AGRICULTURE AND OCS OIL AND GAS DEVELOPMENT 



Although currently there are few interactions between the agricultural 

 sector of Southwest Florida and OCS oil and gas exploration and development, 

 two potential threats should be considered. The start of intensive offshore 

 drilling could exact new demands on the labor market. The relatively higher 

 wages of oil workers, approximately $12 per hour (Charter Oil Co. August 1982) 

 as compared to farm hands, $3.34 per hour in 1980 (Greene et al. 1980) would 

 attract farm workers and possibly cause a temporary labor shortage. 



Long term and potentially the most costly conflict between agriculture 

 and OCS oil and gas production is the prospect of increased air pollution from 

 refineries built locally (see reports in this volume about minerals and oil 

 production, and environmental issues and regulations). Sulfur dioxide is one 

 of the main pollutants emitted during oil refining and heavy concentrations 

 kill plants. Sulfur dioxide in gaseous form combines with moisture in the 

 atmosphere and forms acid rain. Acid rain can seriously acidify natural, 

 unbuffered fresh waters or leach the soil and damage roots and leaves (Florida 

 Sulphur Oxides Study Inc. 1978). 



Other than these two potential problems the writer can see no other pos- 

 sible conflicts between OCS oil and gas development and the agricultural sec- 

 tor. The short run labor conflict is the product of an efficiently operating 

 market. The conflict involving air pollution is the result of an externality, 

 where the market does not operate efficiently. It is beyond the scope of this 

 paper to estimate the potential damage from pollution to farmers. In short, 

 it is anticipated that OCS leasing, if it has these impacts, will raise costs 

 for both the farmer and the consumer and may lower yields and output thus 

 raising consumer prices even higher. 



AGRICULTURAL PRODUCTION PROJECTIONS 



Two sets of primary agricultural production projections are described 

 here. The first set is derived by the writers, the second from the "OBERS 

 Florida Agricultural Projections." 



PROJECTIONS, SET 1 



For the purpose of these projections, it is assumed that agricultural 

 projection or supply is perfectly elastic in response to any change in demand; 

 therefore, the real price of these commodities is assumed to remain constant. 

 The demand for farm products is a function of the growth of the population and 

 real per capita income. Mathematically it can be expressed as follows: 



[Qq] t= [ P/P + Ey/n ^-i^^ 



where Qq is the quantity demanded at time period T in Southwest Florida; P/P 

 is the percentage change in the U.S. population; Ey/n, the income elasticity; 

 PI/PI is the percentage change in real per capita disposable income; and [Qjg 

 is the base period (1978) for projections to 2030. Because most agri- 

 cultural products produced in Florida are sold in a national market, the 



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