President Obama’s ban of deepwater drilling in the Gulf Coast will likely cost tens of thousands of jobs and could even cancel out the private employment gains reported by the government for the month of May.
Industry trade group the American Petroleum Institute (API), which is strongly opposed to the moratorium, estimates that 46,200 people are directly and indirectly employed by offshore drilling in the Gulf Coast, Sara Banaszak, an API economist said.
The Bureau for Labor Statistics Friday announced that 41,000 private sector jobs were created in May, which, along with a relatively high number of temporary government census jobs, pushed the unemployment rate down two tenths of a percent to 9.7 percent.
Obama’s Interior Department Secretary Ken Salazar announced the moratorium May 27 and said offshore drilling directly employs an estimated 150,000 people nationally in a report to the President on the safety of offshore drilling.
Obama spokesman Ben LaBolt said “the President believes we must ensure that the BP Deepwater Horizon spill is never repeated” and noted that another spill would cause further economic damage to the Gulf Region. LaBolt said “economic impacts were certainly taken into account” as evidenced by the fact that the administration did not ban shallower, more safe drilling as well.
But the Interior Department does not appear to have estimated the job losses from the moratorium. No estimates appear in literature published announcing the ban. A spokeswoman, asked if the agency had estimated potential job losses, said, “not that I am aware of.”
The administration’s heavy assault on the oil industry is a stark departure. Obama had unveiled a proposal to increase offshore drilling in the weeks before the Deepwater Horizon oil spill in the Gulf, but under pressure for his handling of the spill has adopted a newly harsh stance.
Besides the jobs, industry analysts say hundreds of millions of dollars in startup costs are sunk into each drilling site.
The API’s estimate does not include jobs “induced” by offshore drilling, meaning the jobs created when industry employees spend their incomes in the Gulf region.
The Gulf Coast is already reeling from the economic impacts of the BP oil spill, which is expected to cost thousands of jobs in the fishing, tourism and other industries.
The dismal economy had already made the job picture bleak there as well, as it has across the country.
In all, 33 drilling operations have been forced to cease their operations.
Republican lawmakers in the Gulf Region protested the moratorium.
“Already, Louisiana has suffered severe negative economic and ecological impacts from the BP oil spill . . . .During one of the most challenging economic periods in decades, the last thing we need is to enact public policies that will certainly destroy thousands of existing jobs while preventing the creation of thousands more,” Louisiana Gov. Bobby Jindal, a Republican, wrote in a June 2 letter to the President.
Jindal said Louisiana drilling authorities the moratorium will cost up to 6,000 jobs in only two to three weeks.