RPC Reg Spotlight March 9, 2011

 

UPDATE:

 

The following legislation has been passed by the House of Representatives but still awaits action by the Senate.

 

  • H.R. 1229 – Putting the Gulf of Mexico Back to Work Act – passed the House on May 11, 2011.
  • H.R. 1230 – Restarting American Offshore Leasing Now Act –passed the House on May 5, 2011.
  • HR 1231 – Reversing President Obama’s Offshore Moratorium Act – passed the House on May 12, 2011.

 

Regulatory Action in the Spotlight:

 

Deepwater drilling moratorium in the Gulf of Mexico and subsequent inaction on drilling permits.

 

Adverse Effects:

 

  • Prohibiting exploration for oil during a time of rapid energy price increases.
  • Increasing dependence on foreign sources of oil.
  • Eliminating employment opportunities for Americans.

 

Response of the Obama Administration:

 

Although the formal moratorium ended on October 12, 2010, a de facto suspension of drilling remains in effect via the deliberate inaction of Interior Secretary Ken Salazar and Director of the Bureau of Ocean Energy Management, Regulation and Enforcement’s MichaelBromwich.  As of this date, only one deepwater permit has been approved since the moratorium ended.

 

The Obama Administration has deliberately ignored the ruling of U.S. District Judge Martin Feldman, who on Feb 17, 2011, gave the Department of the Interior 30 days to rule on seven deepwater drilling permits.  Judge Feldman overturned the original ban in June 2010 and rebuked the government for "arbitrarily" imposing a moratorium that would cause "irreparable harm to businesses" along the Gulf Coast.   The Judge has described the department's delay in issuing permits since the Gulf oil spill as "increasingly inexcusable."

 

Impact on the United States:

 

Loss of jobs:

 

According to a Bloomberg report on a July 10, 2010 memo to Interior Secretary Ken Salazar from Michael Bromwich, “There is no question that the imposition of a suspension on deep-water drilling activity will have a significant negative economic impact on direct and indirect employment in the oil and gas industry…”  Bromwich further estimated a drilling moratorium would result in ‘lost direct employment' affecting ‘approximately 9,450 workers’ and 'lost jobs from indirect and induced effects' affecting about 13,797 more.'" 

 

A study by Joseph R. Mason, Ph.D, of Louisiana State University on behalf of the American Energy Alliance cites the potential loss of over 24,000 jobs.

 

Loss to the economy:

 

Bromwich also estimated that the moratorium would lead to a $10.2 billion reduction in industry-related spending in 2011…

 

Loss of revenue:

 

... resulting in a cost to state and federal governments of $170 million in royalties and $522 million in taxes in 2011 alone.

 

Loss of confidence:

 

Furthermore, scientists who authored a May 27, 2010 report entitled “Increased Safety Measures for Energy Development on the Outer Continental Shelf”  expressed that they did “….not agree with the six month blanket moratorium on floating drilling.  A moratorium was added after the final review and was never agreed to by the contributors.”   The scientists added the moratorium has nothing to do with improving drilling safety stating, “We believe the report does not justify the moratorium as written and that the moratorium as changed will not contribute measurably to increased safety and will have immediate and long term economic effects. Indeed an argument can be made that the changes made in the wording are counterproductive to long term safety.”

 

In Closing:

 

Since President Obama’s inauguration in January 2009, the weekly U.S. regular retail gasoline price per gallon has risen from $1.813 on 01/26/2009 to $3.473 on 03/07/2011 – an increase of $1.66 per gallon. This is causing considerable pain at the pump for American consumers as more of their disposable income is being dedicated to energy usage. Action must be taken immediately to open offshore areas to oil and natural gas discovery and production. To continue to be negligent on such matters fails to meet the needs of the U.S. economy and national security.

 

Relevant Legislation:

 

H.R. 840, the Safe Exploration Coming from Underwater Reserves of Energy (SECURE) Act, introduced by Rep. Tim Murphy (PA-18) would allow previously approved permits for over thirty Gulf of Mexico drilling projects to proceed immediately.  These approved permits have been effectively blocked by the Administration’s inaction.