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An Economic Overview of Selected Industries Dependent upon the Gulf of Mexico charles m. Adams, Emilio Hernandez, and Jim Lee 3 Introduction The Gulf of Mexico is a critical source of natural resources, providing billions of dollars in tangible and intangible benefits to a variety of marine-related industries and other user groups. The economic benefits of Gulf resources flow not only to bordering states but also to the U.S. economy as a whole. Industries directly or indirectly dependent on the Gulf ecosystem include coastal development , coastal recreation and tourism, merchant shipping, offshore oil and gas production, hard mineral mining, recreational boating, and commercial fisheries . Some of these, such as commercial and recreational fishing and tourism, are entirely dependent on a healthy coastal and marine ecosystem for their existence . The rapidly growing coastal population and industrial base are placing increasing demands on the Gulf’s critical natural resources. As a result, resource managers are becoming increasingly aware of the need for aggressive measures to enable sustainable management of Gulf resources and to ensure that marinerelated user groups and industries have future access to Gulf of Mexico natural resources. Such proper management of Gulf natural resources is, in part, dependent on an adequate understanding of the economic value derived from these resources. To that end, this chapter is intended to provide a brief overview of economic values and activities of key U.S. industries dependent on those resources by focusing on important trends in past decades for those industries. The chapter is not intended to be an exhaustive assessment of all the marine-related industries in the Gulf region, but instead focuses on petroleum extraction commercial fishing commercial seafood processing marine sportfishing merchant shipping cruise industry activity maritime vessel construction marine recreational activities The discussion draws heavily from a previously published article by Adams et al. (2005) but, where possible, provides more recent data and trends. In addition , this overview focuses on the period before the devastating storm events of the 2004 and 2005 hurricane seasons. With the exception of the data for the petroleum industry, the information needed to quantify the short-term effects of the storms was not available at the time of writing. Also, the long-term effects of the Hurricanes Katrina and Rita have yet to be fully realized by most industries and their associated communities within the Gulf region. Economic Overview of Selected Industries 29 The industries addressed make significant contributions to the Mexican and Cuban economies, some of which are described elsewhere in this book. However , this chapter focuses solely on impacts to the U.S. economy. Oil and gas reserves are key Gulf of Mexico economic assets that support such operations as oil and natural gas exploration and extraction, oil refineries, petrochemical and natural gas processing, supply and service bases for offshore oil and gas production, offshore platform and pipeline construction, and other industry-related installations (French et al., 2006). Offshore oil and gas production in the Gulf of Mexico occurs mainly near the coastlines of Louisiana and eastern Texas, though there is limited production as far east as Alabama. The offshore oil and gas industry has endured dramatic changes over the last thirty years due to such factors as international finances, political decisions and actions, and changes in domestic consumer demand for petroleum-based fuels. Recent proposed lease sales off the Florida coast, as well as proposed liquefied natural gas (LNG) facilities in the Gulf, have drawn new attention to both the environmental and economic values of the Gulf coastal areas. If managed improperly, such expanded activities have the potential to degrade Gulf resources. Therefore, balancing environmental concerns with the economic and national security benefits associated with increased offshore oil, gas, and mineral production is of utmost concern to resource managers, public policymakers, and industry executives within the region. Production Trends Historically, oil and gas production in the Gulf have undergone cyclical swings. In addition to weather conditions, oil and gas exploration and drilling activities have been affected by many factors, including technological improvements, price fluctuations, general economic conditions, and financial and political developments in the United States or abroad. Gulf offshore oil production in federal waters climbed to a production peak of approximately 370 million barrels per year in the early 1970s, and then achieved another peak of about 350 million barrels per year during the mid-1980s (fig. 3.1). After declining during the late 1980s, solid productivity gains through technological improvements allowed oil production to grow steadily throughout the...

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