Economic Effects of Petroleum Prices and Production in the Gulf of Mexico OCS on the U.S. Gulf Coast Economy

The purpose of this study is to analyze the dynamic interaction between changes in crude oil prices, oil and gas industry activity in the OCS (measured in terms of petroleum production) and selected indicators of the Gulf Coast economies. The scope of the study is expanded to include E&P activity in the deepwater. A vector auto-regression (VAR) model framework showing the interaction between crude petroleum price, oil and gas production, the U.S. interest rates, the U.S. gross domestic product, and selected indicators of the state of the Gulf Coast economy-personal income, unemployment rate and revenue-was developed and estimated. The model framework enables us to establish the direction, symmetry, causation, duration, responsiveness, and correlation between industry activity and state economic activity indicators and oil price changes over time.