An estimated $1.2 billion in economic output and 17,000 jobs will be lost in the Gulf Coast states by the end of the year even if the spewing oil flow is permanently plugged by next month, according to a report issued by Moody's Analytics Monday.
But under a more pessimistic scenario in which the oil spill continues through December and President Obama's moratorium on deepwater drilling is extended until year-end, the report said $7.4 billion in economic growth and more than 100,000 jobs would be lost.
"We...assume that the six-month moratorium on deepwater drilling will indeed remain in effect until November and that this stoppage, most likely, will have a much bigger negative impact on jobs and income than any losses from tourism," the Mood's report said.
"The oil spill's impact will be limited to the Gulf Coast economies even under a more pessimistic scenario in which the oil leak cannot be stopped until the end of the year. The national economic impact will be negligible, as it has been for most of the nation's past natural disasters," it said.
A Louisiana State University (LSU) economist sees different economic impacts during the first six months of the Obama administration's drilling ban. The Gulf moratorium could result in the loss of more than 8,000 jobs, nearly $500 million in wages and more than $2.1 billion in economic activity in the Gulf region alone, said Joseph F. Mason, economist and LSU endowed chair of banking.
"The data are clear...In fact, the moratorium could be more costly than the oil spill itself," he said. "The region is already struggling from devastating losses from Hurricane Katrina, Hurricane Gustav and the nation's depressed economy. By stifling one of the area's primary economic engines, the administration is crippling the local economy and risking long-term consequences."
Mason's report, which was sponsored by Save U.S. Energy Projects, a project of the energy advocacy group American Energy Alliance (AEA), estimates that the net loss of jobs could be 12,000 nationwide in the six months, a number that could grow to 36,000 over the next year. Additionally, Mason projects that the U.S. economy will lose about $2.8 billion in economic activity and the federal treasury will lose about $220 million in tax revenue.
The report also warned against the worst-case scenario -- a permanent moratorium on all oil and natural gas production in the Gulf -- which would lead to nationwide economic losses in excess of $95 billion and more than 400,000 jobs.
"We need to find ways to save U.S. energy jobs, not cut them," said AEA President Tom Pyle. "The administration's moratorium will devastate the economies of Louisiana, Texas, Mississippi and Alabama and will cost thousands of people their jobs and harm families nationwide."
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