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Economics of Oil and Gas Leasing on the Outer Continental Shelf

In November 2011, the Department of Interior’s Bureau of Ocean Energy Management (BOEM) issued the proposed Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2012–2017 and accompanying Draft Programmatic Environmental Impact Statement (DPEIS). Legally, BOEM is required to ensure that the Program is planned and operated in a manner that maximizes net public benefits taking into consideration all relevant benefits and costs to society. In February of 2012, CSE completed a preliminary critique of the economic analysis supporting the Program and the DPEIS for its partner Oceana. We found (a) that BOEM presents a biased characterization and analysis of the no action alternative that significantly understates its economic and social value; (b) that Program benefits are substantially exaggerated, for instance, by including private profits and by failing to account for exports; (c) that Program costs are significantly underestimated by excluding costs of public subsidies, ecosystem service damages and carbon emissions damage; (d) that the DPEIS fails to incorporate the economic analysis in a manner prescribed by NEPA and its implementing regulations, and (f) that BOEM failed to model the effects of a wide range of policy interventions that affect Program economics.

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