In response to the incident in the Gulf of Mexico, the Obama Administration issued a six month drilling moratorium and increased licensing and regulatory requirements. Obama’s “response strategy” to inhibit oil production will cost hundreds of thousands of workers their jobs – further exacerbating the current negative economic situation.
Specifically, estimates from Wood Mackenzie Research and Consulting show the six month moratorium will result in the following consequences:
- The 33 drilling platforms which support some 1,400 workers, offshore and onshore will be forced to shut down
- As many as 46,200 jobs could be idled by the moratorium
- These are well-paying jobs – $5-10 million per month, per platform in lost wages
- Long-term job losses as a result of the moratorium could reach 120,000 by 2014
- The State of Louisiana estimates that the deep-water drilling suspension will result in a loss of 3,000-6,000 in-state jobs in the first 2-3 weeks and potentially more than 20,000 Louisiana jobs within the next 12-18 months
- Louisiana estimates that if the suspension of deep-water drilling activity continues for a long period, the state could lose more than $20,000 in the next 12-18 months
Additionally, preventing offshore oil exploration will undermine America’s energy security and reduce state revenue during a time when states have an “over-spending” problem:
- A six-month moratorium on new drilling activity could result in a loss in deepwater Gulf production of 80,000-130,000 barrels per day
- A longer-term delay could lead to a loss of oil and gas production equal to 350,000 barrels of oil per day by 2015
- 80 percent of the Gulf oil and 45 percent of natural gas come from deepwater wells
- 58 percent of the more than 7,300 active leases in the Gulf of Mexico today are in deep waters – including the 20 highest producing leases in the Gulf
- A six-month moratorium on new drilling activity could result in $120-$150 million in lost royalties to the federal government and a $300-$500 million decline in government revenue in 2011
“First the president was against shallow drilling and offshore expansion, then he supported it; now he’s against expansion but in favor of shallow drilling. While at the same time trying to repeal the Sec. 199 domestic manufacturers’ tax deduction passing a $13 billion tax onto every American family in the form of higher energy costs,” said ATR President Grover Norquist. “For the sake of our economy, I hope he picks a national energy policy and sticks with it.”