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  • Obama Administration Admits New Drilling Rules Will Kill Jobs

    What’s the best cure for a recessionary environment? Apparently, raising energy prices and killing jobs. The Obama Administration admitted to both because of the Department of Interior’s (DOI) newly announced offshore drilling safety regulations. Katie Howell of E&E reports:

    The Obama administration is acknowledging that its new offshore drilling safety regulations will raise costs for the oil and gas industry—and may also delay some offshore development, slightly increase gas prices and kill some jobs.

    The new rules unveiled last week would increase operating costs by an estimated $1.42 million for each new deepwater well drilled with a floating rig, $170,000 for each new deepwater well drilled with a platform rig and $90,000 for each new shallow-water well, according to an Interior Department notice released yesterday.

    DOI called the costs “not an insignificant amount” and said it would only increase drilling costs 2 percent and 1 percent for deepwater wells and shallow-water wells, respectively. Although the cost increase would not be enough to affect world markets, “it could also lead to job losses at the more than 130 companies that own active leases in federal waters and more than a dozen drilling contractors and their suppliers,” Howell writes.

    Interior Secretary Ken Salazar says the increased costs are worth it because it will reduce the likelihood of another BP-like spill. How much will it reduce the risk? He doesn’t say.

    It’s easy from a public relations standpoint to say we need newer and tougher regulations to prevent such a catastrophe from happening again. The Administration did the right thing by separating the federal regulators responsible for promoting energy sources and those responsible for enforcing regulatory standards. But the stricter regulations could unnecessarily stifle offshore oil and gas exploration and production, especially for smaller companies. Dan Naatz, vice president of federal resources at the Independent Petroleum Association of America, said:

    When you look at this issue of increased compliance cost, increased regulation coupled with discussions of unlimited liability … all make, certainly, some amount of uncertainty for our producers, if not flat-out stop them. They’ll have to take a very serious look at whether to continue operating in the Gulf of Mexico. Will it stop activity in the Gulf? I’m not saying that, but it certainly will make us take a serious look.

    Some oil companies may even be willing to accept the new regulations because it provides some certainty in the business. Yet given this certainty, Salazar has chosen not to lift the drilling moratorium. They’re still not issuing permits for deepwater or shallow water activities, and despite reports that the economic effects of the moratorium have been overestimated, the drilling ban is having serious effects on the Gulf region.

    Instead, Congress should implement a program that accurately assigns risk to offshore oil and gas operators, holds them fully liable, promotes safety, and guards against frivolous lawsuits. Assigning liability calculations and insurance premiums to accurate risk assessments will create a strong financial incentive to operate safely. Including a third-party safety certification process will ensure that the best techniques and technologies are being used will be complementary to federal regulations.

    The oil industry should create an independent organization to collect/distribute safety data, establish and certify best practices, and share information, as appropriate, with federal regulators. Third-party monitoring would reduce corner-cutting and provide sufficient response time to anomalies. Further, safety certifications from such an organization could inform insurance premiums and risk assessments. This could be done in a much more cost-effective manner that would allow drilling to continue in the Gulf without destroying jobs.

    For more, check out the full plan, Oil Spill Liability: A Plan for Reform.

    Posted in Energy [slideshow_deploy]

    11 Responses to Obama Administration Admits New Drilling Rules Will Kill Jobs

    1. Billie says:

      This unnecessary trouble is more incompetence. Kill jobs, increase unfair costs and collapse the businesses. How is this in contrast to foreign oil businesses in the gulf?

      He vehemently ignores the depression he creates…

    2. ozzy6900 says:

      So the DOI doesn't think that $1.24 is significant? That is so typical for the Obama Administration! Mr. Obama, it is YOU that is killing the job market. It is YOU that is turning the economy into a total shambles. It is YOU that is destroying this Country to bring your socialist principles to the forefront. It is YOU who is destroying the health care system. And it is YOU who will go down in history as the worst person to ever set foot in the White House! Your policies are stupid, your decisions are moronic and your entire concept of "stealing what does not belong to you" is abhorrent! That "hope & change" is killing jobs and it's time We take our Country back!

    3. George Tippett, Sout says:

      If the ban goes unchecked, more deleterious consequences could result.

      http://tiny.cc/bfa8t

    4. David Farrar, Georgi says:

      Given Obama's admission that new drilling rules will kill Jobs, and in view of the recently released September unemployment figure, the indications are we will need to provide further funding to deal with rising unemployment figures for at least two more years. For this reason, I think it is time to think the unthinkable and speak the unspeakable. I want to suggest using some of the Bush tax cut extension as a means of addressing our growing unemployment figures for the next two years. By permanently extending 85% of the middle class tax cuts and 75% of the "wealthy" tax cuts, funding can be procured to create a new WPA (Works Project Administration) type program that would include a new "must work" provision for those extending their unemployment benefits beyond the 99-week period. This effort could also dovetail nicely with the new infrastructure effort now being placed before Congress.

      The present problem with our economy is our middle class consumers, who make up 70% of the economy. They can't or won't buy enough to turn the economy around until they are convinced the economy is stabilized, that a strong economic recovery lies just around the corner, and that their present household debit has been significantly reduced to manageable levels vis-à-vis their income. Until these conditions are met, tax cuts for businesses or even for the middle class will not stimulate the economy.

      What we need for this economy to turn around, and turn around quickly, in this deflationary period is to place more money in the hands of those consumers who will be forced by their own dire economic circumstances to spend what little they receive just to stay afloat back into the economy i.e. extending unemployment benefits through a "must work" mechenism for the next two years, until 2012.

      With such a program in place, we can accomplish three things: First and foremost, stimulate the economy directly. Secondly, put those to work who have exhausted their 99-week unemployment period, and, thirdly: avoid increasing the country's deficit.

      ex animo

      davidfarrar

    5. Norm says:

      The phrase you are seeking is fortuitous opportunity. If a man sets out to burn down a barn and lightning strikes doing the work for him, this is called a fortuitous opportunity.

      Likewise, if a man sets about to dismantle a nation to rebuild it in his own idea of perfection, he'll get there much quicker if the machinery stops running for lack of a drink of oil. Simplistic, but sadly true.

      Norm with the AlabamaTeaParty.org website.

    6. Delores Smith - Mesa says:

      NICHOLAS LORAS – GREAT ARTICLE – Thank you.

      OBAMA,

      You knew very well what would happen to the economy of the Gulf.

      George Soros sent $1,000,000 to Brazil for deep-shore oil drilling, and you followed through with $2,000,000,000 (Billion). You did this with the moratorium in place. Two judges ruled against you, but you disregarded The Rule of Law and wrote a new moratorium. You were busy with your "redistribution of wealth." You can plaster that smile on your face, but it very obvious that you are a liar.

      Delores Smith Delores109@cox.net

    7. Patrick Daylong, Tex says:

      The congressional office of Lloyd Doggett can’t or will not say where he stands on these new regulations. Not a surprise because his offices doesn’t know where he is from day to day. Most of the time they don’t know if he is in Austin or DC.

      Donna Campbell is against these new regulations because she wants to help the people of Texas and the 25th congressional keep their jobs and not suffer from higher gasoline prices.

      The gasoline price spiked just before the housing market collapsed as people had to choose between driving to work or paying their mortgage payments.

      A small price hike will not help our economy at this time.

    8. Ace Sez Bishop, Cali says:

      There is no hope for the current economic situation til Obama is removed from office–along with his henchmen the carz.

      If only he would die tomorrow of natural causes? We would still be in a mess with Biden and Pelosi–but maybe Nov. 2010 elections will make a difference?

      Please ppl–voting has consequences–vote for a change that will stop Obama's change–the one he promised but didn't describe in 2008–Your American lifestyle is at stake—when the gov't decides what light bulbs you can buy–you gott'a know we're in deep doo-doo

    9. Pingback: Forfeiting Capitalism…What A Fine Mess Obama & Democrat-Socialists Got Us Into | Asian Conservatives

    10. Pingback: US Interior dept lifts deepwater drilling ban – Reuters « Contacto Latino News

    11. Tom Berquist, Pennsy says:

      These people have regulations in place to kill drilling in the Gulf. They place roadblocks for American oil companies and send Mexico a billion dollars to drill in the very place they deem too dangerous for Americans to drill. This administration had committed to shutting down drilling in the country BEFORE the BP spill. These actions are going to send energy costs up and more jobs will be lost. These are treasonist acts being committed on the American people.

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