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  • With Moratorium Lifted, Time to Start Issuing Permits

    Yesterday the Obama Administration lifted the moratorium on deepwater drilling that it imposed on the oil industry following the BP oil spill in late April. This announcement comes ahead of the expected November 30 end date for the moratorium. According to The New York Times:

    We have made and continue to make significant progress in reducing the risks associated with deepwater drilling,” Interior Secretary Ken Salazar told reporters on a conference call. Therefore, he said, “I have decided that it is now appropriate to lift the suspension on deepwater drilling for those operators that are able to clear the higher bar that we have set.

    By “progress,” Salazar refers to regulatory changes the Department of the Interior (DOI) released recently that address safety concerns about blowout prevention practices, emergency response, and worker training, for example.

    Before the cheers become too boisterous, though, the Administration should remember that it inflicted the ban on new energy exploration in the first place. The effects of this initial action have hurt the Gulf Coast economy. In fact, a six-month long moratorium would have taken a toll on the economy in the order of 9,000 direct jobs, 13,797 indirect jobs, and a $10.2 billion freeze in industry spending, according to DOI estimates made in July. Additionally, though the ban was geared toward deepwater drilling, it also caused shallow-water exploration to languish under a de facto moratorium.

    Members of the President’s own party have recognized the negative economic impacts of a prolonged moratorium, as The Heritage Foundation previously reported. Senator Mary Landrieu (D–LA), who has repeatedly drawn attention to the moratorium’s detrimental economic effect, eventually moved to block the President’s nominee for the head of the Office of Management and Budget (OMB) until the moratorium was lifted. Her response to the news? Measured support for this “step in the right direction,” but her hold on OMB nominee Jack Lew still stands.

    Industry’s reaction is also mixed. Expressing support for easing the moratorium, The American Petroleum Institute, an industry trade group, said the following:

    Without additional resources and a serious commitment by the government to process and approve permits and other requirements expeditiously, the moratorium will give way to a de facto moratorium, which will continue to cripple the already hard-hit Gulf region and cost more than 175,000 American jobs a year.

    Industry detects the shroud of uncertainty originally cast by the moratorium and drawn out as the federal government considers subjecting it to “tighter rules, stronger oversight … in a regulatory environment that will remain dynamic as we continue to build on the reforms we have already implemented.”

    From the perspective of those in the Gulf who suffered from the moratorium, lifting it may seem more like an obviously smart move than a reason for self-congratulation. It has never been widely popular to celebrate putting out a fire one started in the first place. In fact, it is more like damage control.

    Emily Goff is currently a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm

    Posted in Energy [slideshow_deploy]

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