Dissecting the Economics of Offshore Drilling

Energy independence, new jobs, and billions of dollars in potential revenue are all touted as virtues of expanding offshore drilling, as the current administration has proposed to do on virtually all US coastlines. Oil lobbyists and the politicians in their pockets have done everything in their power to convince the public that the benefits of drilling outweigh the costs. This is patently false.

There are many holes to poke in their analysis. To begin with, the economic contributions of offshore drilling pale in comparison to those of our vibrant coastal economies. Ocean-based industries, which include fishing, tourism, recreation, and hospitality, account for a majority of the nation’s jobs (71%) and almost half of the nation’s GDP. California’s coastal hospitality industry alone brings in $98.8 billion every year, according to the National Ocean Economics Program — not to mention $18 billion from tourism and hundreds of millions from fishing. Compare those numbers the to the yearly revenue of $79 billion that the entirety of US gas and oil generates (as self-reported by the industry). Offshore drilling would represent only a negligible fraction of GDP. Furthermore, jobs that would be added in the offshore sector are risky and undesirable, and the lion’s share of profits would go to top executives. It’s clear that coastal economies are vastly more important contributors, but are the two really incompatible? How likely is it that drilling would pose a serious threat?