgia by Dr. Timothy J. Considine, the School of Energy Resources Distinguished Professor of Energy Economics at the University of Wyoming, finds that the benefits of allowing offshore oil and gas production far outweigh the costs in North Carolina and the rest of the Atlantic states.
Using three different scenarios – low production, medium production, and high production – Considine analyzed the economic and environmental impacts the industry would have on several Mid-Atlantic states, including North Carolina, through the year 2035. This was done in order to analyze the impacts for various output levels that could be attained based upon the amount of oil and natural gas that could be accessed.
The study uses two main factors to evaluate economic impacts: “value added” and “employment generated.” In calculating these, the study includes direct impacts, such as immediate jobs, tax revenue, and capital investment, as well as indirect impacts resulting from the stimulation of related industries. For environmental impacts, Considine calculates first the costs associated with the risk of spills, contamination, and cleanup, and second the cost of higher carbon emissions.
Considine found that every state studied (Delaware, Maryland, Virginia, North Carolina, South Carolina, and Georgia) would see a much greater economic benefit than environmental cost. In North Carolina, the benefit-cost ratio could reach 4 to 1. Benefits substantially exceed costs even when using the most extreme assumptions for the price of carbon or the risk of spills.
Compared to the costs and benefits of other states studied, North Carolina emerges as the clear winner, having the greatest potential for development and economic growth. In fact, under the high-production scenario, by 2035 North Carolina would have the potential to produce, on its own, more than the amount of total natural gas it consumes. Not only would this result in lower fuel prices, it would create a major competitive edge for North Carolina in exporting energy.
According to the study, the economic benefits for North Carolina if Atlantic offshore oil and gas production were allowed would be substantial: “North Carolina could realize over $24.5 billion in economic output, $4.3 billion in additional tax revenues, and on average employment levels that are nearly 30,000 higher each year over the 2017 to 2035 period.” It’s also worth mentioning that those new jobs are not minimum-wage, low-skill positions. Jobs in the oil and gas industry pay over $70,000 per year on average.
The study’s author does acknowledge that these figures need to be tempered by the environmental costs for cleaning up the air, water, and land, which he estimates may reach as high as $531 million by 2035. In comparison to the economic benefits, however, it easy to see that the benefits far outweigh any potential costs.
The research provided in this study should serve as a wake-up call for legislators. The next potential leasing period begins in 2018, just four years from now. North Carolina has an opportunity to provide tens of thousands of jobs and more affordable, home-grown energy for its citizens.
Article written by Rachael Dobi, with contributions from Brian Balfour