The Gulf of Mexico oil spill is tragic, and the oil and natural gas industry is fully committed to reducing the risks of offshore drilling. But in spite of the accident, our nation’s demand for energy is growing, and we will need more oil and natural gas to meet that demand in the coming decades.

Offshore development—particularly deepwater production in the Gulf of Mexico—plays a crucial role in meeting this demand. Approximately 30 percent of the nation’s total domestic oil production and 13 percent of domestic natural gas production comes from the Gulf of Mexico, which is where a majority of the nation’s offshore development takes place. Eighty percent of the oil and 45 percent of the natural gas produced there is from deepwater exploration.

A moratorium on deepwater exploration could cripple the nation’s economic and energy future:

•    A six-month moratorium on new drilling activity would result in a reduction of 4 percent of deepwater Gulf of Mexico production, between $120-150 million in lost royalties to the federal government and a $300-500 million overall decline in government revenue in 2011, according to a study by Wood Mackenzie.

•    The same study found that longer delays (1-2 years) in new drilling projects would lead to an almost 20 percent reduction in deepwater production in 2015 and 2016.

•    A study by IHS Global Insight suggests that if new permits were restricted by just 74% (not even a full moratorium) over a five year period, domestic oil production would be 350,000 barrels per day lower by 2014 and result in more than 120,000 lost jobs, at a minimum.  

•    A one-year delay on new deepwater projects could cut world oil supply by 500,000 barrels per day between 2013 and 2017, according to a study released in May 2010 by Bernstein Research.

•    Stopping deepwater drilling in the Gulf of Mexico for at least six months will idle 33 drilling platforms, which support as many as 1,400 direct and indirect jobs—meaning the moratorium could cause losses to the tune of 46,200 jobs in the short-term.

This issue goes well beyond the oil industry, as access to affordable energy impacts every sector of our economy, every state in our nation and every American family.

For more information on the importance of domestic access, see API’s primer “Offshore Access to America's Oil and Natural Gas Resources.” This primer was assembled to foster an informed, constructive public policy debate and to demonstrate how the development of America’s vast oil and natural gas resources will help meet growing demand, create jobs, provide revenue to federal and state governments and enhance our nation’s energy security.