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  • Offshore Drilling and the Federal Deficit

    For all the talk about job creation and deficit reduction, the Obama administration continues to ignore one solution to accomplish both: offshore oil drilling.

    As the de facto drilling moratorium continues to shackle the Gulf coast region, Sen. David Vitter (R-LA) is determined to hold the administration accountable for what is more than just a regional issue.

    The day after President Obama’s Interior Department was held in contempt of court for refusing to lift the moratorium, Vitter wrote to David Hayes, deputy secretary at the Interior Department, demanding that he properly assess the financial damage caused by the moratorium and the liability of the federal government.

    “The administration’s energy policy has clearly stifled Louisiana’s coastal economy, and now all American taxpayers could seriously pay the price by having to foot the bill for breach of contracts caused directly by the Interior Department’s actions,” Vitter said. “The Obama administration has made a real mess of the permitting process, and companies can’t just keep waiting around for Interior to meet their contractual obligations. And quite frankly, it’s hard to blame them for suing.”

    The lack of drilling increases the deficit and the burden on taxpayers in two ways: First, the refusal to grant drilling permits is costing the government revenue through royalties from oil companies. Secondly, a more recent development, the breach of contract with private companies, could force the federal government to dole out large quantities of taxpayer money to pay for damages.

    The longer the administration is silent on its de facto moratorium, the more drastic the financial repercussions will be. Vitter fears jobs and the financial health of the Gulf will continue to dwindle and suffer without action soon.

    Posted in Energy [slideshow_deploy]

    16 Responses to Offshore Drilling and the Federal Deficit

    1. George Colgrove, VA says:

      Even if, by miracle Obama decides to open the gulf back up, it will take months to get geared up and the number of players will likely be lower than before the spill. Obama has already caused permanent harm.

      We may be getting a hit on lower royaltees revenue and will be hit in the claims court, but worse is the hundreds of thousands of people who lost their jobs or are seeing lower incomes due to closing down the gulf. Tax revenue is already coming in lower than last year.

    2. Don G. Dinsdale, St. says:

      "BO" Oh sorry… President Obama's administration is anti-anything good for America…

    3. Lloyd Scallan (New O says:

      I'm really starting to wonder if anyone out their understands just what Obama is

      deliberately doing to this nation. Obama doesn't give a hoot in hell for reducing the federal deficit. His plan is to drive our economy to destruction and replace it

      with his socialist "fix" that is already in place just wating for the right time. Oil production (or the lack their of) is yet another part of our system that he must destroy to complete his goal. Too many people still do not or cannot recognize just how devious and dishonest this guy is. He continues to lie and parse his words to continue to fool the American people for the next two years to have a chance at reelection. If he is reelected, God help this nation, because nothing less will.

    4. Mike, Wichita Falls says:

      I assume that the terms of a lease contract are as follows: an oil company, after being named the highest bidder, pays the Interior Department or Bureau of Ocean Energy Management (fka Minerals Management Service) a fee for the right to develop the minerals (oil and/or gas) under a lease within a certain period of time (10 years or so) and pay a royalty (1/8th or so) to the BOEM on any minerals produced. This they do in exchange for the BOEM granting them permits to drill wells on that lease. If the BOEM does not grant that oil company permits to drill, that oil company cannot fulfill their obligations under the lease contract.

      Interior says they are holding up permits because they want to thoroughly scrutinize them against environmental and personnel safety rules. If these rules existed before the spill, why weren't those permits already being scrutinized? Has Interior written new rules under which these permits are now scrutinized? Did Congress have any say in these new rules? Conclusion…Interior either wasn't enforcing rules already on the books or wrote new rules without Congressional approval. They were just found to be in contempt of federal court regarding their second moratorium, so their other actions should come as no surprise.

    5. William Downey, Worc says:

      The present administration continues to wage "war" on oil and natural gas. The original court order was clear, the government had exceeded its authority. Instead of heeding the order the DOI simply maintains a permitorium.

      In addition the government has put out a moratorium on exploration in the eastern Gulf of Mexico, the Atlantic and Pacific coasts and the area around Alaska. The EPA continues to oppose the extension of a pipeline to the Gulf from Canada, despite the recommendation from the DOE.

      The administration is maintaining an unlevel regulatory field in granting fast track approval for wind energy off the very coasts that it says it wants to protect, while increasing the burdens on oil and gas exploration and production.

      The only thing that the administrations "energy policy" is decreasing revenues, hurting the emergence of good paying jobs, and increasing our dependence on foreign oil.

    6. Tim AZ says:

      What some are just now learning is that there is no effective way to compel a president of the United States to honor his oath of office, or the rulings of any judge. So long as said president possesses the ability to place him or herself morally unaccountable to their fellow human beings. Mao-Bama continues to demonstrate on a daily basis that there isn't one branch of govt. that has enough character within its makeup to carry out their oaths of office in defense of the American citizenry, and hold another branch of office accountable for their evil deeds against the citizenry. Mao-Bama continues to demonstrate daily that the elites are indeed above the law. That contempt of court rulings are little more than a scolding for the elite. He has brought far more shame to the oval orifice than both Clintons could have ever hoped to. Lets hope the people learn from this painful lesson that no individual should escape public scrutiny when running for a position that demands the public's trust. Especially when an individual portrays themselves to be all things to all people. Had enough yet?

    7. Al Reasin, Conowingo says:

      I've been saying this for some time since it is so obvious. Drilling rigs when operating increases employment in steel mills, fab shops, food vendors, etc besides making us more energy independent as was proposed when the Energy Dept was created in 1977 when we imported 30% of our oil; now 70%.

      Canada sends us 15% of our oil and 5% of that from the tar sands. Our stupid environmentalists want to stop the tar sands oil total use in the US as Rep Waxman (D-CA) did to our military in the defense budget two years ago. It may still be in there since we are operating off of a continuing resolution for the feds budget. The tar sand are economically viable at $46 per barrel and oil is now over $80 per barrel; but the environmentalists don't like the energy used to extract it and the impact on "climate change". Of course they don't like cheaper oil extracted from the Gulf either and have helped with an injunction against the NY state's Marcellus Shale formation; it is estimated to hold enough gas to meet the country’s natural gas needs for more than 20 years. Additionally The Obama Admin has by Executive Order placed the West and East coast off limits to drilling as well as the proven reserves in the Eastern Caribbean off Key West that the Cubans are now drilling in.

    8. Sandy Olnhausen says:

      The Bakken formation of light crude in Montana and N. Dakota is estimated to contain over 500 Billion bbls of cheap oil that could supply USA for 100's of years.

    9. Ben C. Ann Arbor, MI says:

      "The Bakken formation of light crude in Montana and N. Dakota is estimated to contain over 500 Billion bbls of cheap oil that could supply USA for 100?s of years."

      Agreed, and given yesterdays report that the Saudi oil fields have less reserve than originally esitmated (up to 40% less) it won't be long before we truely are between a rock and a hard place. At what point will civil unrest reach a crescendo and Congress actually listen to its citizens.

    10. Bobbie says:

      I don't understand what we can do to stop one man from ruining it for all men?

    11. John Bynum says:

      Thank you for this article Heritage Foundation, and for all you do. Please keep up the good work. when the dooar is no longer the reserve currency, then this country will be exported oil rather then importing it.

    12. BJ Ft. Myers Fl says:

      Wouldn't it be great if both oil and gas were shut off in the DC area and all of the people in congress and the White House had to chill out for the winter. Maybe then we would get some interest from them, This administation is in contempt of several courts and continues to ignor the rule of law. For someone who was supposidly a student of the law (of course we don't know that as he has sealed all of his records from the public) it would appear that he must have failed all of his classes and was only advanced because he cried racist to anyone who was knowledgeable enough to fail him.

    13. Bobbie says:

      oops, I meant to say "I don’t understand what we can do to stop one man OF MANY UNKNOWNS, from ruining it for all MANKIND?"

    14. Frank, Seattle says:

      "As the de facto drilling moratorium continues to shackle the Gulf coast region"

      Crude oil production, Gulf of Mexico, January 2009: 39.5 million barrels

      September 2010 (latest data): 47.0 million barrels

      http://www.eia.doe.gov/dnav/pet/hist/LeafHandler….

    15. Tim,Grafton,WI says:

      Doesn't look like a laser light focus on jobs, like he promised America, to me. Great job from The heritage Foundation to keep us informed on the real facts and issues that face America. The solution, because we are faced with many problems, get informed, get involved, make your voice heard, help educate, and encourage others to do the same. We can not afford to make a mistake like this administration ever again if we plan to enjoy the freedom that is America. This President seems to be on the wrong side of every issue that he should be on, that can't be an accident. I'm not a conspiracy theorist or anything, but the only laser light focus on anything he has shown the public, he is out to destroy America. Too bad, Michelle Obama just started to like America after the election. Think about it, pro public union that is bankrupting us, crimping off oil supplies, insulting American allies, praised by dictators on his policies, delayed action on foreign policy, issues apologies for actions taken by America, unemployment at record highs for years now, food and energy prices thru the roof….. 2012 is right around the corner, don't make the same mistake twice.

    16. Ron Hert, CA. says:

      Is there no law concerning the refusal or delay to pay contracts and if not-causing extra monies to be spend in the law suits and in the form of fines; this should be seen as a failure to do their duly elected job as representatives of the federal government and fines should be denied- salaries as the Governor in Wisconsin was going to do for those state legislators that refused to perform their duty. This would get many a reps more motivated to be responsible about doing their job. After this next election and we still have a nation standing-then our legislators need to do their duty and Impeach Obama and his accomplices-do not allow one day that is left to be served by Obama after the election-take him to jail.

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