Right now, U.S. states are facing record budget deficits -- totaling, in aggregate, at least $230 billion from fiscal year 2009 through 2011. Families in these states are getting whipsawed by the housing collapse, the weakening financial sector and, just recently, an increasing pinch at the gas pump. Needless to say, more jobs, new revenues and additional economic activity are desperately needed by these states’ treasuries.
One of the best ways to achieve all of those needs is through America’s oil and natural gas industry. Recent news highlights the importance of this industry’s ability to make headway into our economic and energy future.
Even long-standing opponents of offshore drilling have changed course. Just last week, California Governor Arnold Schwarzenegger threw his support behind a proposal to explore an oil field off the coast of Santa Barbara County. And Sen. Byron Dorgan of North Dakota just proposed an amendment which would encourage exploration and drilling in the eastern Gulf of Mexico, specifically in an area called the Destin Dome, which -- according to the Department of Energy -- contains over 2.6 trillion cubic feet of natural gas. Not surprisingly, this potentially prosperous proposal passed the Senate Energy and Natural Resources Committee.
But the valuable resources hidden beneath the Destin Dome merely scratch the surface. Beneath the seas that surround the U.S., the Outer Continental Shelf (OCS) holds more than 86 billion barrels of oil and over 420 trillion cubic feet of natural gas. This energy is close to home and can effectively and efficiently power our future. State treasuries and payrolls, however, could be the main beneficiaries of increased offshore energy production.
According to a recent American Energy Alliance economic analysis, offshore oil and natural gas production has the potential to create $8 trillion in additional economic output (GDP), raise over? $2.2 trillion in total tax receipts for government treasuries and create 1.2 million new jobs nationwide. With the national unemployment rate at 9.4%, millions of out-of-work Americans are counting on these opportunities.
The very states that are trying to wade through the worst budget disasters are also those who stand to benefit greatly from this increased offshore oil and natural gas production.
For example, California currently faces a budget shortfall of $24 billion. If the moratorium off the coast of the Golden State was lifted to allow for our energy companies to explore, the state could reap over $7.4 billion in tax revenues. This would surely give Sacramento something to cheer about it. The state could also gain over 293,000 jobs if the OCS ban was removed.
Over on the east coast, Florida is fighting a tough battle, too. The Bureau of Labor and Statistics (BLS) estimates that the Sunshine State’s unemployment rate stands at %9.6, the highest it’s been in over 10 years. But if Florida were to tap its offshore oil and natural gas resources – as some recent activity in Congress may champion – the state could put over 225,000 Floridians into well-paying jobs. And over $27 billion of additional economic output resulting from expanded offshore exploration and production will help Florida combat its current budget deficit.
The Center on Budget and Policy Priorities predicts that 46 states will be in the red this coming fiscal year. As the economy continues to prove unstable, states should look to the steady and continual revenue and job creation the U.S. oil and natural gas industry can provide from the energy resources off our shores.