1. GROWTH OF THE MARITIME INDUSTRY IN THE GULF REGION AND THE DEMAND FOR QUALIFIED MARITIME PROFESSIONALS AMERICA’S ENERGY COAST LEADERSHIP HEARING GALVESTON, TEXAS MAY 25-26, 2010 WILLIAM T. MC MULLEN, PH.D. PROFESSOR OF MARITIME ADMINISTRATION AND OF MARINE SCIENCES Head of the Department of Maritime Administration Interim Head of the Department of Marine Transportation TEXAS A&M UNIVERSITY AT GALVESTON

2. THE GENERAL DEVELOPMENT OF WORLD TRADE BETWEEN 2000 AND 2020, WORLD TRADE WILL DOUBLE. BETWEEN 2000 AND 2020, WORLD TRADE WILL DOUBLE. IMPORTANCE OF INCREASED ECONOMIC AND POLITICAL STABILITY WHICH STIMULATES FOREIGN DIRECT INVESTMENT, AND GLOBALIZATION. IMPORTANCE OF INCREASED ECONOMIC AND POLITICAL STABILITY WHICH STIMULATES FOREIGN DIRECT INVESTMENT, AND GLOBALIZATION. IMPORTANCE OF THE MIDDLE CLASS IN CREATING DEMAND FOR GOODS AND SERVICES. IMPORTANCE OF THE MIDDLE CLASS IN CREATING DEMAND FOR GOODS AND SERVICES. DIFFERENTIAL IMPACT ON AMERICAN COASTS – CARGO MOVEMENTS ON THE GULF COAST ARE EXPECTED TO TRIPLE DIFFERENTIAL IMPACT ON AMERICAN COASTS – CARGO MOVEMENTS ON THE GULF COAST ARE EXPECTED TO TRIPLE

3. REGIONAL IMPACT OF THE NEW LOCKS OF THE PANAMA CANAL NEW LOCKS WILL OPEN IN 2014 AND WILL DOUBLE THE PRESENT CAPACITY, ALLOWING LARGER AND MORE VESSELS NEW LOCKS WILL OPEN IN 2014 AND WILL DOUBLE THE PRESENT CAPACITY, ALLOWING LARGER AND MORE VESSELS SMALLEST PRESENT LOCK IS 110’ WIDE, 1,050 FEET LONG AND 85’ DEEP. NEW LOCKS ARE 180’ WIDE,1400 FEET LONG AND 60’ DEEP. SMALLEST PRESENT LOCK IS 110’ WIDE, 1,050 FEET LONG AND 85’ DEEP. NEW LOCKS ARE 180’ WIDE,1400 FEET LONG AND 60’ DEEP. BETWEEN 2005 AND 2025 CARGO VOLUME WILL DOUBLE. PRESENTLY ABOUT 15% OF THE CONTAINERS FROM ASIA THAT TRANSIT THE CANAL COME TO HOUSTON; THIS WILL INCREASE TO 35% WHEN THE FULL IMPACT OF THE LARGER LOCKS IS FELT. BETWEEN 2005 AND 2025 CARGO VOLUME WILL DOUBLE. PRESENTLY ABOUT 15% OF THE CONTAINERS FROM ASIA THAT TRANSIT THE CANAL COME TO HOUSTON; THIS WILL INCREASE TO 35% WHEN THE FULL IMPACT OF THE LARGER LOCKS IS FELT. COASTWISE DISTRIBUTION OF CARGO BY SHIP/BARGE WILL BE ESSENTIAL. ROAD AND RAIL SYSTEMS WILL BE INADEQUATE. COASTWISE DISTRIBUTION OF CARGO BY SHIP/BARGE WILL BE ESSENTIAL. ROAD AND RAIL SYSTEMS WILL BE INADEQUATE.

4. EXPANDING OIL AND GAS INDUSTRIES IN THE GULF OF MEXICO STARTING IN 2000 AND CONTINUING THROUGH ABOUT 2040, THERE WILL BE APPROXIMATELY $400 BILLION IN DIRECT INVESTMENT IN DEEP GULF DRILLING OFF THE CONTINENTAL SHELF. STARTING IN 2000 AND CONTINUING THROUGH ABOUT 2040, THERE WILL BE APPROXIMATELY $400 BILLION IN DIRECT INVESTMENT IN DEEP GULF DRILLING OFF THE CONTINENTAL SHELF. TECHNOLOGY OF RECOVERY HAS OVERTAKEN THE TECHNOLOGY OF EXPLORATION TECHNOLOGY OF RECOVERY HAS OVERTAKEN THE TECHNOLOGY OF EXPLORATION ECONOMIC MULTIPLIER EFFECT ON THE COASTAL ZONE IS 5-7 TIMES THE VALUE OF THE OFFSHORE INVESTMENT: TOTAL IMPACT APPROACHES $3 TRILLION. MOST IMPACT WILL BE WEST OF THE MISSISSIPPI RIVER. ECONOMIC MULTIPLIER EFFECT ON THE COASTAL ZONE IS 5-7 TIMES THE VALUE OF THE OFFSHORE INVESTMENT: TOTAL IMPACT APPROACHES $3 TRILLION. MOST IMPACT WILL BE WEST OF THE MISSISSIPPI RIVER.

5. ECONOMIC ACTIVITY IN THE COASTAL ZONE 12 COASTAL COUNTIES IN TEXAS AND 26 COUNTIES COMPRISE THE COASTAL ZONE - THE AREA WITHIN ABOUT 100 MILES OF THE COAST. 12 COASTAL COUNTIES IN TEXAS AND 26 COUNTIES COMPRISE THE COASTAL ZONE - THE AREA WITHIN ABOUT 100 MILES OF THE COAST. ONE-THIRD OF THE POPULATION AND ONE-THIRD OF THE ECONOMIC ACTIVITY OF THE STATE OCCURS IN THE COASTAL ZONE. ONE-THIRD OF THE POPULATION AND ONE-THIRD OF THE ECONOMIC ACTIVITY OF THE STATE OCCURS IN THE COASTAL ZONE. THE PORT OF HOUSTON GENERATES MORE THAN 785,000 JOBS IN THE STATE OF TEXAS AND APPROXIMATELY $117.6 BILLION OF ECONOMIC ACTIVITY IN TEXAS. THE PORT OF HOUSTON GENERATES MORE THAN 785,000 JOBS IN THE STATE OF TEXAS AND APPROXIMATELY $117.6 BILLION OF ECONOMIC ACTIVITY IN TEXAS. THE PORT OF HOUSTON GENERATES ABOUT 9.6% OF THE GROSS STATE PRODUCT OF TEXAS WHICH WAS $1.228 TRILLION IN 2008. THE PORT OF HOUSTON GENERATES ABOUT 9.6% OF THE GROSS STATE PRODUCT OF TEXAS WHICH WAS $1.228 TRILLION IN 2008. THE ECONOMY OF THE STATE WILL BENEFIT ENORMOUSLY FROM INCREASED FOREIGN TRADE. THE SIGNIFICANCE OF PORTS WILL INCREASE. THE ECONOMY OF THE STATE WILL BENEFIT ENORMOUSLY FROM INCREASED FOREIGN TRADE. THE SIGNIFICANCE OF PORTS WILL INCREASE.

6. THE MARITIME LABOR POOL THERE IS PRESENTLY A SUBSTANTIAL INTERNATIONAL SHORTAGE OF MARITIME PROFESSIONALS AT SEA AND ASHORE. SHORTAGES WILL INCREASE AS MARITIME-BASED ECONOMIC ACTIVITY EXPANDS. 90% OF INTERNATIONAL TRADE IS BY SEA. WORLD WIDE SHORTAGE OF APPROXIMATELY 46,000 OFFICERS. THERE IS PRESENTLY A SUBSTANTIAL INTERNATIONAL SHORTAGE OF MARITIME PROFESSIONALS AT SEA AND ASHORE. SHORTAGES WILL INCREASE AS MARITIME-BASED ECONOMIC ACTIVITY EXPANDS. 90% OF INTERNATIONAL TRADE IS BY SEA. WORLD WIDE SHORTAGE OF APPROXIMATELY 46,000 OFFICERS. INTERNATIONAL AND DOMESTIC TRAINING AND CERTIFICATION REQUIREMENTS ARE INCREASING. THIS INCREASES TRAINING COSTS AND COSTS OF RE-CERTIFICATION OF SERVING MARINERS. THIS CONSTRAINS EXPANSION OF THE LABOR POOL AND ESTABLISHMENT OF NEW PROGRAMS. INTERNATIONAL AND DOMESTIC TRAINING AND CERTIFICATION REQUIREMENTS ARE INCREASING. THIS INCREASES TRAINING COSTS AND COSTS OF RE-CERTIFICATION OF SERVING MARINERS. THIS CONSTRAINS EXPANSION OF THE LABOR POOL AND ESTABLISHMENT OF NEW PROGRAMS. TEXAS A&M UNIVERSITY AT GALVESTON, TEXAS SOUTHERN UNIVERSITY, THE UNIVERSITY OF HOUSTON, SAN JACINTO COLLEGE, HOUSTON COMMUNITY COLLEGE, AUSTIN AND YATES HIGH SCHOOLS IN HISD, AND HIGH SCHOOLS IN PASADENA AND LA PORTE ARE JOINTLY ADDRESSING THE NEEDS OF THE REGIONAL LABOR MARKET. TEXAS A&M UNIVERSITY AT GALVESTON, TEXAS SOUTHERN UNIVERSITY, THE UNIVERSITY OF HOUSTON, SAN JACINTO COLLEGE, HOUSTON COMMUNITY COLLEGE, AUSTIN AND YATES HIGH SCHOOLS IN HISD, AND HIGH SCHOOLS IN PASADENA AND LA PORTE ARE JOINTLY ADDRESSING THE NEEDS OF THE REGIONAL LABOR MARKET. REGIONAL INLAND WATERS PERSONNEL DEMANDS ARE SUBSTANTIAL WITH TUGS AND BARGES TIED UP FOR LACK OF CREWS REGIONAL INLAND WATERS PERSONNEL DEMANDS ARE SUBSTANTIAL WITH TUGS AND BARGES TIED UP FOR LACK OF CREWS