Offshore Wind Can Lower Energy Prices and Beat Out Oil and Gas

Introduction and summary

The Inflation Reduction Act of 2022 is the largest federal climate investment in U.S. history and promises to put the country on track to reduce emissions to 40 percent below 2005 levels by 2030.1 However, the oil lobby managed to tuck in provisions that would mandate a series of fossil fuel lease sales as well as a policy that shackles new wind and solar projects to oil and gas leasing in public lands and waters.2 This is despite the fact that renewables are expanding at a faster rate than fossil fuels and result in considerably stronger benefits for communities, consumers, and the economy.3

President Joe Biden’s administration has demonstrated its focus on dramatic expansions of offshore wind energy rather than polluting and dangerous oil and gas. In fact, the administration canceled three fossil fuel lease sales in 2022 due to a lack of industry interest.4 In contrast, there are currently 18 active offshore wind leases with 14 new site assessment plans approved, including the scoping of the first wind energy areas in the Gulf of Mexico and Gulf of Maine.5 This momentum will contribute to the United States achieving and surpassing its goal of deploying 30 gigawatts of offshore wind energy by 2030.6 Moreover, these policies not only move the administration closer to its national and international climate commitments but also maximize the benefits that Americans receive from clean energy development on public waters.

A new Center for American Progress analysis found that, per acre, Americans are getting significantly more return on investment from offshore wind energy leasing than they are from oil and gas leasing. This is true across the board, from taxpayer revenue to energy production, consumer energy costs, and carbon emissions. The average acre from an offshore wind lease sale brings in nearly 12,500 percent more revenue for taxpayers than 1 acre of oil while providing enough electricity to drive an electric vehicle almost 65 times farther than a gasoline-powered vehicle.

President Biden has and should continue to use the country’s offshore resources in the smartest and most economical ways possible. Prioritizing offshore wind has done just that.

Offshore wind leases are a massive potential source of public revenue and a strong investment for taxpayers, one that could also reduce energy and fuel costs and that has far fewer environmental and health costs than fossil fuels. With these opportunities for a climate- and human-friendly economy, there has never been a better time to switch to wind-focused ocean energy development.

Offshore wind brings in much more public revenue from lease sales than oil and gas

The Outer Continental Shelf (OCS) exists between state and international waters, and its resources—including renewable and fossil fuel energy—are managed by the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM). In recent years, offshore wind leases were sold for nearly 12,500 percent more per acre than their fossil fuel counterparts, while still providing comparable costs for consumers. A closer comparative look at the two leasing processes reveals exactly how Americans lose out when the country invests in offshore oil.

BOEM’s oil and gas leasing schedule is determined by its five-year plan, and each lease sale undergoes multiple steps in coordination with the National Environmental Policy Act of 1969 (NEPA). During these competitive lease sales, companies submit bids for the right to extract these publicly owned resources, and the winning bid, or bonus, is paid to secure a lease. Companies determine the maximum bidding point at which they are willing to pay for a lease by taking into account future price uncertainty, resource uncertainty, and environmental risk.7 The average winning bid from offshore oil and gas lease sales from 2019 to the present is $47 per acre.

Offshore wind versus oil and gas: By the numbers


Average winning bid per acre from offshore oil and gas lease sales (2019–present)


Average winning bid per acre from offshore wind sales


Additional revenue for taxpayers brought in by offshore wind lease sales versus oil and gas lease sales

The offshore wind leasing process is similar: During lease sales, companies submit bids for the right to construct and deploy wind turbines, with the winning bid paid to secure that lease.8 However, because the wind energy market is more stable, policy and capital markets are favorable, and the environmental risk is low, wind leases sell for considerably more per acre than their oil and gas counterparts.9 The average winning bid from all of BOEM’s offshore wind sales is $5,906 per acre.

However, offshore wind energy has an advantage over fossil fuels on more than a price-per-acre basis; it is also bringing in more money for the energy it is expected to produce. Offshore wind bid payments per expected megawatt-hour (MWh) are 217 percent higher than they are for oil and gas.10 Increased focus on renewables could therefore increase revenue generated through offshore leasing tremendously, maximizing returns on public resources.

Table 1

Wind benefits workers

Offshore wind is not only a better option for the environment but also a better deal for workers and the public. Offshore oil and gas is almost an exclusively nonunion industry, often relying on foreign workers throughout the extraction process.11 In contrast, offshore wind is putting workers first. Every project built and currently under construction operates under a project labor agreement—a collective bargaining agreement between a union and employer that covers terms of employment.12 In addition, there are strong commitments from industry and governments to ensure that the construction, operations, and maintenance of these projects provide high-quality jobs13 and use increasingly more domestically manufactured materials.14

1 acre of offshore wind leasing produces more usable energy for less

Historically, oil and gas have been considered the most cost-efficient sources of energy due to their high energy density and relative ease to transport, especially among options available for offshore exploitation. However, many of the remaining major oil deposits are in deeper waters that are farther from shore and have higher exploration and equipment costs and risks.15 With offshore wind development costs plummeting and multisector energy grids quickly electrifying, the cost-to-energy-output ratio is starting to swing in favor of wind.16

Since all taxpayers are energy consumers, energy costs are also important to the American public. Consumer costs are directly tied to demand as well as energy production rates; and not every single leased acre of a fossil fuel lease actually ends up being productive—i.e., having active oil and gas extraction. Often, less than one-third of that leased space is used for extraction in a given year.17 One average productive acre of natural gas leasing produces just 34 MWh, while offshore wind exceeds this at 40.8 MWh per acre. For offshore wind, that is enough power to drive an average electric car nearly 118,000 miles, the equivalent of driving from coast to coast in the United States 42 times—and notably, 18,000 miles farther than the distance achievable using the power generated from natural gas. One acre’s annual output of consumer-grade gasoline is only enough to drive 1,917 miles, or about the distance from New York City to Albuquerque, New Mexico.

Figure 1

For fuel consumers, however, mileage is irrelevant if that distance is not affordable at the pump—or plug. In August 2022, when the average gallon of gasoline cost $3.82,18 a drive from New York City to Albuquerque would cost about $332. That same drive in an electric vehicle would cost less than $58.19 Offshore wind is, of course, only part of the clean energy matrix; these prices have been dropping for years, and the rate of decrease is increasing exponentially.20

Project lifetime electricity costs are lower for offshore wind

The levelized cost of energy (LCOE), defined as “the price at which the generated electricity should be sold for the system to break even at the end of its lifetime,” is a useful tool for comparing energy sources.21 Essentially, the LCOE determines the cost-effectiveness of each measured energy source on a per-MWh basis and is a suitable stand-in as a unit of energy value.22

While the LCOE for electricity generated in offshore wind farms is currently slightly higher than that of gas—$66–$100 per MWh versus $45–$74 per MWh, respectively—the increasingly rapid deployment of wind turbines on the OCS is expected to bring costs down significantly.23 By 2030, wind energy is estimated to be nearly 28 percent cheaper to produce over a project lifetime than the current LCOE for gas, which is projected to increase over the next decade.24 Given new investments in offshore wind through executive action, in the Inflation Reduction Act,25 and prioritization from BOEM,26 the LCOE of offshore wind could be even lower by 2030.

Figure 2

Spills and cleanup costs are negligible with offshore wind

Fossil fuel extraction is, of course, inherently a dirty industry. Although catastrophic spills are significantly less common than smaller spills, they require multiple orders of magnitude more time and money for remediation. The Oil Pollution Act of 1990 codified that cleanup cost responsibility lies with those responsible for the spills,27 but the direct line of cost responsibility is not always seamless, and spill remediation costs, reimbursement lines, and delayed environmental and human impacts are not straightforward.28

In particular, abandoned and orphaned oil wells represent a serious environmental spill risk and taxpayer burden.29 Their tendency to leak often goes unnoticed and unaddressed for months or even years, releasing tons of harmful crude oil and gas into public waters.30 Owners of decommissioned wells have been known to cut corners by “temporarily” abandoning them for decades to avoid the expensive decommissioning costs.31 If the previous owners have declared bankruptcy or no longer exist, the responsibility once again falls on taxpayers. In California, for example, when the owners of Platform Holly and wells on the Rincon Pier declared bankruptcy, they left California taxpayers with a $115 million decommissioning bill.32

Read more on abandoned and orphaned oil wells

Furthermore, spill damages associated with quality of life and ecosystem health are often undervalued, and social damages—including forced livelihood changes and perceived value shifts of polluted areas—are not entirely covered by punitive damage costs. After the Exxon Valdez spill in 1989, for instance, a contingent valuation study found that the public was willing to pay a minimum of $2.8 billion in taxpayer money to cover damage to the environment and wildlife—considerably more than the $1 billion Exxon was held responsible for.33 More often than not, the costs not covered by the spiller end up being shouldered by taxpayers, either directly in terms of personal lifestyle cost increases and quality-of-life changes or indirectly through diverted tax revenue streams.

Additionally, oil companies can write off their profit losses against their taxes to recoup money paid in fines and cleanup costs, leaving taxpayers with a greater burden to support the drop in government revenue. BP successfully used this tax write-off method to gain back $10 billion of the $60 billion the company paid in damages for the Deepwater Horizon disaster in 2010.34

Taxpayers deserve a better energy industry that does not pollute their coasts and swindle them out of remediation costs. Furthermore, hazardous waste facilities are frequently located adjacent to historically marginalized communities, such as in the aptly named “Cancer Alley” in Louisiana, where residents face the threat of oil spills and refining processes that depress health outcomes.35 Offshore wind turbines, in contrast, do not produce harmful chemicals or waste products when generating electricity—and as a result, there are no dangerous chemicals that could be spilled. Likewise, leaks cannot occur, and decommissioning wind turbines is a much cleaner and simpler task.36

Offshore wind benefits the climate and communities

Community health and climate stability are intimately connected, and the impacts of the continuous release of greenhouse gasses into the atmosphere highlights the need to transition the country’s energy mix. The annual emissions produced from 1 average acre of offshore oil and gas leasing shows the stark contrast between carbon-based versus wind leasing. On average, 201 barrels of crude oil are produced annually in 1 actively productive acre in the Gulf of Mexico, which has the potential to emit 87 metric tons of carbon dioxide.37 A recent study found that offshore oil drilling operations may be emitting considerably more greenhouse gasses than previously understood.38 One acre of offshore wind, meanwhile, avoids emissions equivalent to nearly 30 metric tons of carbon dioxide each year.

Figure 3

Furthermore, fossil fuels must be transported—often hundreds or thousands of miles—to energy generation sites before they can be used, emitting even more carbon throughout that shipping process.39

The costs of carbon emissions extend beyond direct climate effects: The social cost of carbon (SCC), which quantifies the economic damage estimated to occur from emitting 1 ton of carbon dioxide, affects all levels of society.40 The offshore oil and gas industry is responsible for a significant amount of carbon emissions per year, and the associated annual SCC for an average acre of extraction is $2,794 for gas and $16,040 for oil.41 Industries sustaining coastal economies need to account for those costs to maintain solvency—especially fisheries, tourism, and agriculture.

By comparison, the SCC of offshore wind energy is negligible.42 Even when considering emissions from construction and maintenance, the SCC of offshore wind is less than five-thousandths of a cent ($0.000045) per acre.43 According to the U.S. Department of Energy, the health and climate benefits of offshore wind energy were estimated to be $76 per MWh for installations in 2020—or $3,101 per acre. And considering the human cost of fossil fuels, offshore wind represents the United States’ strongest social investment opportunity.44

Table 2

Learn more


A significant expansion of offshore wind leasing is a viable and financially sensible alternative to the United States’ largely oil-based ocean energy economy. The Biden administration has been working judiciously to assess, identify, and approve potential new wind energy development zones, and industry is showing strong interest across the board. In areas such as the Gulf of Mexico, which has been historically dominated by the oil industry, the existing offshore energy supply chain and deployment infrastructure have created an attractive environment for utility-scale wind investment and are already attracting industry attention—not to mention the significant boost to Gulf state economies.45

Unfortunately, the Inflation Reduction Act’s provisions tying new offshore wind to oil leasing have no basis in the reality of clean energy expansion and threaten to hamstring wind development and jeopardize what has proved to be a more efficient and economical energy source. In executing the law’s leasing requirements, the Biden administration must lease as little new fossil fuel acreage as possible while prioritizing and maximizing offshore wind.

Offshore wind has proved itself to be the most efficient and cost-effective use of OCS leasing acreage. The benefits for the domestic economy to taxpayers, and to workers and energy consumers, are unmatched by offshore wind’s crude oil and natural gas counterparts—the environmental, health, and financial costs of which are a drain on livelihoods and monetary resources. Publicly owned ocean resources should be leased in a manner that results in the greatest returns to the taxpaying public. Wind energy offers a greater return on investment for the public and increases revenue as well as social value.

President Biden has and should continue to use the country’s offshore resources in the smartest and most economical ways possible. Prioritizing offshore wind has done just that. New investments and commitments to offshore wind leasing announced in President Biden’s July 20, 2022, executive actions,46 coupled with those included in the Inflation Reduction Act, are significant. They mark a bold strategy that will lead to a stronger ocean energy economy and a healthier populace.


The author would like to thank Zainab Mirza, Miriam Goldstein, Jennifer Rowland-Shea, Mark Haggerty, Mike Williams, Nicole Gentile, Corinne Muller, Shanée Simhoni, Steve Bonitatibus, Bill Rapp, and Keenan Alexander for their contributions to this report.


Because wind turbine generation expectations are very straightforward and well documented, production is easily forecast—even for projects not yet constructed. Utility-scale wind energy projects typically report their electricity output in terms of “nameplate generation,” or the amount of electricity that would be generated if all turbines were working at their maximum capacity for one year. Since real-world conditions rarely—if ever—reach this level of production for long, the industry standard for the “expected” generation is to use a capacity factor, or an expected average generation level, of nameplate capacity. The New York Bight and Carolina Long Bay wind energy projects under development off the coasts of New York, New Jersey, North Carolina, and South Carolina are the only large, utility-scale offshore wind lease sales held in the United States thus far, and the author used their data for all per-acre analyses. These projects have a combined nameplate capacity of 6,901 MWh across 598,292 leased acres, which amounts to about 102 MWh per acre. Here, the analysis used the projects’ expected 40 percent capacity factor output of 40.8 MWh per acre.47

Oil and gas essentially share the same extraction and leasing pipeline. Since OCS leases are sold for combined oil and gas extraction rights rather than separate leases for oil and gas, companies can—and do—extract both products from the same leased areas. However, extraction values are only reported in terms of total leased area and total acreage undergoing extraction and are not broken down by product.48 Oil and gas production values are published for each region as a whole, and for these analyses, the author used values from the Gulf of Mexico for 2019 through 2021.49 From this, the author was able to estimate the amount of each product extracted per actively productive acre, lease sale value, and value to taxpayers—although doing so limits the analysis to estimates flattened across all producing acres.

Making comparisons across energy sources is a crucial part of discussing usage of the same physical ocean acreage. Comparing wind energy with natural gas is fairly easy; both energy sources result in electricity as their final product, and with the LCOE used as a common variable to incorporate all project aspects, overall unit cost comparisons are simple. Comparing wind energy generation with crude oil extraction is a less straightforward process, however, since their final products are electricity and liquid fuels, respectively. Their use in transportation, potential for overlapping leasing space, and the U.S. Environmental Protection Agency’s carbon emissions/carbon offset conversion calculator allows that jump to be made with minimal additional effort.50 Using this tool, it was possible to identify the product of one year’s worth of oil extraction across 1 acre of leasing and, as with gas and wind energy, its equivalent emissions and energy values. Since only about 40 percent of each barrel actually ends up becoming gasoline, the author used this lower value for calculations involving vehicle miles and vehicle emissions.51

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