Finance Professor Mason Testifies to U.S. House Committee
September 16, 2015
BATON ROUGE – LSU Department of Finance Professor Joseph Mason testified on Tuesday before the U.S. House of Representatives Committee on Natural Resources about the impacts of federal policies on energy production and economic growth in the Gulf of Mexico.
Specifically, Mason addressed what effect the U.S. Department of the Interior’s Bureau
of Safety and Environmental Enforcement’s (BSEE) requirements related to “blowout
prevention systems and well control” would have on the industry. In strict economic
terms, Mason stated, “those requirements pose new costs for the offshore oil and gas
industry at a time when high-cost production is being pushed out of the industry.”
In his testimony, Mason referred the committee back to a study he made in July 2010, “The Economic Cost of a Moratorium … to the Gulf Region.” That study predicted a roughly $2 billion slowdown in economic activity in the Gulf States in the six months after a drilling moratorium in May 2010. Subsequent to the study, real gross domestic product (GDP) from oil and gas extraction in the four Gulf States measured fell by $16 billion in 2009-2010 and remained $11 billion below 2009’s real GDP in 2011.
Not much has improved in Louisiana, Mason said, in recent years. Citing a study by the American Petroleum Institute, he testified that with the addition of the new BSEE regulations, approximately 690 fewer wells are projected in the Gulf of Mexico between 2017 and 2030 – a 26 percent decline. This would lead to fewer jobs, decreased wages and lower economic growth. Furthermore, these effects impact higher education, as students studying oil and gas, alternative energy or compliance, for example, are left without job prospects and university programs without funding.
“The majority of LSU’s externally funded research is not associated with fossil fuels but renewables,” Mason said. “Moreover, that energy research funding is nearly equal to the total budget provided to the relevant colleges by the state of Louisiana. That research money is plugged back into course development and student support for education and workforce training in related fields.”
Estimates show that almost 3,000 LSU undergraduate and graduate students study in energy-related fields. In fact, some 18 percent of LSU E. J. Ourso College of Business graduates go on to work in the oil and gas and energy sectors. Mid-career earnings by graduates of the college also rank in the top 15 among flagship universities, largely due to energy industry employment. Consequently, Mason argued, LSU’s workforce development programs are a vital component of safety and efficiency in today’s energy industry.
In summary, Mason closed his testimony by saying that LSU is “inextricably intertwined with the energy industry and the Gulf of Mexico” and asked that members of the committee please consider such dynamics before placing new offshore regulations on Gulf energy production.
The Department of Finance is a Chartered Financial Analyst (CFA) Program Partner and a Certified Financial Planner (CFP) Board-Registered Program that offers high quality curricula to undergraduate and graduate students interested in careers in corporate finance, asset management, real estate, insurance, banking, financial planning and business law. The department boasts internationally renowned research faculty in several areas, including derivatives, asset management, banking and spatial econometrics. The department’s Securities Markets Analysis Research & Trading Lab boasts the Bloomberg Professional service, the platform used by more than 300,000 leading business and financial professionals worldwide to make informed business decisions, and an extensive library of financial data bases including the Wharton WRDS System. Additionally, the department encourages, supports and conducts research in real estate by housing the nationally renowned Real Estate Research Institute. For more information, visit our home page or call 225-578-6291.
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LSU E. J. Ourso College of Business