The Full Cost of the Drilling Moratorium

While the original story of the new drilling moratorium was covered here at Hot Air, the new unemployment numbers which came out this week highlight an even more disturbing aspect of this proposal by the administration. Jack Gerard of the American Petroleum Institute (API) sent out a rather graphic warning to President Obama on Wednesday which laid out the danger of such a decision.

Jack Gerard warned that the administration’s decision today not to allow offshore drilling in the eastern Gulf of Mexico, the Atlantic and the Pacific in the government’s next five-year drilling plan could result in the loss of tens of thousands of American jobs, billions less in government revenues and an increasing dependence on foreign energy sources.

In a longer study compiled by API, some of the alarming facts and figures are brought to light.
Potential Jobs from Energy Exploration

By 2020, these jobs could have grown nation-wide to more than 57,000

Also by 2020, government could have reached annual revenue collection exceeding $3.8 billion and still rising. By extending a moratorium on these areas which have been held off limits for decades, Americans are denied benefits such as these from this valuable economic activity.

But even this doesn’t tell the full story. Retreating on this front will impact far more than the direct jobs and revenue involved in energy exploration. As this story shows, the industry stretches out to provide opportunities far from the actual oil rigs. A prime example is that of Thomas Clements, who operates a business manufacturing machine parts for equipment used in energy exploration. He’s been struggling with government energy policy and its effect on his operation for some time now and went to petition his government for redress of grievances back in August.

At that time, thanks to the deepwater drilling moratorium, Clements, who co-owns a small business that produces metal parts for oilfield equipment, had no income. Not quite three months later, Clements still lives on his savings — and business is down by 54 percent for the year.

“Right now, we’re living off savings and that’s it,” he said Monday on a conference call. “It’s everything we’ve saved up. We’ve worked our entire lives to get to this point. … We were supposed to be in the black this year. We’re definitely still in the red and, in the future, we’re not too sure what it looks like even though the moratorium is lifted.”

Until the Interior Department begins to issue permits at a higher rate, Clements said, his business prospects will remain uncertain. While the drilling moratorium technically applied only to deepwater drilling, the Interior Department’s permits for shallow water drilling slowed, too — by 53 percent. The department has yet to pick up the pace. It continues to issue 3.8 fewer shallow-water drilling permits a month than it did the year leading up to the oil spill. No new deepwater permits have been issued since May.

This “permitorium” as it is being called is hitting people across a number of industries and the service sector as well. Even in spaces where drilling is not being expressly forbidden, the government is dragging its feet on the issuance of new permits bringing a large swath of economic activity – along with the corresponding jobs which might be produced – to a screeching halt.

The last gulf oil spill was bad news, no doubt. And it serves as a reminder that we must continue to work to increase safety and containment measures. But it does nothing to alleviate our need for both domestic energy resources in an uncertain global climate and the jobs that come from such endeavors. Let’s hope the next Congress can talk some sense into those currently holding opportunity in check.