Should the U.S. Allow Offshore Oil Drilling?

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I have somewhat addressed this already in my arguments for lifting the leasing moratorium, so I will not repeat that here.  But, one must understand the scale of investment and the capital at risk under consideration here, especially in deepwater environments.  Coupled with geologic uncertainty and damage risks due to natural events such as hurricanes, oil companies should diversify their production assets, meaning they will not simply drill in one region.  Moreover, capital itself is scarce, as even project teams within a company compete for approval and the capital budgets needed to move forward.  Aside from timing issues related to assessing a property and fulfilling the environmental impact assessment process, which can take up to two years, some leases in the GoM that are currently available have not been developed simply because they are not profitable, especially when compared to other options.  An important issue here is the fact that projects typically require large upfront fixed costs and long lead times, meaning any change in the market environment over the 10-20 year following the initial undertaking of a project could result financial disaster. (The list of these instances is too long to enumerate here.)  By the way, returns in the energy business, in percentage terms, are dwarfed by those in real estate, technology and other industries.  Are they colluding to drive up profits?

There are many issues involved in asset management and project development that the industry should probably devote some resources to explaining in clear concise language.  It would go a long way to educating the public about what is actually going on.