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  • Guest Blogger: David Holt on the Costs of a Drilling Moratorium

    In the wake of the moratorium on offshore drilling projects that President Obama announced late last month, The New Orleans Times-Picayune has attempted to measure the cost of so much disruption to one of Louisiana’s core industries.

    The result? A conservative estimate – assuming a shutdown of just six months – suggests the moratorium could cost the state $2.97 billion and 7,590 jobs directly related to the oil industry. That is not counting all the other industries indirectly related to oil production and exploration. The story states that each job in the oil industry is believed to support four other non-industry jobs that provide products and services related to drilling. Of course, it’s also not measuring the impact to other Gulf states, namely Texas.

    The paper’s estimated impact, moreover, is not accounting for the possibility that once oil production is halted it might not be so easy to restart. To name just one potential problem, rigs could be redeployed to other sites around the world. For that reason, one industry group fears that even if the official moratorium lasts just six months, it could effectively drag on for two years. These are complex operations and cannot just be switched off and on.

    In fact, the Times-Picayune states that one of the biggest concerns with the shutdown is general confusion, over precisely which operations are impacted, how long the moratorium is likely to last, and what becomes of rigs left idle. As of Monday, a number of companies operating in the Gulf were reportedly still unsure if their operations were covered by the moratorium.

    As we navigate all of this chaos and confusion, we need to keep in mind that everyone is trying put in place measures to make our industry safer. We need to have some patience for the delays and disruptions that result from this important work.

    But we also need to discourage policies that threaten to make a bad situation worse, costing people their livelihoods without contributing any improvement to industry safety. While we must hold those responsible accountable, we also must urge lawmakers to consider the future damage – to individual workers, and local economies – of the policies being put in place now.

    David Holt is the President of the Consumer Energy Alliance.

    The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.

    Posted in Energy [slideshow_deploy]

    9 Responses to Guest Blogger: David Holt on the Costs of a Drilling Moratorium

    1. Sheridan, Houston, T says:

      The recent 6 month moratorium on drilling in the Gulf was evidently not thought out as far as the economic impact that it will have not just on the Gulf Coast states but to the U. S. at large. I heard on CNN tonight that there are over 100,000 industry related jobs that will be affected. The federal government will lose up to $8 billion in revenues.

      There is a lot of talk about drilling companies moving rigs to places like Brazil where they are begging for companies to explore their waters. The average rig lease is for 5 years at an average price of $500,000 per day. Are the rig owners of the 33 rigs left idle going to sit back and lose that income for 180 days??? That is $2.97 billion in 180 days.

      If those rigs do decied to leave the Gulf and go elsewhere, they will be signing 5 year leases. This means that those rigs would not return to the Gulf until late 2015 or in 2016, if they ever decide to return. This would totally destroy any effort to become oil self-suficient rather than pay our money to foreign countries that produce the terrorist that attack us. so, we would be supporting the terrorist by giving our money for their oil.

      I am appalled that our federal government would start criminal investigations against BP. Yes, something did happen, but do you think that someone working on that rig actually committed a criminal act??? Obama didn't even bother to go to the funeral of the 11 workers who were killed. Our justice department has even agreed to Morandized international terriorist. And, now they want to try to bring chargers against BP when the government is reluctant to bring the same charges against known terrorist.

      I know someone who works offshore. Before this accident happened, he told me how stressed he is on the job because he knows that he must adhere to the strictest safety rules. There is no time to lose focus. It is constant concentration on doing the job and doing it safely.

      I must add that I sent 12 years raising funds for conservation. I was invovled with raising about $10 million so I know about the environment. Probably more than those screaming for the persecution of the offshore industry. Although I spent years in conservation, I am also a realist and know that alternative energy sources are at least a decade away from being brought to the fore. In the meantime, the U. S. has a choice to be dependent on countries that also supply the terrorist out to destroy us or become energy independent by drilling in the Gulf and other parts of our country,

      To shut down exploration in the Gulf is like taking the car away from a family of 8 because one family member had a wreck. The father needs to get to work. The mother needs to get to work. Other family members need to get to jobs or to school. But, severe reaction has totally paralyzed 8 people.

      Yes, I am sure there should be a few changes to insure safety. But, to paralyze an industry and cause more harm to our economy is ridiculous. This "school boy punishment" act is only going to cause more harm than good. We have never stopped the aviation industry after a plane crash.

      The oil industry has always been one of contention in the political world, and this could be the case here. I am sure by November 2 there will be plenty of people screaming and voting for reasonable representation in Congress rather than for representation that only costs us more in the long run.

    2. LibertyAtStake says:

      Ah, but, "..costing people their livelihoods…" is the specialty of this administration.

      [For a light hearted take on our present peril]

    3. Lloyd Scallan New Or says:

      What will it take for everyone to see just what Obama is doing to this country?

      Just yesterday, Obama used this "crisis" to re-energize his "Crap and Tax" bill,

      (now renamed "American Powers Act"), which will increase taxes on every aspect of our daily lives.

      Last week he basically shut down offshore drilling (under the guise of crisis), he claims for "6 months", but when considering the fact that those rigs could be moved to other countries waters, it could be for years.

      At the same time, the idea of "Federalizing" BP (taking over a private oil company), are bing mentioned as a "fix" to the oil spill.

      Obama is continuing to make us more dependent of foreigh oil by not allowing drilling or even exploration, on millions of acres of Western lands under federal control, and Alaska, where enough oil and gas are in such abundance, as to make us oil independent for perhaps a hundred years.

      His absurd claim that "easy oil is gone" is just another lie to justify his actions. Why can't we see Obama is deliberately "transforming" our American way of life to a total socialist system where government will be in charge of everything.

    4. Al Wunsch, Fl says:

      The logical thing to do would be to address the cleanup challenge, help BP where they can to stop the oil leak and once those things are in hand, investigate to find out what went wrong. Was it a failure to follow safety rules, is there a problem with the specs for the saftey equipment that should have shut down the well etc. Only then can steps be taken to change regulations and bring any missteps (including the role of the gov't regulators) to justice. In the meantime, one accident (until proven otherwise) does not justify stopping oil drilling and it isn't going to improve the cleanup and after effects of the oil spill. As many have pointed out, drilling in deeper waters is the result of gov't regulations and restrictions. If we are going to stop off shore drilling then we need to open shale oil drilling to offset the loss and to work toward independence from foreign oil. To do otherwise, is to wantonly and purposefully damage the economy of this country.

    5. Al Wunsch, Fl says:

      The logical thing to do is to concentrate on the cleanup challenge and assist BP in their efforts to stop the oil leak. Once that is underway and well in hand, an investigation into what went wrong should be conducted. Any change to the regulations/restrictions and/or to bring missteps to justice (including gov't regulatory agencies) requires knowledge as to what the cause of the oil spill was. In the meantime one accident (unless proven otherwise) does not justify a moratorium on oil drilling. At least, we should open shale oil to offset losses from offshore drilling. To do otherwise is to wantonly and purposefully damage our economy and endanger our national security.

    6. Pingback: Guest Blogger: David Holt on the Costs of a Drilling Moratorium « 2010 Gulf Coast News

    7. Ray B Northern WI says:

      The moratorium is quite intentional. It will cripple the oil companies with expenses on non-producing wells, lost skilled labor in long term layoffs, and expensive imported replacement oil. It makes them ripe for nationalization as they will soon need a bailout too.

      At the same time laying off hundreds of thousands of workers will cripple the economy further and increase government dependency. Added to a gasoline shortage driving prices up to 4-8 dollars a gallon, it could be a final artery shot on our already precarious financial situation nationally.

      You couldn't plan a more effective intentional terrorist act by America hating people. The magnitude of this is 30x the 911 attacks. Call it one more bullet from the 4 year attack on America that you call obama.

    8. Pingback: The Absurd Report » David Holt on the Costs of a Drilling Moratorium

    9. Jane Van Ryan, API says:

      David – great post.

      Several organizations have offered estimates of the drilling moratorium's impact on consumers, the U.S. oil and natural industry, and U.S. energy security: http://blog.energytomorrow.org/2010/06/the-drilli

      Jane Van Ryan

      American Petroleum Institute | blog.energytomorrow.org

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