Post-Moratorium Gulf Oil Regulations Could Drive Out Jobs, Drillers
Post-Moratorium Gulf Oil Regulations Could Drive Out Jobs, Drillers
October 15, 201011:51 PM MST
Unemployed commercial fishermen and their families wait in line to receive hand-outs from New Orleans Catholic Charities in Hopedale, La.
Washington Post
As I have stated in previous publications, the only way for the US to create real jobs, wipe out its debt, strengthen the dollar, and grow its GDP by 6%-8% per year is to produce the goods and services US and global consumers want and need. To do this, the US must revitalize a number of industries, especially those in the aerospace, manufacturing, and high-tech areas.
Growing these industries requires a vibrant energy production base. Unfortunately, the policies that the Obama administration has been pursuing since the April 2010 Deep Horizon Gulf oil disaster, namely the moratorium on deep-water oil drilling in the Gulf of Mexico, have made achieving energy growth much more difficult.
As Gulf Coast businesses and lawmakers warned last Spring, the moratorium would prompt many drilling operators to leave the region for good. Three of the 33 companies engaged in deepwater drilling in the Gulf when the moratorium was imposed have since relocated their operations to Nigeria, Egypt and elsewhere.
On Wednesday, the administration announced that it would lift its moratorium on deep-water drilling, a move which should have inspired hopes for the revival of the Gulf’s drilling industry. Instead, the onerous rules the administration is imposing on the drilling operations are dampening hopes of such a revival.
Louisiana Gov. Bobby Jindal had warned that as a result of the moratorium some of the remaining drilling companies are “actively exploring additional opportunities to relocate rigs.” The morass of new regulations such companies will now face could accelerate their exodus out of the Gulf.
Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement that oversees offshore oil drilling, said that operators must now demonstrate that their proposed development and exploration plans can deal with potential blowouts. He stated that the agency won’t approve permits “without vital supplemental information required by the rules.” The new plans call for independent third parties, so-called “blowout preventers,” to perform detailed inspections and reviews of their construction plans and design.
The first meeting of the seven-member commission on the Deepwater Horizon oil spill held this week hardly instills confidence in the administration’s ability and willingness to help the drilling industry begin operating in the Gulf. Many commission members harbor an inherent bias against offshore drilling. Some even seem downright antagonistic to America’s use of fossil fuels in general, and see the Deep Horizon spill as an opportunity to promote a “green” energy agenda. Said one commissioner, Cherry Murray, the dean of the Harvard School of Engineering and Applied Sciences, "If you went to all electric cars, 70% of our oil usage would go away,"
Economists predict that companies, spooked by revenue losses resulting from the moratorium as well as a new regulation framework, will begin mass lay-offs throughout the region by year’s end. University of Houston Michelle Foss contends that large numbers of oil rig workers, as well as lawyers, accountants and engineers could lose their jobs.
This would be in addition to the job losses caused by the Obama moratorium. A federal report said the moratorium probably caused the loss of 8,000 to 12,000 jobs in the Gulf region. Other reports, such as that authored by Joseph Mason, Louisiana State University in Baton Rouge economist, estimate that 20,000 jobs were lost, both in the region and nationally
The President’s decision to shut down the Gulf’s deep water drilling industry has cost the US jobs and made us more dependent on foreign oil than we were six months ago. Misguided energy policy decisions might potentiall transform what started as a man-made technological disaster, the explosion of an oil rig, into an economic catastrophe.
The administration is pinning its hopes for an economic rebound not on industrial development but on monetary legerdemain and creative accounting. Over the last two years the Fed and the Treasury have tried every trick in their financial playbook to boost the economy—TARPs, the “stimulus,” low interest rates, and the printing of trillions of dollars.
None of these measures have worked. Unemployment has stayed above 9.5% for 14 months, and the real unemployment rate, which includes those who have dropped out of the job market, has exploded to 17.1%. GDP is slogging along at 1.5%-2% growth rates at best.
We can only hope that a new Congress, and eventually a new administration, will aggressively pursue more expansionary, pro-growth policies that unleash America’s productive potential and set the US back on the path to prosperity.
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