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  • Gulf Coast Businesses Suffer Strain of Offshore Drilling Slowdown

    As gas prices continue to climb, approaching a nationwide average of nearly $4, lawmakers in Washington turned their attention to the drilling slowdown in the Gulf of Mexico.

    The House Subcommittee on Energy and Mineral Resources held the oversight hearing Thursday examining how the Obama administration’s policies have put a strain on businesses, causing economic instability and even forcing some employers to leave the area.

    “The economic impacts of this permit slow-down or de facto moratorium are diverse and far reaching, affecting individuals and businesses in various industries across the Gulf Coast,” said James Adams, president and CEO of the Offshore Marine Service Association. “Businesses are indeed laying off workers, reducing hours and salaries, and limiting new hires as a result of the permit slow-down.”

    A survey released in January from Greater New Orleans Inc. documented the consequences. It included 102 small, medium and large companies involved in Gulf of Mexico exploration and production. Key findings revealed:

    • 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 hearing also examined the budgets for the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE). The two agencies, reorganized in the wake of the 2010 oil spill in the Gulf of Mexico, regulate drilling activity.

    Subcommittee Chairman Rep. Doug Lamborn (R-CO) called the hearing to ensure that BOEM and BSEE were efficiently using taxpayer money to carry out their missions.

    “When I say BOEM and BSSE must be held accountable,” Lamborn said, “I mean that I want to know what these agencies are doing to use their taxpayer dollars efficiently to tackle these challenges. After all, oil and natural gas are America’s resources. They help us create jobs and they reduce dependency on foreign oil.”

    Defenders of BOEM and BSEE countered that oil production is at its highest in eight years.

    “We have more oil rigs operating in the U.S. than the rest of the world combined,” said Rep. Rush Holt (D-NJ). “According to industry analysts, by this summer, there will be 30% more floating rigs operating in the Gulf than there were prior to the BP spill.”

    Rep. Ed Markey (D-MA) echoed his statement: “My Republican colleagues will tell you that we need more supply to bring down prices, but America’s oil production is at its highest levels in nearly a decade and offshore oil production is higher than it was during each of the last three years of the Bush administration.”

    Critics of the drilling slowdown disagreed. They noted the number of deepwater and shallow-water permits have actually decreased under President Obama and that rigs are leaving U.S. waters for other countries.

    “With respect to the statement that production is up, the number of rigs and so forth across the U.S., that is quite true, but it’s because it’s in the private sector out of reach of the federal government,” said Rep. John Fleming (R-LA). “If you look at federal lands and offshore it has gone down. We’ve seen a decrease in leasing, a decrease in permits. We’ve seen rigs leaving our shores and going to Brazil and places like that and in some cases we’ve actually subsidized activity into other countries.”

    Benjamin Salsbury, senior vice president and senior energy policy analyst at FBR Capital Markets, agreed.

    “There are just 25 mobile offshore drilling units or ‘floaters’ and 15 platforms drilling,” he said. “That is 12 percent fewer floaters than were operating before the Macondo spill despite crude oil prices more than 25 percent higher. There continues to be a permitting constraint on deepwater Gulf of Mexico drilling activity.”

    Heritage’s Nicolas Loris has echoed these concerns, warning as well that a drop in production in the Gulf of Mexico also means a loss of revenue for the federal government. The U.S. Treasury collects an 18.75 percent royalty rate on offshore oil and gas leases, meaning the government will forfeit millions of dollars in revenue.

    “The economic losses wreaked by, first, the drilling moratorium, then the “permitorium” and now the frustratingly slow permitting process have been devastating,” Loris recently wrote. “It has cost the region almost $20 billion in capital and operating expenditures since the April 2010 explosion — and an estimated 90,000 jobs last year alone.”

    Posted in Featured, Scribe [slideshow_deploy]

    7 Responses to Gulf Coast Businesses Suffer Strain of Offshore Drilling Slowdown

    1. Politicalpony says:

      We The People know the reasoning behind this administration action behind all of this. For one, just after the expulsion and during the clean up Billionaire Sorros bought large amounts of the Brazilian oil company. Some of the floaters then picked up anchor and headed for Brazil to drill. Obama has publicly started that America will be one of its best customers. In the meantime shutting down the extension of the pipeline does two things. First, Warren Buffet owns many train tankers. Primarily which move oil from the midwest area to the north east. Then we have the Green Movement. Obama with Socialists and the help of the United Nations Agenda 21 are teeing to force the American citizen off the dependency of oil and into what at this moment in history is a failure in Green Alternative Energy. One must ask why other than their cries for cleaner air and water would anyone destroy an economy and a peoples way of life? One must ask, who stands to have control of the whether and the money? I ask, what was Al Gores net worth when he left the White House, what is it now through his inconvenient truth, what will he be worth once we have no oil resources and are forced to have nothing but failing alternative energy. Al Gore and others will be the richest men in the world while the rest of us will live like peasants begging for bread crumbs. All of this said, they should be warned.if we collapse and the people find out who's behind this and just what they have done, they will have created the largest revolution known to man. And with this thought, how do they plan to control the people? Have they already created a plan for this? I personally, wouldn't doubt it. In fact I suspect they have the plan already in the pieces.

    2. Bobbie says:

      Just think if America wasn't forced to involve government that hinders America's way? In fact, wherever government inflicts higher costs is where government shouldn't be. Where would America be without government and their authority placing a moratorium on essential parts of our lives? Living freer and self reliant and alot more stable protected from or forewarned to prevent crisis. The President can take many steps today to change the economic status and gas prices! #1 – removing his unconstitutional self and let the market make its way as it always has.

      God Bless the families and friends and co-workers of the 11 lives lost!

    3. Bob says:

      I erge anyone and everyone that reads this posted comment to send BILLS of over taxation as well as any excessive costs for anything you can possibly call added on since Jan 22nd 2009 until Jan 21st 2013 to the department of Energy and treasury. WE THE PEOPLE to to hold the current tyranistic regime accountable for our family members having to walk to work because gasoline is now unaffordable. As is milk, bread and anything else you care to mention as mechandise. These items have gone up in cost from 2.75 to 7 times since this GANG has infected the white House. Please I implore you to send these bills of excessive and additional household costs to these factions so WE THE PEOPLE be in charge of our own lives. I did this and yes I was actually responded to within two days!

    4. It is important to know who is lining up to get these oil leases the government has been withholding for so long? We may be buying our oil in the Gulf from China, Brazil, or Soros…or all three.

    5. Lloyd Scallan says:

      Many of my younger years were spent working in the oil fields off the Louisiana coast. I am no expert, but I do know something about how drilling operations work. The BP blow-out was not that unusual. Only in the fact that it happened in such deep water, which the Obama adminstration insisted on. Because of the dept, the BOP was never inspected on site. Only after months sitting in all sorts of whether, behind NASA fences, was the "offical inspection and report" released. Very much like the "magic bullet" and the "Warren Commission Report, it was pure invented fiction to dispell a "conspiracy". In very much the same vain, the BOP failure was invented to provide political cover to Obama who desperately needed as much damage as possible to justify shuting down all drilling operations. That BOP did not fail because of machincal problems. It was because that BOP was deliberately sabatoshed to give Obama the damage he needed. Knowing what we now know of Obama's tactics, would we trust that Obama would not do whatever he needed to do to complete his aganda.

    6. mike swann says:

      Besides wanting to being this country down, O started CCX ( Chicago Cimate Exchange) before he was president. Much of Franklin Raines ill gotten money from Fannie & Freddie went into this. Base in in England. Al Gore is big in this,many Goldman Sachs big wigs>Remember the emaisl between two British scientists stating how they were told to push this global warning thing? Revealed much of what we all guessed, it's BS. Media kept it quiet. I understand there are bilions to be made on this hoax throough CCX. O is said to have funneled much of Fannie and f money into this. Glenn Beck revealed this. I looked it up myself and all my finds aere same as Beck's. Trouble is, there are so many cnanot see this man hates American, whites, he took our money and bailed mideast countries out and woldn't protect our aborders. The mideast didn't intend to be a democracy. Egypt is Iran's buddy after all themoney O wasted on it. They all practice Sharia law, so that is Muslim and all those countries hate us and he knew it.

    7. Obama and Clinton openly support the UN Small Arms Treaty. If signed UN troops could be used in the U.S. and we could kiss the Second Amendment, the one that protects all the rest and the Constitution itself, will be History. Can you imagine how that barbaric period of the early US will be spun in the new Govt approved US and World History textbooks?

      Hopefully the Senate will never ratify it even if Obama tries to 'deem' it passed with an Executive Order.

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