The Gulf of Mexico – sanctions on movement of vessels are an impediment to long-term, sustainable change

In our evolving energy landscape, coordinated efforts to orchestrate a greener global approach must be met with an element of pragmatism.  

Last week, the American Petroleum Institute (API) released a sobering report outlining the potential impacts an ill-thought-out sanctions approach can have on international supply chains and domestic economies.   

Reacting to a lawsuit involving the National Marine Fisheries Service, which ultimately calls for significant restrictions on oil and gas vessels operating in the Gulf of Mexico, the API’s report reminds us of the compounding effects on employment and GDP should restrictions be successful.  

Traffic in this area, which is one of the most used maritime areas in U.S waters by a variety of industries, is said to have been unfairly singled out in comparison to other industries.  

Restricting supplies and equipment travelling through the area are projected to significantly dent industry spending, associated industry employment, government revenues as well as the production of oil itself. Indeed, added burdens will be placed on operators eventually increasing emissions from vessels forced to either operate at suboptimal speeds or idle outside the restriction areas.  

This represents a very real threat to 412 thousand jobs in the United States, income earners whose livelihoods are reliant on a measured approach to regulating the persistent need for domestic oil and gas production in the U.S.  

Global anxiety surrounding the future of energy development cannot be appeased by sudden and unsupported halts in activity - over $7.3 bn USD in government revenues alone are at stake with operations in the gulf. While it is clear that there ought to be a demonstrable shift away from an outmoded “fossil fuel economy”, the disparity in the ability of richer countries, who are able to manage this shift without seismic consequences on mid-level economies, is great.  

Global insecurities over such a transition must be addressed in a way which is both economically and politically sustainable. For example, the Republic of Congo, South Sudan and Gabon, would likely be devastated by a sudden and rapid transformation. Despite being small producers of oil and gas, they have precious little in the form of other economic revenues.   

There are staggering costs to the transition to a renewably sourced global economy. Market-led transitions must be helped if policymakers can rally around a considered “phased-down” approach. In the Gulf of Mexico, for example, allowing for a steadier flow of oil reserves whilst policymakers and markets work together to reach targets will protect against a sharp rise in gas prices, secure Gulf Coast jobs and ensure the US does not increase its reliance on oil imports.