Offshore Oil Drilling: Advantages, Challenges, and Impact

Introduction

The concept of offshore drilling centers on the extraction of natural resources such as oil, gas, or petroleum from beneath the water in either continental shelves or demarcated water boundaries near ports. Offshore drilling can also be conducted in lakes, rivers, and tributaries. In recent times, however, most offshore drilling has focused on a single resource — oil — extracted primarily from shoreline seas and oceans.

The heightened demand for oil within industrialized nations like the United States has provoked debates about the importance and impact of offshore oil drilling as an alternative to importing oil from Middle Eastern states such as Saudi Arabia. This has led scientists and ecologists to argue extensively about the overall pros and cons of offshore drilling — not only for the environment, but also for people and the economy. This paper examines the positives and negatives of offshore oil drilling within the context of current demand and gas prices in the United States.

Before proceeding, several important facts must be established. First, there is no reliable data on the actual level of oil reserves present along the shores of the United States. Second, any offshore drilling initiated today would not produce accessible oil for at least ten years. Third, even if oil were extracted in large quantities, its impact on the economy would not be substantially felt before at least 2030. Fourth, the overall decrease in gas prices that consumers might experience would amount to roughly four or five cents per gallon. Bearing these facts in mind — as established by economists and scientists — the ecological argument cannot go unnoticed. Offshore oil rigs could potentially cause more environmental damage than they generate economic benefit, and may drain more finances than they return. The issue of global warming would also be further exacerbated by offshore drilling, the remediation costs of which alone could strain any economy (Weibe, 2008). This paper analyzes both the advantages and challenges of offshore drilling and draws interpretations based on the facts presented.

The main advantage that politicians and economists within the United States attempt to promote is that gas prices will drop once domestically drilled oil becomes available on the market. The reasoning is that when oil companies begin investing in domestic oil production, the overall demand-supply chain will benefit the economy and relieve pressure on gas producers. Many strategists argue that the mere initiation of drilling could cause gas prices on the stock market to fall and investment in oil to increase — even before any oil is actually produced.

While the logic of supply-and-demand theory does apply in principle, a critical factor is being overlooked: this is not a standard demand-supply scenario because actual supply will not reach parity for at least a decade. This means that any anticipated decrease in gas prices will not occur in the near future if the alternative supply of oil cannot be fulfilled within ten years. The argument about decreasing prices is therefore premature at best (Daniels, 2008).

Advantages of Offshore Oil Drilling

A second commonly cited advantage is the rise in employment opportunities. Job creation would be expected to boost per capita income and improve the overall standard of living and educational opportunities within communities. However, it cannot be ignored that jobs created by the offshore drilling industry would come with significant occupational health risks and safety concerns in a hazardous work environment (Daniels, 2008). Moreover, offshore drilling has a well-documented negative effect on tourism. A considerable decline in tourism activity would likely reduce jobs in that industry, potentially canceling out whatever employment gains the oil rigging sector created (Daniels, 2008).

All manned work structures for oil rigs must be constructed above sea level. This means that even before any benefit from oil production is realized, the economy already incurs heavy construction costs. Even if the U.S. government were to use floating platforms anchored to the shore rather than traditional fixed structures, the costs would be significant. Maintaining floating platforms and implementing the security and safety measures needed to counteract the effects of waves would be extremely expensive (Weibe, 2008). Even experimental methods — such as pumping oil from the seabed to a submerged platform and then up to the surface — would require enormous amounts of energy. Given the current energy crisis and shortage of resources, this represents a substantial investment with little guarantee of meaningful returns, though it could allow for a wider range of seabed exploration (Daniels, 2008).

One of the greatest concerns surrounding offshore oil drilling is the potential for ecological disasters stemming from oil spills or improper waste disposal in the sea or air. Internal spills — those occurring within the facility itself — can cause fires and result in permanent damage to the structure. External spills from pipelines or transport vessels can cause severe environmental damage to ocean life and, in turn, affect human health as well.

Waste disposal and emissions into both the sea and the atmosphere are also major concerns for environmentalists, as they contribute to declining sea life quality and to global warming. Additionally, excess water produced during oil excavation must be discharged back into the ocean. This water is not naturally pure — it contains remnants of oil particles and other chemicals that can disrupt the chemistry of ocean water. Furthermore, the removal or relocation of an oil platform after its reserves are depleted is extremely costly. To avoid these costs, most oil-producing countries simply abandon the site, which, if adopted in the United States, could create additional problems for the movement of ships and other naval vessels (Weibe, 2008).

Challenges and Disadvantages

The prominence of offshore oil drilling in the 2008 presidential campaign elevated the issue to the highest level of public debate regarding economic growth. John McCain used the topic of offshore oil drilling as a way of sidestepping discussion of rising gas prices. While the strategy had some short-term political effect, it does not change the underlying reality: even if drilling had been initiated and proved successful, it would not have benefited the economy in any meaningful way for the next ten to fifteen years. The most immediate results would be increased employment opportunities and a rise in environmental hazards — without any near-term decrease in gas prices as predicted by stock market analysts. At worst, the initiative could result in environmental damage that the government would need to recover from, potentially crippling the fishing industry and producing negative economic consequences rather than the projected benefits (Daniels, 2008; Weibe, 2008). In my view, the only real reason offshore drilling would be legalized in the United States is political motivation, not genuine energy security or economic strategy, because the practice is not practically sound and is likely to be more detrimental than profitable.

That is not to say the issue has no merits at all, but the general perception promoted by politicians and the media is not entirely accurate. The initiation of offshore oil drilling could effectively be used as a negotiating tool — a threat to lower the prices the United States pays to import oil from Middle Eastern states. The actual drilling, when assessed on its internal merits, may or may not result in decreased gas prices or increased alternative fuel production. In recent times, however, the real purpose driving the intense debate has been to use offshore drilling as a strategic bargaining chip rather than a genuine energy solution.

I have no objection to using the threat of offshore drilling as a negotiating strategy. My concern is with how offshore drilling is portrayed as the savior of American dependence on foreign oil. This is similar to how love is sometimes cast as the cure for every troubled relationship, when clearly no relationship can function without compromise, communication, and respect. The failure to acknowledge peripheral factors makes the case for offshore drilling a weak one. Notably, many oil companies are not even utilizing the land and reserves already available to them for drilling — which raises the question of why there is such a strong push for offshore drilling at all. If oil companies are not producing from currently available reserves, there is no guarantee that investment in offshore drilling would be profitable (Gertz, 2008).

John Koch, chairman of the Loxahatchee Group, highlighted the negative impact of offshore oil drilling at a luncheon hosted by the Wellington Chamber of Commerce. Koch explained that the project would have no impact on overall gas prices and would only present Americans with two expensive options, since oil produced domestically would not be sold to American consumers at a discount simply because it was produced domestically. He further noted that the risk of environmental hazards would never disappear, and that unpredictable weather conditions would inevitably cause spills — as would human error from incompetent personnel. Koch also supported the central argument of this paper: that the actual impact of offshore drilling cannot be definitively characterized as positive, and that even if it were, the effects would not be felt in practical terms for at least fourteen to seventeen years (Parsley, 2008).

Robert Kaufman, a specialist on global oil markets and director of Boston University's Center for Energy and Environmental Studies, shares Koch's view and poses the question: "Do you think oil companies are going to sell [U.S. oil] to U.S. consumers for anything less than top price?" He answers his own question plainly: "The answer is no." There is no guarantee that sufficient reserves exist, nor that domestically produced oil would serve as an alternative energy commodity for American consumers. Even if Congress can control whether offshore drilling occurs, it cannot control how, where, or at what price the produced oil would be sold (Gertz, 2008).

Conclusion: Alternative Fuels as the Better Path Forward

Stolberg, S. G. Offshore drilling won't be easy sell: Bush prods Congress to open U.S. waters to oil exploration, but even if it happens, it's no quick fix. New York Times, 19 June 2008.

Weibe, W. A. V. Debate over Offshore Drilling. CBS News. 2008. Retrieved 18 April 2009.