Impacts of energy exploration in North Carolina
Many people want to drill for oil and natural gas, both off the coast and onshore in North Carolina. Others are skeptical because they see potential environmental and other costs related to these activities. Do we have any numbers to go with both the possible benefits and costs to drilling? N.C. State University economist Mike Walden responds.
“I’ve had that question posed to me several times over the last few months. So, I did a study. This was a university sponsored study not funded by any outside group where I tried to assess both the benefits – potential benefits – and potential costs in North Carolina of drilling for energy both offshore as well as onshore.
In terms of the benefits, they could be significant. I estimate that if we did both offshore and onshore drilling we could create maybe as many as many as 18,000 permanent new jobs in the state, create about $2 billion of additional new private revenue, and, of course, there would be tax revenue coming from that.
However there could be costs. We see, for example, that on average if you go offshore there are going to be issues with spillage. The rate is rather small, but I estimate that on average each year we could potentially see about $80 million dollars of costs, primarily to our coast from spillage.
Now onshore – fracking, if you will – there are a lot of questions about the implications of that in terms of healthy environment. We don’t really have a lot of good solid numbers, but what we do see is that many studies have shown that property values reflect the concerns.
That is, property values are lower in sites where what’s called hydraulic fracking – that is, the exploration for natural gas underground – is occurring we have several hundred million dollars potentially of lower property values in North Carolina.
The Last thing I’ll say here is all of these numbers are very, very uncertain. It depends on the price of the energy down the road, which we never know for sure. It also depends on how much energy there is, and we really don’t know that until we start to drill. And all of these numbers I found could change by a factor of a hundred based on changes in prices and quantities.”Category: Economic Perspective