Drilling moratorium spells economic disaster in the Gulf

Thomas Pyle President, Institute for Energy Research
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The Gulf oil spill is delivering a crushing blow to coastal residents and businesses, but Washington’s response threatens to place additional hardships on the Gulf region that could jeopardize our national energy security.  In the wake of the accident, President Obama first halted work in the deep water Gulf and then suspended 33 existing deepwater projects. A temporary pause to inspect these deepwater drilling rigs was warranted; an outright ban will cripple the already struggling Gulf Coast community. Now that the BP well has been capped and a permanent solution to the leak is on the way, the president should re-evaluate his hasty and politically motivated decision to issue a deepwater drilling moratorium.

After a federal judge struck down the first moratorium, Interior Secretary Ken Salazar rushed to issue a second moratorium.  While less stringent in theory, this latest effort will be just as harmful to the Gulf Coast in reality. President Obama explained he wants to prevent another environmental disaster, but he neglects to address the economic disaster now facing the region – tens-of-thousands of Americans employed in the energy industry in the Gulf who could lose their jobs due to the moratorium, a number that will escalate if new drilling projects are not allowed to proceed.

Even worse, the president’s actions have now caught on with his foreign counterparts, as EU Energy Commissioner Guenther Oettinger told reporters after talks this week with oil companies that “a moratorium of new drillings [in Europe] would be a good idea.” With their prospects dimmed both here and abroad, energy companies will have no choice but eliminate thousands of jobs – some permanently.

Goaded by powerful anti-energy interests and the national environmental lobby, some lawmakers are even pushing for a permanent ban on offshore drilling. Florida Senator Bill Nelson has proposed that his state should ban all drilling off the coast. Senators from California, Oregon and Washington want to permanently prevent any drilling in the waters off of the West Coast. Some legislators are pushing for an Outer Continental Shelf moratorium in the cap-and-trade bill Congress is currently considering.

When gas prices skyrocketed in 2008, the American public rightly demanded more domestic energy production. A decades-old moratorium on Outer Continental Shelf drilling was overturned, but the president and Congress’ knee jerk reaction to the Gulf spill could reverse the hard-won policy gains a majority of Americans favor. Instead of focusing time and resources on permanently plugging the leaking well, cleaning up the coastline, and assisting the affected communities, the president and Congress are taking aim at all offshore drilling and the thousands of American jobs that go with it.

What occurred in the Gulf of Mexico three months ago is tragic on every level. But responding to a tragic accident in a way that compounds the economic and potential environmental damage – as this administration has done with its deep water drilling ban – is politics at its worst.

We encourage the administration to investigate what went wrong with this well, and to ensure that the appropriate safety measures are carried out. But a six-month ban on leasing and exploration will only hurt the economy, kill jobs and increase our dependence on foreign oil. By focusing on bolstering national public opinion polls, this administration has dealt yet another terrible blow to the economy of the Gulf Coast by unnecessarily locking up American offshore energy resources and the jobs that go with them.

Thomas J. Pyle is President and CEO of the Institute for Energy Research.