Oil has been an engine of growth for a modern day society that enjoys an unprecedented standard of living to the masses. With economic growth and progress comes a simultaneous dependency on the processes and institutions that support it. Our society is dependent on fossil fuels and the affordable energy it produces (Tainter & Patzek, 2012). The demands for cheap energy continue to drive our economy, so much so that to stop off-shore drilling could be detrimental to the economy. One of the concepts described in Chapter 1 of the textbook was the idea that an increase in the price of supply results in decreased inventory and increases the price of the product. If off-shore drilling were to stop, the oil supply would be reduced and prices would naturally rise. An increase in expenditure for oil products would affect goods and services that consume those products. For instance, transportation costs would increase. The average person’s commute would be more expensive, affecting the amount of disposable income he now has. Delivering goods and services would cost more and that often results to transferring those costs to the consumer.
The United States should actually increase its current efforts at off-shore drilling. The Obama administration released its oil and gas leasing program that covers 2012-2017 and it continues to keep most of the U.S. offshore areas off-limits for energy development. Areas in the Atlantic Ocean, Pacific Ocean, Alaskan waters, and the Eastern Gulf of Mexico represent the 85% of U.S. offshore areas that remain of-limits for “energy development.” Political leaders in several states directly affected by this ban have expressed in opening up their beaches and cite the numerous financial benefits for their perspective states. Senators Jim Webb and Mark Warner, for instance, proposed a bill that would allow oil and natural gas exploration in the coastline in Virginia. Virginia was going to be the first state on the east coast to allow such a measure. Unfortunately, the negative publicity from the Deepwater Horizon Incident (oil spill) halted such progress. Governor Bob McDonnell of Virginia discussed his opinion in the Wall Street Journal, citing the loss of thousands of prospective jobs and what would have been significant new revenue for the state and local governments. “Energy is the lifeblood of our nation’s economic growth,” McDonnell was quoted. Although it is sometimes difficult to take a politician’s words at face value, there is quite a bit of truth to that statement. A recent study traced back nine million American jobs to U.S. energy development (the oil industry) and its related service industries. It also generates tax revenues for local, state, and federal governments (Cohen, 2012). And to reiterate, the oil and natural gas generated from off-shore drilling fuels our households, businesses, cars, and a number of politicians.
. References
Cohen, K. (2012). A Missed Opportunity on Increasing Access to U.S. Energy Supplies. Exxon Mobile Perspectives. Retrieved on July 2, 2014 from http://www.exxonmobilperspectives.com/2012/07/20/a-missed-opportunity-on-increasing-access-to-u-s-energy-supplies/?gclid=CO7ArPDNqr8CFUdcfgod9FYALg&gclsrc=aw.ds
Mankiw, N. G. (2013). Macroeconomics (8thed). New York, NY: Worth Publishers.
Tainter, J. A., & Patzek, T. W. (2012). Drilling down [electronic resource] : the Gulf Oil debacle and our energy dilemma / Joseph A. Tainter, Tadeusz W. Patzek. New York, NY : Copernicus Books, c2012.
Responses
While you made a very good argument against off-shore drilling through citing the negative effects of the Deepwater Horizon incident, I implore you to consider the larger picture. The United States should continue and actually increase its current efforts at off-shore drilling through the exploration of additional energy development locations. Federal, state, and local governments can really benefit from the amount of revenue generated from added jobs and taxes
