How much money is the US losing by maintaining its de facto drilling ban on the coasts and the explicit ban on drilling in ANWR? The SAIC Corporation studied the question, in part funded by the oil industry, and claims that the American economy will lose over $2.3 trillion dollars in opportunity costs over the next two decades:
Restrictions on oil and gas drilling will cost the U.S. economy $2.36 trillion through 2029, according to a study requested by state utility regulators and paid for in part by industry-sponsored groups.
Drilling restrictions in Alaska’s Arctic National Wildlife Refuge and off the U.S. coastline are blocking access to about nine years’ worth of U.S. oil and gas consumption, according to the report. Among sponsors are the National Association of Regulatory Utility Commissioners and the industry-funded Gas Technology Institute, of Des Plaines, Illinois.
Former President George W. Bush and Congress ended bans in 2008 on drilling along the U.S. coastline. The Interior Department hasn’t acted to open the newly available areas, including offshore Alaska and on the U.S. Outer Continental Shelf in the Atlantic and Pacific oceans. Congress has kept the Arctic refuge off limits. …
The report, issued today, said opening the areas would free up 43 billion barrels of oil and 286 trillion cubic feet of gas. The U.S. used 22.8 trillion cubic feet of gas and 5.2 billion barrels of oil in 2009, according to a press release issued with the report.
The usual caveats apply to studies funded at least in some degree by parties with vested interests in the outcome. Obviously, oil and gas companies would like to gain access to these areas; after all, they’ll be the ones getting a chunk of that money. The request from state regulators may or may not fall into this category as well, since some of the states would like to collect license fees on the sales of leases off of their shores.
However, there are obviously some opportunity costs lost in the refusal to use our own resources for energy production. Instead of sending billions to Brazil to boost oil production off of their coast, the private sector could invest its own money into leases and extraction. This would create hundreds of thousands of high-paying jobs here in the US, as well as reduce our trade deficit. It would provide a more stable bridge towards our shift to replacement energy sources in renewables, while boosting access to cheaper energy in the short run to make the American economy more dynamic. Without it, energy prices will rise much faster than inflation, making our economy more sluggish than necessary.
Do those opportunity costs total $2.36 trillion over 20 years, and the loss of an average of 0.52% GDP in those years? Perhaps a more independent study will confirm that. Until then, though, we know we’re losing a lot of opportunity and shoveling more and more of our money into markets that allow some hostile nations to profit from it. That should be enough to have American looking homeward for its energy, no matter where it lies.