Report: Oil-and-gas drilling bans will cut GDP by $2.36 trillion

This should provide some ammo for industry groups pushing the White House to allow wider drilling: A new report says U.S. oil-and-gas drilling bans will increase consumer energy costs and decrease cumulative U.S. GDP by $2.36 trillion over the next two decades

That’s an average annual GDP drop of roughly a half a percent.

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The report, commissioned by the National Association of Regulatory Utility Commissioners, comes as President Obama is signaling that he’ll back expanded offshore drilling as he seeks GOP and centrist Democratic support for a broader energy and climate bill.

The report explores restrictions on offshore drilling and onshore areas, including the Arctic National Wildlife Refuge. It was conducted by the Science Applications International Corp. and the industry-backed Gas Technology Institute.

It concludes that maintaining limits on domestic exploration will cause U.S. oil production to decrease by nearly 10 billion barrels total by 2030, while OPEC imports rise. The U.S. used roughly 7 billion barrels of oil in 2008.

Domestic natural gas production will drop by a total of 46 trillion cubic feet, which amounts to a roughly 9 percent annual drop, if drilling remains restricted, the report concludes.

Decades-old bans on coastal drilling – which prevented leasing in areas except offshore Alaska and the western-central Gulf of Mexico – lapsed in 2008, although a large swath of the eastern gulf remains off-limits.

But oil-and-gas industry officials are upset that the Interior Department under President Obama has not moved to lease areas that had been restricted until recently.

The Consumer Energy Alliance, which counts energy companies among its funders, highlighted the findings today. David Holt, the group’s president, said it’s easy to measure how energy development adds to jobs, stable energy prices and other benefits.

“It’s a lot harder trying to assess the opportunity cost we’re forced to pay by not producing that energy – how many jobs we stand to lose, how much additional money we’d have to send to OPEC. Now, thanks to this NARUC study, we have such a relative indicator. And let me tell you: It’s not pretty,” he said in a prepared statement.

The report predicts that over the next two decades, average annual natural gas prices will rise by 17 percent, average electricity prices will rise by 5 percent, and gasoline prices will climb 3 percent if the limits remain.

Overall, cumulative consumer energy costs will rise by $2.35 trillion over the next two decades, an annual average increase of 5 percent, the report claims.


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