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  • Businesses Blame Drilling Slowdown for Loss of Jobs, Revenue

    More than 15 months after the Obama administration lifted its ban on offshore drilling in the Gulf of Mexico, oil and gas supply and service companies report they are suffering significant financial hardships from the government’s actions.

    The moratorium — as well as the slow pace of permitting that followed — have suffocated businesses, costing jeopardizing millions in business revenue and even forcing some to close their doors, according to a survey conducted by Greater New Orleans Inc.

    Louisiana, home to 88 percent of the country’s offshore rigs, has absorbed much of the impact.

    “In Louisiana, there are more than 1,777 small businesses in the Oil and Gas Extraction industry that represent over $4.2B in annual revenue. Their operations also support over 9,700 employees, and aid in increasing our country’s energy security,” GNO Inc. reported. “[B]usinesses are indeed laying off workers, reducing hours and salaries, and limiting new hires as a result of the permit slow-down and insecurity about future markets in the Gulf of Mexico.”

    The survey included 102 respondents — representing small, medium and large companies — that are involved in Gulf of Mexico exploration and production. They were asked to share information about revenue, cash reserves, employment, business plans and personal finances.

    Key findings show:

    • 41 percent of businesses are not making a profit;
    • 76 percent have lost cash revenues;
    • 27 percent of businesses have lost more than half of their cash reserves;
    • 50 percent of businesses have laid off employees as a result of the moratorium;
    • 39 percent of businesses have retained workers but reduced salaries and/or hours;
    • 46 percent of businesses have moved all or some of their operations away from the Gulf of Mexico;
    • 82 percent of business owners have lost personal savings as a result of the permit slowdown;
    • And 13 percent of business owners have lost all of their personal savings as a result of the slowdown.

    The economic impact has been diverse and far-reaching because the oil and gas industry in Louisiana is a major part of the local economy, according to the study. Among the most alarming consequences: Revenues have dramatically decreased.

    “One company reported an annual revenue range from $750M to $1B before the moratoria, decreasing to $50M to $250M — representing a decline of at least $500 million,” GNO Inc. reported. “Additionally, two companies transitioned from the $250M-$500M range to the $15M-$25M range.

    “The losses of these three companies alone (total of at least $950M annually) represent a tangible economic loss to communities in Southeast Louisiana that rely on larger companies for subcontracts and constant demand for services,” according to the survey.

    The Heritage Foundation has consistently highlighted the impact of the drilling slowdown — both on the local economy in Louisiana and in terms of lost revenue for the federal government.

    “Allowing access for exploration and creating an efficient regulatory process that allows energy projects to move forward in a timely manner will not only increase revenue through more royalties, leases, and rent,” Heritage’s Nick Loris wrote, “it will also create jobs and help lower energy prices in the process.”

    Posted in Energy, Scribe [slideshow_deploy]

    6 Responses to Businesses Blame Drilling Slowdown for Loss of Jobs, Revenue

    1. Katherine Lemoine says:

      Great article!

    2. The lorax says:

      Where are your bullet points on the damage done to the economy, the environment, and the people of the gulf coast due to the BP oil spill. I believe that the Deepwater Horizon oil spill had something to do with the moratorium on off shore drilling and find it concerning you make no mention of it in your article.

      • slackwarerobert says:

        So how did the owners / operators of the deepwater horizon get the authority to stop the other rigs?
        Only two things could be true…
        One, it was blown up on purpose. In which case there is no reason to stop drilling.
        Two, It was an accident. Again, no reason to stop drilling.

        So where is your evidence that they stopped drilling on other platforms. No logical reason I can find for the government to do it either. Yet they did stop and chase the rigs to Brazil, and africa.

    3. JBinGB says:

      Obama has done more damage to the people of the gulf coast than BP ever could ! Dump him in november.

    4. slackwarerobert says:

      The oil spill in the gulf was made much worse by obamas demand that the oil couldn't be cleaned up.
      If his people hadn't lied to BP, and told them what a bastion of safety the rig was, maybe BP could have prevented it from happening. But when they give you praise for the safety on the rig, wouldn't you assume that the reports from the manager on the rig were also true. If they had told BP the rig was a disaster waiting to happen, and never in the history of drilling had they seen such inept and incompetant operations, then BP might have sent out a man to see which reports were right.

      Then you add that obama refused to allow oil skimmers to clean up the oil because they would only remove 96% of the oil. And he wanted 100% or nothing. BP could do nothing obama took over on day 1 and wouldn't allow anything that he as the only expert on the planet could claim success with to be tried.
      His ego is what caused the disaster, not BP.

    5. david5300 says:

      It's the obama way.
      Remember in November.

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