The American Petroleum Institute (API) says proposed changes to the way the Jones Act is interpreted will lead to job losses, loss of GDP, reduced production and will adversely affect energy security in the US.
In a report released this week, the API said it foresees “significant and damaging impacts” from the Customs and Border Protection Agency’s (CBP) proposed modifications to its rulings related to the use of Jones Act vessels in offshore oil and natural gas activity.
API says the adverse effects of the proposed changes include the potential for significant loss of American jobs, reduced US oil and natural gas production, and diminished revenues for federal and state government.
“This report projects that the proposed changes to these longstanding rulings would have widespread negative impacts on American jobs and the national economy and a damaging effect on our national energy security,” said API upstream and industry operations group director Erik Milito.
“The study also concludes that these changes would have an abrupt negative impact on oil and natural gas development and investment in the Gulf of Mexico, further impacting consumers and businesses and substantially decreasing government revenue.”
According to the Calash economic report, the impacts of CBP’s proposal could include:
- Losses in the range of 30,000 industry supported jobs in 2017 with as many as 125,000 jobs lost by 2030. The Gulf of Mexico states are projected to be the most impacted by these job losses.
- A decrease in US oil and natural gas production in the range of 23 per cent from 2017-2030.
- A fall in government revenue of more than US$1.9 billion per year from 2017-2030.
- A decline in offshore oil and natural gas spending in the range of US$5.4 billion per year.
- Cumulative lost GDP of US$91.5 billion from 2017-2030.
“President Trump’s recent executive order on energy independence was an important step toward increasing American competitiveness, and these proposed changes completely undermine the order’s purpose by placing unnecessary and harmful burdens on domestic energy production,” said Milito. “The proposed changes to the rulings should be immediately withdrawn to protect US energy security and allow consumers and businesses to continue benefiting from America’s energy renaissance.”
As highlighted earlier by OSJ, numerous industry organisations inside and outside the US have also expressed concern about the proposed changes.
A joint trade group opposed to the changes includes the API, the Association of Diving Contractors International, Independent Petroleum Association of America, International Association of Geophysical Contractors, International Marine Contractors Association (IMCA), Louisiana Mid-Continent Oil and Gas Association, Offshore Operators Committee, the US Chamber of Commerce and the US Oil and Gas Association. The group has held meetings with numerous politicians in Gulf Coast states to alert them to what it believes are the significant adverse implications of the changes.
Members of the International Association of Drilling Contractors (IADC) say they are concerned by the uncertainties associated with the proposed changes, and IADC is participating in a joint effort with the associations named above in order to better understand the implications of the changes. However, the association has not taken a position either in support of, or in opposition to them.
The report by Calash is available on API’s website.
The IMCA report referenced earlier by OSJ has now been published and can be found here.