Wednesday, August 25, 2010

The Gulf Drilling Moratorium

Remember the pedictions of lost jobs and oil rigs leaving for other shores after President Obama imposed a moratorium on deepwater drilling? The New York Times reports the oil and gas industry has been crying wolf:
Yet the worst of those forecasts has failed to materialize, as companies wait to see how long the moratorium will last before making critical decisions on spending cuts and layoffs. Unemployment claims related to the oil industry along the Gulf Coast have been in the hundreds, not the thousands, and while oil production from the gulf is down because of the drilling halt, supplies from the region are expected to rebound in future years. Only 2 of the 33 deepwater rigs operating in the gulf before the BP rig exploded have left for other fields.

While it is too early to gauge the long-term environmental or economic effects of the release of 4.9 million barrels of oil into the gulf, it now appears that the direst predictions about the moratorium will not be borne out. Even the government’s estimate of the impact of the drilling pause — 23,000 lost jobs and $10.2 billion in economic damage — is proving to be too pessimistic.
As for the reason for the moratorium, the Washington Post has a thorough report on how the Minerals Management Service operated as a "partnership" with the oil and gas industry:
MMS's acquiescence stemmed from the unusual relationship it had cultivated with industry. Directed by law to "meet the nation's energy needs," the agency pursued that mission by declaring itself publicly and formally as industry's partner.

Top officials and front-line workers routinely referred to the companies under their watch as "clients," "customers" and especially "partners." As the relationship became more intertwined, regulatory intensity subsided. MMS officials waived hundreds of environmental reviews and did not aggressively pursue companies for equipment failures. They also participated in studies financed and dominated by industry, more as collaborator than regulator. In the face of industry opposition, MMS abandoned proposals that would have increased costs but might have improved safety.


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