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Gulf Spill Update: Obama's Job-Killing Moratorium

Posted By Brandon Stewart On July 6, 2010 @ 2:30 pm In Energy | Comments Disabled

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The final cost of the Gulf spill cleanup hasn’t even been tallied and some experts are already predicting that the economic impact of the President’s politically-motivated drilling moratorium will prove to be more costly.

At the end of May, the President announced that he would be extending his temporary moratorium [2] for six months. But at a time when the White House is desperately trying to spin a dismal June job’s report, forcing thousands of Gulf rig workers out of work only increases the strain on an already fragile local and national economy [3].

An article [4] in Sunday’s Time-Picayune discussed the projected impact of the President’s costly overreaction:

Among many analysts there is early consensus on this: Although President Barack Obama’s shut-down order is nominally for six months, the legislative and rule-writing process it will invoke means that realistically businesses should expect it will be a year or more before it is lifted — and longer yet before deepwater rigs resume operations.

Analysts describe the massive rigs floating far offshore as capital-rich factories, employing 250 or so very well-paid workers, with each worker providing a direct or indirect livelihood to three additional workers onshore, from the pump operator at Port Fourchon to an auto salesman in Morgan City.

As the Time-Picayune reports, estimates for the jobs that will be impacted in Louisiana alone range from 5,000 – 9,000 while some estimates for the entire Gulf are as high as 37,000. A recent letter [5] by Senator Mary Landrieu (D-LA) and other business groups protesting the moratorium didn’t mince words, saying, “On the heels of a global financial meltdown that has already left millions of Americans jobless, the economic losses that will be inflicted by the moratorium are nothing short of staggering.”

Indeed, a Morgan Stanley study [6] (PDF) warned that if the moratorium stands, there is a 60% chance that it will actually last up to a year and a half, once Congressional red tape is factored in and some wonder how many jobs will survive, with three rigs already announcing that they are pulling out [7] of the Gulf due to the ban.

The fate of the moratorium was put in doubt late last month when a federal judge reversed that decision [8], citing a lack of rationale for the blanket ban. The Administration acted “arbitrarily and capriciously in issuing the moratorium,” said U.S. District Court Judge Martin Feldman in his ruling.  Later that day, Interior Secretary Ken Salazar announced that he would move swiftly to circumvent the judge’s ruling and reinstate the ban.

But while it took the Administration only a matter of hours to respond to the federal judge’s ruling, the government’s response to local officials desperate to protect the livelihood of their friends and neighbors has been noticeably slower.

As Louisiana reporter Richard Rainey noted this weekend [9], it took a month for the government to respond to a plan by one parish to “use barges and rocks to keep oil out of two major passes into Barataria Bay”. When they finally received a response this past week, it was only to inform them that their request had been denied. The decision provoked a fiery response from Louisiana Governor Bobby Jindal who shot back, “It’s taken them over a month to decide whether rocks in the water is dangerous. Somebody in Washington, D.C., needs to understand that rocks in the water is less dangerous than oil in the water.” In the last few weeks, Jindal has been very critical of a federal response that has has seemed more interested in observing protocol than moving swiftly.  ”Our message to the federal government is lead or get out of [the] way,” he explained.


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URL to article: http://blog.heritage.org/2010/07/06/gulf-spill-update-obamas-job-killing-moratorium/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/obama-salazar.jpg

[2] extending his temporary moratorium: http://www.nytimes.com/2010/05/28/us/28drill.html?_r=1

[3] an already fragile local and national economy: http://www.foundry.org/2010/07/02/morning-bell-recovery-summer-vacation/

[4] article: http://www.nola.com/news/gulf-oil-spill/index.ssf/2010/07/moratorium_in_wake_of_gulf_oil.html

[5] recent letter: http://www.2theadvocate.com/news/97716694.html

[6] study: http://www.offshoremarine.org/images/stories/GOM_Drilling_Moratorium_06_01_10.pdf

[7] announcing that they are pulling out: http://www.calgaryherald.com/news/rigs+leaving+Gulf+Mexico+over+says+official/3133793/story.html

[8] reversed that decision: http://latimesblogs.latimes.com/greenspace/2010/06/gulf-oil-spill-obama-moratorium-on-drilling-is-struck-down.html

[9] noted this weekend: http://www.nola.com/news/gulf-oil-spill/index.ssf/2010/07/corps_denies_jefferson_parishs.html

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