Obama Offshore Drilling Ban to Devastate Gulf Coast Economies

by | Jun 16, 2010 | Economy, Energy, Obama, Politics

Citing the potential economic impact on the Gulf Coast, Congressman Pete Olson, of the 22nd  District in Texas, introduced a bill in the House of Representatives yesterday to lift the offshore drilling moratorium imposed by President Obama in response to the BP Deepwater Horizon oil spill. 
Senator David Vitter (R-La) introduced the companion bill in the Senate stating, “This moratorium threatens to finish what the oil spill started.  If it stays in place, even for six months, it will be a devastating blow to the economy of Louisiana and other Gulf states. My bill would simply nullify the president’s ill-advised moratorium.  The best way to prevent future oil spills is not to stop drilling altogether, but to improve the inspection process to ensure that our rigs are safe.” 
Calls for a lift of the moratorium hail from both sides of the political aisle with Senator Mary Landrieu (D-La) expressing serious concerns regarding the effect the drilling ban will have on her home state. Senator Landrieu said the 6-month ban would “spell a second economic disaster for families, businesses and communities along the Gulf Coast.”   Democrat co-sponsors to the House bill to end the ban include House members Charlie Melancon (D-LA) and Henry Cuellar (D-TX).
Sponsors of the legislation noted the shutdown means that 33 rigs, successfully inspected by order of Interior Secretary Ken Salazar since the incident, will be idle for six months costing $250,000 to $500,000 per day, per rig. Direct wages lost would reach approximately $330 million a month. Additionally, 800-1400 jobs per idle rig would be at risk, with a possible total of over 45,000 jobs in the region lost within the region.  This would have a devastating economic impact to the already hurting economies on the Gulf Coast.
A panel of industry experts, hired by Secretary Salazar for consult in preparing the 30-day review of the oil spill, released a letter after Salazar falsely implied the experts were in agreement with the offshore drilling moratorium. According to a letter signed by eight of the 15, they claim that although “we broadly agree with the detailed recommendations in the report and compliment the Department of Interior for its efforts … we do not agree with the six-month blanket moratorium on floating drilling.” The letter continues, “A blanket moratorium is not the answer. It will not measurably reduce risk further and it will have a lasting impact on the nation’s economy which may be greater than that of the oil spill. We do not believe punishing the innocent is the right thing to do.”   Salazar now admits that it was his idea and decision to issue the moratorium without regard for the expert opinion to the contrary provided by the panel of experts he hired.
It is unclear whether the White House grasps the severity of the potential economic situation in the Gulf States under this moratorium.  The administration’s current response is to put together a legislative package that will include unemployment benefits for people who have lost work due to the drilling ban.  People don’t want unemployment benefits from the government; they want to keep their jobs.  They want their communities and states to retain their economic stability.  They are not asking for or want dependence on the federal government.
To ban all offshore drilling pending a single accident investigation is akin to shutting down all airplane travel after a plan crash while the NTSA investigates the crash.  This action would kill the airline industry and negatively affect the economy.  It isn’t done.  This is no different.  These 33 oil rigs, if suspended for 6 months, will leave the Gulf for other drilling opportunities with no guarantee to return.  Already Anadarko Petroleum Corp announced they are shutting down three drilling rigs in the Gulf in order to continue production in other areas of their global portfolio.  Losing these 33 rigs could spell disaster for our Gulf economies and guarantee much higher oil prices for years to come. 
As of present, Administration officials have said the moratorium is not being reconsidered despite the predicted devastating impact the moratorium will have on the Gulf communities and the economy.