LL: Looking at the onshore state and local economies which are dependent on oil production, how would you classify those economies?
JM: Ohio, Louisiana, Mississippi and Alabama were not severely affected until the moratorium. Texas is being held together by onshore energy activity.
The Fed’s August 2010 Beige Book noted that factories, farms and mines, nationally, were all seeing “continued gains in demand and sales,” while housing sales—and the related construction industry—slowed. But in the Atlanta district, “Fewer … manufacturers noted increases in new orders, and more said that orders were lower.” In the Dallas district, the Fed reported directly “the deep water drilling moratorium [was expected to] impact revenues.”
Illinois and California have substantial refining capacity that is directly affected by drilling and production activity.
LL: A halt like this has ripple effects which impact not only the upstream and downstream industries but also the retail stores, education services and healthcare assistance. Have you been able to quantify that impact?
JM: My initial study on the effects of the moratorium broke out job losses by sector. There, although the largest effect was in positions directly related to exploration and drilling, the next largest sector was health care and social services, followed by retail trade and then real estate. The same relationships would be expected to be maintained in the ongoing de facto moratorium, and also expansionary policies such as opening up the Outer Continental Shelf to exploration and development .
LL: President Obama over the weekend supported Brazil's off shore oil drilling. Why not here? How much money and jobs could be injected into the US economy if the administration allowed such drilling?
JM: I agree. Brazil is characterizing the industry and their reserves as their "economic miracle." Where is ours? Certainly not "green" or so-called "renewable" energy, as much of those revenue go overseas to the manufacturers of those technologies.
Moreover, we need to think hard about energy efficiency before jumping headlong into new technologies.
Last, when we do jump we need to make sure that all elements of the technology are prices so that we do not leave new unpriced sources of pollution — economic externalities — potentially worse than those of carbon and quite possibly capable of producing catastrophes far greater than the Deepwater Horizon blowout or even the recent Japanese nuclear disasters.
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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."