David Holt

Today marks the one-year anniversary of the official end to the administration’s deepwater drilling moratorium in the Gulf of Mexico, a milestone the House Natural Resources Committee is appropriately marking with a hearing on the continued reverberations of that decision.

The fact that the moratorium ended 12 months ago should mean drilling in the Gulf region and the jobs and income that go along with it are all back to normal levels. Far from it. Although the Interior Department has significantly beefed up the OCS regulatory regime in order to ensure that any activity in the Gulf will be done safely, it has unfortunately instituted a slower than expected permitting pace which has resulted in a 37 percent decrease in the number of operating drilling rigs in the Gulf. As of last month, three rigs are idle, and another 11 have left the region altogether since May 2010. Of those that departed (primarily to African countries with less favorable regulatory environmental safeguards), only three have returned since the moratorium was lifted. That means a loss in potential spending of $6.3 billion and a loss in direct employment of 11,500 jobs in just two years.

Earlier this month the Administration dusted off its “Gulf-drilling-has-returned-to-normal” talking points, which it has trotted out several times in the past 17 months. The Bureau of Ocean Energy Management Regulation and Enforcement (split this month into the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement) argued that a good deal of the slow-down in permitting for these rigs is due to “flawed” applications from rig operators. The agency also said that counting old, recently reissued permits brings the rate of permitting for new wells in the Gulf up. But who’s counting old permits? Not the rig workers who depend on the industry for their livelihoods. As Sen. David Vitter, Louisiana Republican said recently, “Revenue cannot be generated from sales that do not happen, and jobs cannot be created on leases that private industry cannot acquire.”

In January the Energy Information Administration predicted that offshore oil production would decrease 13 percent this year, owing directly to the moratorium and related policies. In the Gulf, offshore drilling supports approximately 400,000 jobs, meaning we can expect the 9.5 percent unemployment rate in the Gulf Coast region to hold steady or even increase. We should also expect tourism, manufacturing and other industries in the area continue to struggle. To compound the impact of the EIA’s forecast for reduced production, consider that the United States has already imported 2.7 billion barrels of oil in 2011 at a cost of over $285 billion (www.moreenergynow.org). Increasing our reliance on imported oil by reducing domestic production will place our energy security at an even bigger risk and drive up gasoline and diesel prices even higher.

If the Administration is serious about putting Americans back to work, it should make moves now that will create job growth opportunities and reduce prices at the pump. Removing the impediments currently in place to a thriving domestic energy industry would be a great place to start.


David Holt

David Holt is President of the Consumer Energy Alliance.