White House Drilling Moratorium: The Second Gulf Disaster?
The Deepwater Horizon was a tragic incident that cost human lives and has lead to significant environmental and economic destruction. But while oil continues to spill into ocean waters, there is another crisis developing in the Gulf—the death of the “energy coast” economy and the jobs the oil and gas industry supports.
The moratorium was struck down by a federal judge in late June, citing inadequate reasoning for the ban. Despite this finding, and the objection of panel members whose recommendation the President has based his decision on, the new moratorium was initiated. Following the reinstitution, Louisiana Governor Bobby Jindal stated:
“This second suspension of deepwater drilling is a clear sign that the administration is unwilling to follow the advice of their own scientists. The ultimate effect of this second moratorium is the same as the first — to shut down drilling operations in the Gulf and risk killing an estimated 20,000 jobs in Louisiana.”
Punitive policies such as the drilling moratorium are crippling the region, threatening to create a second disaster. As drilling rigs in the gulf go idle, jobs are being lost and the region is losing millions of dollars in desperately needed economic activity each day; income and investment that could be supporting struggling Gulf communities.
Consider the following:
- The Energy Information Administration (EIA) has projected that the moratorium will cut oil production 82,000 barrels per day (BPD) in 2011. This decline will increase prices across the country, leading to ripple effects throughout the economy.
- The Louisiana Mid-Continent Oil and Gas Association (LMOGA) estimates losses in direct wages could total up to $330 million a month.
- The moratorium has lead to the direct suspension of 33 platforms in the Gulf. Suspension of these operations costs roughly $8,250,000 to $16,500,000 per day with secondary impacts totaling up to $1 million in lost revenue per day.
- Offshore energy production is one of the Gulf’s most important employers, playing a critical role in nearly every aspect of the region’s economy. The moratorium’s impacts are not felt by the energy industry alone – vessel operators, dock facility workers, and myriad other industries are impacted, putting at risk hundreds of thousands of jobs in the near term, and as many as 1 million jobs could be affected over the next few years.
- This moratorium creates incentive for energy companies to take their operations to foreign waters. With production activities suspended, companies such as Anadarko have announced their intent to pull significant portions of their fleet out of Gulf waters and into foreign territory. Diamond Offshore has announced they will move their Ocean Endeavor rig from the Gulf of Mexico to waters near Egypt.
- A ban on offshore drilling would increase reliance on imported oil, leading to a reduction in GDP and domestic job growth. Estimates show an offshore drilling ban between now and 2035 could increase in total expenditures for imported oil by nearly $737 billion – undermining America’s energy security.
