Oil Boom you say?  Today oil is trading at about $47/barrel, less than half of what it was in July.

The important part of this is “the why”.  The US has ramped up production to the point where we have affected the worldwide supply of oil.  As a result, prices have fallen. A lot.

The result is that we’re significantly less dependent on others to produce our energy needs.  This is helping both our trade deficit and national security.  It’s also dramatically helped the US employment situation.  When you look at the job growth of the past 6 years, much of it has been in places like Texas and North Dakota – places that have fully embraced the domestic energy industry. Nationwide, consumers are reaping a windfall.  Not only are pump prices down, but businesses are seeing input prices fall as the tax of oil’s middle east risk premium has been eliminated.  This is a boon for consumers, manufacturers, and many other business sectors.

Georgia has been largely left out of the wave, though we are a leader in solar panel production and making cellulosic ethanol with pine pellets.  “All of the above” should remain central to our national energy strategy, and Georgia should participate where economically and environmentally feasible.

Georgia also may soon have the opportunity to join the ranks of states adding oil sector jobs.  The Bureau of Ocean Energy Management is considering opening up drilling off the Southeastern Atlantic coast.  Their current plan is to let only one lease, in year 2021.  Their long term plan, however, ends in 2022.  As such, there’s the potential for more leases soon after.  That said, those who are first are often the ones that will capture the lion’s share of the support facilities – and the jobs that come with them.

The BOEM will be holding a hearing/listening session tomorrow, Tuesday March 24th, at the Hyatt Regency in Savannah.  The meeting, from 3-7pm, will give citizens their opportunity for input.

What’s the upside?  The American Petroleum Institute says the potential is for 1,200 direct and 3,800 indirect jobs for Georgians.  Note that these would be non-Atlanta based jobs, but jobs in an area of the state that needs more economic diversity.

It’s also about Georgia’s tax base.  In addition to the taxes from these jobs and the employee’s spending, Georgia would be entitled to extraction royalties that API estimates would rise to $175 Million per year by 2035, with as much as $700M added to Georgia’s tax rolls within the first ten years of operation.

Georgia will clearly also want to ensure that the drilling is done in an environmentally responsible manner.  Our coast is quite literally a national treasure.  I’m sure we’ll also hear from those at the session tomorrow that would like to stop all drilling to avoid any risk.  More than likely, the OEM will and should look at a cost/benefit analysis.  It should also be noted that we’re talking about drilling at least 50 miles from the coast.  Best practices must be adopted and monitored, with clear contingency plans in place should an accident happen.  It’s how we operate every other industry, and it should work for this one too.

Georgia should continue to pursue this purposefully but cautiously.  There is a huge upside if the first lease is off the Georgia coast.  But we must balance the desire to be first with the required need to do this right.