**STUDY TITLE**: University Research Initiative on the Effects of
Offshore Petroleum Development in the Gulf of Mexico.

**REPORT TITLE**: Social and Economic Impacts of Petroleum \"Boom and
Bust\" Cycles.

**CONTRACT NUMBER**: 14‑35‑0001‑30470.

**SPONSORING OCS REGION**: Central Gulf of Mexico.

**FISCAL YEAR(S) OF PROJECT FUNDING**: 1992 ‑ 1993.

**COMPLETION DATE OF REPORT**: January 1994.

**COST(S)**: FY 1992: \$27,991; FY 1993: \$0.

**CUMULATIVE PROJECT COST**: \$27,991.

**PROJECT MANAGER**: Paul Sammarco.

**AFFILIATION**: Louisiana Universities Marine Consortium (LUMCON).

**ADDRESS**: 8124 Hwy. 56, Chauvin, La. 70344.

**PRINCIPAL INVESTIGATOR\***: Ruth Seydlitz and Shirley Laska.

**KEY WORDS**: Central Gulf; Louisiana; sociology; development; social
impact; economic impact; resource extraction.

**BACKGROUND**: This study is a continuation of a portion of an earlier
investigation of social and economic impacts of petroleum production in
the Gulf of Mexico on communities (operationalized as parishes) in
Louisiana. The current study adds to the previous investigation and the
literature by: (1) completing the preboom to bust and boom to bust
comparisons as well as the preboom to boom comparison and (2) using time
series regression to analyze the effect of year‑to‑year changes in
petroleum industry activity on year‑to‑year changes on social problems,
educational attainment and strain, and community economic health. The
importance of determining the social and economic impacts of OCS
petroleum extraction in a region that has rarely been studied prompted
MMS to fund such research under the Environmental Studies Program and
the University Research Initiative.

**OBJECTIVES**: To examine from the preboom through the bust the impact
of OCS petroleum activity in the Central Gulf of Mexico on social
problems, educational attainment and strain, and community economic
health in parishes that differed in both their degree and type of
involvement in two major ways: (1) by comparing the levels of the impact
variables in different phases and (2) by analyzing the effect of the
year‑to‑year changes in petroleum industry activity on year‑to‑year
changes in the impact variables and considering delays in impacts that
might be occurring.

**DESCRIPTION**: Data from various government agencies were collected
and analyzed to examine the effect of petroleum industry activity on
three types of impacts: social problems, educational attainment and
strain, and community economic health. The data used included two
indicators of petroleum industry activity, four measures of social
problems, five indicators of educational impacts, and six measures of
community economic health. The data for the petroleum activity measures,
social problems indicators, and education variables were collected from
the late 1950s through the late 1980s while the data for the economic
measures were obtained from the late 1960s through the late 1980s. The
data for the three types of impacts were collected and analyzed
separately for four groups of parishes of which two differed by degree
of involvement (highly and minimally involved groups of parishes) and
two differed by type of involvement (extraction and related activities
groups of parishes). Three primary statistical methods were used:
analysis of variance, time series regression, and t‑tests for the
difference between means. Percentage chances were used for decennial
economic data.

**SIGNIFICANT CONCLUSIONS**: OCS activity has had an impact on social
problems, educational attainment and strain, and community economic
health. Some impacts are negative, some are positive. The impacts are
more complex than expected based on previous studies in that the results
for all three types of impacts suggest a cycle of effects besides the
obvious boom and bust cycle. The exact mechanism by which the price of
oil influences the drilling of wells and social and economic effects is
not well understood as yet; more research is needed that traces the
effects from the price of oil through the intervening variables to
social and economic impacts.

**STUDY RESULTS**: 1) Rapid increases in petroleum industry activity are
associated with increases in social problems, particularly suicides and
homicides. The increase in suicides and homicides between the preboom
and bust in involved parish groups is greater than would be expected
based on the national trends for these variables. (2) Greater petroleum
industry activity is associated with higher high school completion,
lower enrolling in college, and greater strain in providing educational
services. (3) There is some economic gain in involved parishes when
petroleum activity is greater, but this improvement in community
economic health is transitory. There is more evidence of serious
economic problems in the bust than evidence of economic gain during the
period of rapid increases in petroleum activity. The increase from the
preboom to the bust in income is less than would be expected based on
the national trend while the increase in transfer payments is greater
than would be expected. (4) Degree of involvement is important. Highly
involved parishes experience greater impacts than do minimally involved
parishes. The results also suggest that impacts roll out into minimally
involved parishes. (5) Type of involvement is important, especially when
examining economic impacts. The related activities parishes experienced
less extreme economic changes than did the extraction parishes and the
related activities parishes fared better during the bust.

**STUDY PRODUCTS**: Seydlitz, R. and S. Laska. 1994. Social and Economic
Impacts of Petroleum "Boom and Bust" Cycles. A final report by the
Louisiana Universities Marine Consortium for the U.S. Department of the
Interior, Minerals Management Service, Gulf of Mexico OCS Region, New
Orleans, Louisiana. Contract No. 14-35-0001-30470, OCS Study MMS
94-0016. 131 pp.

**\* P.I.'s affiliation may be different than that of the Program
Manager(s).**