Georgia’s economy is in a deep rut. Our unemployment rate, at 10.2 percent, is well above the national average, and last month our state lost more than 18,000 jobs. To add insult to injury, the state is facing $1.2 billion in debt for the coming fiscal year.
Getting out from under this weight of debt and unemployment will take time, and no doubt will require difficult decisions from Georgia’s policymakers. But there is at least one option available that would reduce the state’s deficit and create thousands of jobs, all without the need to raise taxes.
That option is one that many in our state would not expect: expanded energy production in the Gulf of Mexico.
A recent study by Cambridge Energy Research Associates found that restoring oil and gas permitting in the Gulf of Mexico to its pre-BP spill levels would create nearly 4,000 jobs in Georgia and generate $34.9 million in new state tax revenue, all by the end of next year. CERA concluded that Georgia would be among the states with the “most significant job improvements” outside the Gulf region.
EVEN THOUGH Georgia has no coastline along the Gulf, the study finds that, on average, more than three jobs are created for each new direct hire in the Gulf’s oil and gas industry. Drilling companies rely upon equipment – drilling platforms, pipelines, and power cables – that often is manufactured outside the coastal region, and oil and gas products are primary feed stocks for chemical manufacturing and products such as rubber and plastics, all of which employ tens of thousands of Georgians.
Nationwide, restoring Gulf production would support about 230,000 jobs and boost the economy by about $44 billion in 2012.
Of course, the connection between energy production and economic growth has long been well-established. Texas is the country’s largest producer of oil and natural gas, and it’s no coincidence that the state regularly posts the strongest job growth. North Dakota, which jumped from the ninth-largest oil producer to the fourth-largest between 2004 and 2010, currently enjoys the lowest unemployment rate in the country at 3.3 percent.
ASIDE FROM creating jobs, producing more U.S. energy also means stabilizing prices for consumers, including lower gasoline and diesel prices. The average price for gas in Georgia is about $3.50 per gallon, or about a dollar higher than it was just one year ago. Earlier this year the Energy Information Administration projected that, due in part to the slowdown in federal permits being issued for drillers in the Gulf, domestic production would drop off by about 220,000 barrels per day in 2011.
Since its creation last year, the Bureau of Ocean Energy Management, Regulation, and Enforcement has consistently delayed issuing new permits for offshore oil and gas production and refused to provide much clarity about what conditions must be met so the country can start creating more energy.
Georgia’s elected leaders in Washington, D.C., need to tell BOEMRE that continuing to hamstring production in the Gulf means preventing vital job creation in Georgia, and indeed throughout the entire country. And with so much talk about ballooning deficits, out-of-control debt and an unemployment rate stuck above 9 percent, establishing a balanced energy policy that encourages energy production in the Gulf of Mexico would provide a clear path toward solving these important problems.
(The writer is chief executive officer of the Southern Association of Wholesale Distributors, based in Suwanee, Ga.)