Every one on earth would admit that life on earth revolves around oil.  This is because oil contributes to the most human needs such as food and other necessities such as fibers. Owing to this important resource on earth, the demand has completely overgrown thus shifting the attention to the supply. The United States and China which are the leading world superpowers on and concerned with development   have been out to revert the increasing supply deficits by settling on offshore oil drilling. These countries had realized that failure to avert the situation would cause a great tidal wave of disaster in their endeavors to conquer the entire world through technological development.

Over the years, the United States has prohibited the offshore oil drilling while China has continued to explore its offshore oil drilling to address the new energy policy (Brian, para 8). The entire world was concerned about the liability associated with the damage caused by the oil spills. To this effect, the bunkers convention was conceived. This convention was established to check on the pollution limits contributed by oil spills (Zhu, 20). Both the United States and the republic of China have launched a great competition relating to offshore oil drilling. This has seen China invading great offshore of Cuba thus has never been pleas in to the American government. The United States has also shown interests on the energy investment. This has inevitably attracted it to the Chinese market.

The United States realized that the Chinese government would not allow it to invest in its territory; it therefore schemed and entered into the Chinese energy market by negotiating a treaty with the people’s republic of China. This agreement authenticated a joint venture between the United States and the people’s republic of China (Gregor, 93). This made the United States to invest heavily in the energy gene rating sector of Chinese main land industry.


How we should determine the best policy depends above all on the cost and benefits associated with the offshore oil drill.

Objective of the paper

  1. The key objective of this paper is to count costs and benefits associated with the offshore oil drilling in the United States and China
  2. The paper also intends to focus on the policy provisions practiced in both United States and China relating to the offshore oil drilling.
  3. The paper will also try to discuss the economic impacts of offshore oil drilling in both China and United States of America.
  4. The paper finally tries to give the steps taken by China to reduce fishing but not destroying the economy.

Costs and Benefits Associated With the Offshore Oil Drilling in the US and China

The United States, as well as China, has been moved by the fact that energy and power forms the foundation footing of all the development agenda in all the economic fronts. Owing to this, the US has underlined several benefits associated with the offshore oil drilling and gas development to add value to its already existing energy deficits along side replacing the foreign based generated energy (National Research Council, 197). These benefits are categorized into economic benefits, environmental benefits, security benefits, option benefits and knowledge benefits. During 1978 to 1999 “the cumulative cost to DOE to oil program” was a little higher compared to the gas program (p. 197). This cost stood at $ 48 million. The United States government however states that it has found if completely difficult to compile the total economic benefits relating to offshore oil drilling. The DOE’s assessment on the program of oil in 1978-2005 found out that the United States had raised benefits worth $ 2.2 billion to its industries.

Both the United States and China have almost the same costs and benefits relating to the offshore oil drilling. In their assessment, the DOE focused on the projects which were related to drilling. The estimated benefits stood at $ 252 million. The benefits of the offshore oil drilling were never quantifiable but the committee concerned in the analysis estimated total benefits of approximately $ 1 billion. The committee’s estimated benefits ratio stood at 12.on the environmental benefits ,  it  was  noted by the committee that the drilling process was secure from any noise  pollution fuel usage was at minimum rate, reduced discharge of toxin s to the environment.  This move is an important path towards better protection of the environment (197).

The new twists involving the offshore oil drilling is attributed to add more energy to the United States which has remained under pressure. This production of both oil and gas affect directly the national security. These project associated to the new discoveries underlying the offshore drilling is of great importance as it adds value to the existing knowledge base. The aspect of commercialization of the pipeline industry in the United States is great economic importance.

The program is having some graving costs. As much as there are benefits the underlying costs are also adverse. The major costs include those including the cost of establishing the project and the risks involved in the establishment of the drilling plants. Normally the risks which must cause problems include those associated with spillage of the oil in the ocean waters. This spillage has to be covered well as it causes a great harm to both the fishes and the fishermen. The compensation fund has to be established to save the fisherman. For the plant will be authorized to conduct drilling of oil from the offshore and the plant must be ready to compensate the fisherman who entirely earns his livelihood through fishing. Other cost is that the construction of the plant would displace the established beaches and tourists’ hotel and restaurants constructed in the coastline. The government must calculate the anticipated benefits that such a move would earn it which should be more than the contribution of the tourist sector to its economy.

The Offshore Oil Drilling Policy in the United States and China

According to Hills, the China’s policy on offshore drilling was based on open and free policy. The Chinese government allowed for a free exploration and development in all its territorial areas. This was seen in gulf of Bohai, Beibu Wan gulf and Korea Bay. The China’s coastline has been found to be enriched by the oil. This has been discovered along its 2000 miles in the coastline. On discovering the enriched oil coastline, the Chinese government contracted foreign companies in conducting the shooting. Most of these foreign companies were involved in the seismic shooting costing over $ 60 million (678).

The Chinese offshore oil bench is shallow thus attracting several foreign companies. The companies recorded are over forty from fourteen different countries, United States leading the peak. The underlying costs of drilling in China’s continental shelf are low as it lay at a range of 30-100 meters in depth. Moreover, it has been acknowledged that even mere jack up rigs can be used in drilling the oil. The American oil companies led by the oil BP capitalized on this low lying continental shift to establish. With relation to costs, the offshore experts had estimated that each exploration cost per well would range between $10 and $ 15 (Hills, 678).

The United States has for a long time restricted and laid down tough bans on its offshore oil drilling. In 2010, there occurred a great explosion and oil spill in the Mexican gulf. This moved forced the United States congress to re consider the risks and benefits associated with the oil drilling. Before the explosion in the Mexican deepwater, the federal government had put in place a subsidies policy that guided the offshore oil drilling (Baumol and Blinder, 147). Following the spill, the congress had reviewed the aspect of government offering subsidies for the offshore oil drilling. When the Obama government ascended to power, president Obama lifted the ban on the offshore oil drilling for selected parts of the United States. The president claimed that this move was to enable the United States meet its energy requirements (Klein, para 2). This move was to be inevitable in Alaska, Atlantic Ocean and eastern Gulf of Mexico (Klein, para 4).

The Economic Impacts of Offshore Oil Drilling in the United States and China

According to Pombo and Gibbon report, it was recorded that the economic benefits associated with the offshore oil drilling and gas development are numerous. In relation to the report, the economic impacts were related to consumer and producer benefits, federal revenue benefits and employment benefits. In an economic term, the economic relevance was associated with demand and supply y sides of the economy. The supply side producer surplus benefits were dependent on the market prices in relation to the costs of production. While the demand side of consumer surplus revealed the actual responsiveness of the consumers and the actual amount market price (Pombo and Gibbon, 18). Both the United States and the republic of China have benefited greatly in terms of the revenue generation. In the United States, OCS production and lease sales have led to a realization of more than $ 156 billion of revenue to the federal government. The federal government also generates a lot of revenues associated with the taxes it imposes on the offshore oil drilling plants.

The sector has also offered great employment opportunities to both the Americans and Chinese alike. The offshore oil drilling has offered both the direct and indirect employment opportunities. For instance, the OCS industry for oil and gas has offered over 42, 000 people on the direct employment as over 90, 000 people enjoys indirect employment from the same OCS oil and gas industry (Pombo and Gibbon, 18). The other economic impact associated with the introduction of the offshore oil drilling is that new sources of energy have been discovered due to the president’s NEP (18).  The discovery of the offshore oil drilling has necessitated new technical advancements to fast track the drilling process at the highest rate (19).

The American offshore oil drilling has also faced great drawback that has made it impossible to exploit over 31 billion barrels of oil in the North Sea. According to Sanders, the factors that have attributed to these draw back s include the “extreme water depth, strong winds, large waves and the great distance from land” (Sanders, 380). The oil spills in the Gulf of Mexico has also forced the United States to shift and change its policies governing the safety and risks associated with the oil.

The Chinese government has also tightened the grip on its safety relating to the risks associated with the oil spills. Following the spill, the Chinese government was reconsidering working together with foreign countries to strengthen monitoring the marine environment against the oil spills. The Chinese government has thus moved forward by establishing a “12th five year plan” to allow for “systematic utilization of marine resources and coastal areas as the energy demand soars (Xinhua, para 9). It is also reported that the government of China anticipate to review its regulations thus relates to the joint offshore exploration of oil. According to the  reports from the Chinese ministry of land and resources,  the foreign enterprises and firms involved in the exploration may experienced an intense oversight by the government to  counter any risks associated with the oil spill (China Daily, para.16). According to the China dailies, more Chinese companies should be authorized to offer stiff competition in the exploration of both oil and gas at the offshore rather than using the CNOOC (China Daily, para. 20).

Steps Taken By China to Reduce Fishing without Destroying the Economy

China has been the world’s largest producer of fish. It has completely used fleets to harvest the fish and thus reducing the fish population. The Chinese mode of harvesting fish had drawn the international attention since it threatened the existence of the marine ecosystem and the fish. Having realized the need to allow for maintenance and conservation of marine environment, the Chinese government went into an agreement together with other regional countries. In November 1996, the China came under pressure thus signing the fish stocks agreement that prohibited the use of force on the fishing vessels on the high waters. But the Chinese government has not fully implemented the agreement as it has employed force on other fishermen vessels on high waters in its shores (Xue, 652).

The several conventions and treaties have been put in place relating to fishing.  These conventions have posed great restrictions on fishing that the Chinese fishing industry has faced great challenge. Having over depended on distance water fisheries, the conventions and treaties introduced charges on the distance fishing forcing China to withdraw some of its fleets and vessels from high waters. This move compels the Chinese vessels to comply the international communities thus loosing grips on fishing (654).

China has been facing many deficits in the power supply to match its economic growth. Owing to this the country has utilized compost of its waters to produce electricity through the hydroelectric power. China has also initiated several initiatives based in the energy supply. The energy supply is believed to be in a position of contributing much more than fishing. Therefore, the Chinese move of shifting from fishing to the offshore oil and gas exploration will respond coherently to the economic growth and development.


Oil is one of the most important components of economic development. The resource is almost everything in the world and other economies. The resources have completely been almost exhausted in the on land catchments. Owing to its costs, most of the dominating economies have resorted to offshore oil drilling. The United States and China are leading the park by so initiating eve n the joint ventures to allow for the production of energy through the offshore oil drilling and gas development. The move has also contributed to great water pollution. For instance the oil spills on deepwater bodies has called for alarm and both the United States and China have tighten policies on monitoring and management on their waters.  They have also increased vigilance on their water bodies as securities are ever on the check to detect the substandard vessels on the water bodies.

China has also been forced to reduce its fishing rates just to ensure that it abides by the international communities. This is in relation to different conventions and agreements that that have been established by both the United Nations and other regional stakeholders. China was never at bay with these conventions and treaties because they intended to reduce its fishing capacity. The convention introduced new rules that squeezed its revenue earnings thus forcing it to diversify to energy exploitation.


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