Official Blog of Bannon Leadership Consulting Founder Shawn Bannon

Crisis May Hold the Key to Gulf Region’s Economic Future

The oil spill is causing tremendous damage to beaches, wildlife, wetlands and the economy across the Gulf coast.

The oil spill is causing tremendous damage to beaches, wildlife, wetlands and the economy across the Gulf coast.

As oil continues to pour from BP’s ruptured pipeline into the Gulf of Mexico, beaches, wetlands and wildlife are under siege.  Industry – from tourism to commercial fishing – is taking a beating.  The anger and frustration this crisis has caused are understandable; the pain is real. 

But suggestions that this catastrophe underscores a need to turn away from traditional energy sources must be resisted by Gulf region leaders.  In fact, even as some politicians and environmental activists demonize the industry and look for political gain in the crisis, this is the time to put oil and gas at the heart of a new regional plan for sustainable economic prosperity.

A few months before the spill, I traveled from western Louisiana to the Florida panhandle, surveying the recovery efforts still underway nearly five years after Hurricane Katrina and examining the potential to build a stronger, more resilient regional economy.  What I found was an alarming sense among residents that the jobs created since Katrina will only last so long as there are recovery projects and federal funds to sustain them. 

Even as New Orleans celebrated a Super Bowl win and national magazines published feel-good stories about new economic vitality, people who live in the region shared with me their concerns that only the hospitality industry had truly begun to make a comeback that might last.  It was disheartening, but what gave me hope as I drove through Lafayette, Baton Rouge, New Orleans and on to Gulfport, Mobile and Pensacola was the realization that the assets and expertise needed to breathe new, lasting life into the Gulf region are already largely in place. 

Existing infrastructure and oil and gas industry expertise throughout the Gulf Region are both reminders of our reliance on fossil fuels and a source of hope for new economic prosperity.

Existing infrastructure and oil and gas industry expertise throughout the Gulf Region are both reminders of our reliance on fossil fuels and a source of hope for new economic prosperity. (Photo:

I was reminded of communities across the “Rust Belt” – cities like Indianapolis and my hometown, Pittsburgh – that faced a less-literal sort of rebuilding after the collapse of the steel trade in the 1980s.  In order to reinvent ourselves we invested in education, IT and life sciences.  We didn’t abandon our industrial heritage, but manufacturers did have to restructure and worked to become more sophisticated and more efficient.  And ultimately, their efforts to regain a competitive footing supported local growth in other industries.  By building on core strengths and investing in a well-imagined vision for the future even during a time of crisis, these communities created foundations for new prosperity.

Today, there is real potential for leaders in the Gulf region to seize a brighter future from the bleakness of the moment.  But they must have the vision and the courage to stand up to a presidential administration that appears more interested in advancing its alternative energy agenda than in providing for the people of the Gulf region whose livelihoods hang in the balance.

We all want cleaner, greener energy, but no alternative we’ve identified heretofore is near capable of significantly reducing our demand for oil and gas.  While the president and others suggest that we were blind before this spill and that now we can see the pressing need to rush toward new energy solutions, the reality is that the nation has long appreciated the limits of our natural resources and supported the investigation of alternative energy options.  But absent a practical, deployable replacement, what this crisis actually highlights is the need for improved handling of fossil fuels.  What it demands is development of better technologies for exploration, extraction, transmission and refinement of oil and gas, as well as better procedures to safeguard against spills, contain them quickly when they occur, and mitigate their environmental and economic impact. 

Instead of racing to throw tax dollars at unproven alternative energy schemes, this is the time to invest in a multi-state economic development strategy to make the Gulf region an international hub of new energy solutions emphasizing safety and environmental stewardship within the oil and gas industry.

There is vast opportunity for growth in the industry where intellectual and physical assets already exist – for investment in R&D and production of new tools to better manage drilling, flow systems and transportation.  But there also is broad-based economic growth potential as this activity leads to an influx of research capital and students at local universities, as well as creation of jobs in advanced manufacturing, chemicals, construction, distribution, engineering, environmental reclamation, finance, law and other related fields. 

For decades, oil and gas companies have been in the Gulf region because of the proximity to massive reserves of fossil fuels.  Those reserves will last for years but not forever.  So, while the attention of the nation is focused on these issues and while leaders at every level of government are looking for ways to help, this is the chance to sow the seeds for the region’s economic future. 

Specifically, local and state leaders from Texas to Florida should be lobbying the federal government for unspent stimulus funds to support the establishment or expansion of energy companies in the region, under the condition that businesses apply those funds to research and development of safer, more reliable technologies applicable to the oil and gas industry or in the pursuit of alternative energy solutions.  A few months ago, U.S. Energy Secretary Steven Chu said he was unhappy that more than 80 percent of the $36 billion in stimulus money that the Department of Energy received last year had yet to be spent.  Now more than ever, leaders throughout the Gulf region need to call for that money to be invested in their communities.

Second is the need to create a federally supported Gulf Region Energy Investment Opportunity Zone – an interstate region in which energy companies are given significant tax incentives to locate major R&D and new technology fabrication facilities in communities that already have a critical mass of energy industry infrastructure and intellectual capital.  After Hurricane Katrina, Congress passed the Gulf Opportunity Zone Act of 2005, establishing incentives for investment in hard-hit areas of Louisiana, Mississippi and Alabama.  Now is the time to create a much broader program to encourage investment that will not only fuel the Gulf region’s economic prosperity for the foreseeable future, but which also will work to find much-needed solutions to our national energy concerns.

Under the right circumstances, the Gulf Region could become an indispensible source of energy industry knowledge and innovation. (Photo: U.S. Dept. of Energy)

Under the right circumstances, the Gulf Region could become an indispensible source of energy industry knowledge and innovation. (Photo: U.S. Dept. of Energy)

Thirdly, local and state leaders need to push energy industry leaders – including, but certainly not limited to BP – to make substantial and frequent investments to support independent energy research and the development of energy-related talent at universities throughout the region.  Companies in the oil and gas industry should be partnering more actively with universities in Texas, Louisiana, Mississippi, Alabama and Florida to ensure that their engineering, chemistry, physics, computer and nanotechnology programs are among the best in the world.  They should be working together to create an environment that fosters new thinking in energy-related fields and that attracts the best young minds to be educated and to collaborate on projects that will shape our energy future for generations to come.

There may never be a better time to establish the Gulf region as an indispensable base of knowledge within the international oil and gas industry – not only as a source of dwindling natural resources but also as an originator of technologies and procedures that can ultimately be licensed and exported to wherever drilling is done around the world.

Managed well, the silver lining of this dark time will be new business investment, job growth, population recovery and wealth creation that will benefit residents throughout the region from Corpus Christi to Panama City.  But if it’s to be, local and state leaders will need to strike the right balance between calls for federal support of the cleanup effort, requests for funding to encourage new investment, and suggestions that Washington do a better job to not get in the way with any more rash regulatory moves or politically motivated posturing.

Want to share your thoughts on this interesting issue?  Think I’ve got it all wrong?  Have other ideas about how the Gulf region can work to not only recover from this crisis but also to create a brighter economic future?  Leave a comment below or e-mail me.  And don’t forget to sign up to follow Bannon Communictions on Twitter.

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