Obama Admin. Sees Limited Job Loss from Offshore Oil Ban

WASHINGTON (Dow Jones Newswires), Sep. 16, 2010

The Obama administration's six-month moratorium on offshore oil drilling in the Gulf of Mexico has had a limited effect on employment despite proclamations the ban would cripple the already fragile coastal economies.

The number of workers with jobs in the five Louisiana parishes that support most deepwater drilling activities rose in July, two months into the ban. Unemployment insurance claims in these parishes has also declined from April through August, according to an interagency report the Obama administration compiled for Congress.

Most oil employers haven't laid off high-skilled oil workers despite the ban, and have used the moratorium to do maintenance and repairs on some of their rigs, the report says.

The report notes, however, that based on current data the ban could result in 2,000 rig workers losing their jobs or leaving the Gulf. That would represent 20% of the rig workers who worked in the Gulf on April 20, the day BP Plc's (BP) Deepwater Horizon drilling rig exploded, triggering a one of the worst oil spills in U.S. history.

The report may help cool concerns about the ban, which is scheduled to be lifted at the end of November. It could also raise more concerns as the report doesn't include recent unemployment figures and unemployment insurance claims from states other than Louisiana that were affected by the moratorium.

When the Obama initiated the ban amid safety concerns about deepwater drilling in the wake of the BP oil catastrophe, it caused an uproar. It came under intense scrutiny, as well as legal challenges, from Gulf Coast residents, local politicians and oil workers who said it would inflame economic woes.

The report stands in contrast to earlier projections that the ban would result in more than 20,000 oil-industry layoffs. Those earlier estimates, however, were based on the assumption that all deepwater oil workers would be let go as a result of the ban, the new report says.

The report, compiled over the last several months, relies on observations and data collected from oil operators, industry officials and the government. The report doesn't show the overall economic impact of disaster on fishermen or tourism along the Gulf Coast, which have been devastated.

Obama administration officials will testify about the report before a Senate committee that is investigating the impact of the moratorium.

The report also notes the ban has had little impact on oil prices and likely wouldn't going forward. Estimates in the report suggest the ban will reduce oil production in the Gulf by about 31,000 barrels a day in the fourth quarter of 2010 and by 82,000 barrels per day in 2011. These are small reductions compared to overall world production.

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