Dept. of Interior's Figures Belie Obama - Another Case of Understatement
Only fitting on the day that we get employment data for September (that shows the US still has a long way to go to mend the economic fissures of the most recent recession) that we revisit the impacts that both the actual moratorium on deepwater and the de facto one on shallow-water drilling are having on Gulf-states jobs. The table below summarizes three different studies that provide their assessments of the slowed permitting process for shallow-water operations and the suspension of new drilling along the Outer Continental Shelf in the Gulf of Mexico as well as the Department of Interior's study that it submitted to the federal courts in August.
All four suggest that the economic impact of the moratorium is far greater than the Obama Administration's assessment released on September 16, 2010 Estimating the Economic Effects of the Deepwater Drilling Moratorium on the Gulf Coast Economy that pegs temporary job losses impacting 8,000 to 12,000 individuals. The title of the Administration's report indentifies a glaring short-coming in that it focuses only on the "deepwater" impact. According to the SMU report, The Economic and Fiscal Consequences of the Drop in Shallow-Water Drilling Permits: Impacts on the Gulf Coast and the Nation, approximately 70% of the shallow-water drilling fleet will be idled by November without a significant uptick in permit approvals.
The BOEMRE's numbers tracking permits of new wells approved tell the story. Since the Macondo blowout and subsequent ban on deepwater drilling, shallow-water activities have also been severely impacted. Prior to the oil spill, between 10-15 new well permits were issued each month. Now the average is approximately one per month. SMU's analysis suggests that 40,000 jobs are directly related to shallow-water activities. Moreover, the wages paid by the offshore industry for one worker are 50% higher than the average combined household income in the United States. Thus, each one of these jobs lost is the equivalent of more than 2 average jobs in the United States. It is as simple as this - the current administration and legislature are being negligent to the US economy by allowing the BOEMRE to hinder the shallow-water drilling industry's normal progress. Regardless of whose estimates are chosen, the bottom line is that these jobs are evaporating while the BOEMRE is dragging its feet in issuing permits.
For a more detailed look at the Gulf of Mexico, readers may be interested in a free trial subscription to the GOMExplorer. A weekly newsletter is published each Monday for subscribers and the upcoming newsletters will provide greater details surrounding the impact of the moratorium and slow permitting process. We encourage you to give it try.