DOI’s offshore plan: a missed economic opportunity that also weakens U.S. energy security

Despite everything we learned about the effects on jobs, local economies and U.S. energy security caused by this summer’s moratorium on offshore drilling, the Administration has decided to proceed with a more extensive and far more damaging halt on offshore development than we have seen to date.

Today, Interior Secretary Ken Salazar announced that the Administration will implement a de facto moratorium on offshore exploration in the eastern Gulf of Mexico and the Atlantic coast, which effectively means offshore energy development in these areas – and the jobs, tax revenue, economic activity and U.S. energy security they provide – will be put on hold for the better part of the next decade.

And the reason? According to Secretary Salazar, it is because of the need to improve safety and environmental standards as a result of “lessons learned from the Deepwater Horizon oil spill.”

If you’re confused, join the club. After all, this announcement comes despite the fact that Secretary Salazar, when he lifted the temporary ban on deepwater drilling in the Gulf of Mexico in October, said “… [w]e believe the risks of deepwater drilling have been reduced sufficiently to allow drilling under existing and new regulations.”

While the reasons behind this surprising reversal are still unclear, we do know that this decision ignores the industry’s track record and commitment to environmental and safety performance – as well as the overwhelming evidence that the Gulf of Mexico spill resulted from practices far outside industry norms. That’s not to mention the fact that it ignores the visible toll the moratorium took in terms of jobs and economies in the Gulf.

This deeply disappointing decision will have direct, negative implications for our country:

  • Loss of jobs and federal and state revenue that would have flowed from increased resource access: According to a recent study, developing the areas of the United States that have been kept off limits – including offshore — could create more than 160,000 jobs, and generate up to $1.7 trillion in new government revenue – of which $1.3 trillion would be from offshore development. Today’s decision means these benefits won’t be realized anytime soon.
  • Reduced U.S. energy security: According to the U.S. Geological Survey, an estimated 67 percent of conventional undiscovered oil resources and 40 percent of undiscovered natural gas resources are located on federal lands, a good portion of which will not be accessed due to this decision. That means the U.S. will produce less of its own energy and import more.

Today, the U.S. Chamber of Commerce clearly summed up the effects of the decision this way: “The administration is sending a message to America’s oil and gas industry: take your capital, technology and jobs somewhere else.”

In the midst of a prolonged economic crisis, high unemployment rates and soaring federal and state budget deficits, this decision will do nothing to help our economy and put people back to work. In fact, it does exactly the opposite, and it represents a critical, missed opportunity for supporting America’s economic recovery.


4 Comments

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  1. Walter Johnson says:

    The Gulf Coast Deepwater ban was listed in large part because of the number of oil worker and related jobs involved. Along the Atlantic coast far fewer jobs are currently at risk.

    Oil companies including Exxon have a vested interest in working with the U. S. government to maximize safety. BP was nearly put out of business by its one now notorious oil leak from a blown well in the Gulf. The cost itself wasn’t what put BP at risk but the fact its stock and credit rating collapsed as a direct result of the spill and its uncertain cost. The same thing can happen to any oil company.

    Exxon should voluntarily adopt the most stringent safety standards and spend enough on enforcement of those standards if for no other reason than to protect its brand reputation.

    • Michael Wilson says:

      I do not have any association with Exxon, although I worked in the California oilfields around Kern Co. I believe that the company must have taken the strongest tack possible after the Valdez incident. The one great complaint that I have with all of the Oil Companies is that they don’t take a stand to help open up the KNOWN resources we have. It isn’t easy to fight the environmentalists but if we and they don’t start with this national security issue then it won’t be long before the last of your jobs will be going out of the country, that is a sure thing. Oh by the way Exxon you might just have to refine your products someplace out of the country also, because they still have the refineries in their sights. Someone better start fighting back on the fracking issues, in the gas drilling field or you will see that locked up also.

  2. Randy Robertson says:

    Exxon, BP, Shell, Chevron and the other majors have adopted the most stringent safety standards and spent enough on enforcement of those standards. The problem that no one seems to understand is, man made a decision. It was the wrong one, as the world has seen. For those of us in the industry it was wrong before the well blew out. The goverment and the Oil company can put new rules and regulations in place. BP had rules and standards in place to cover this problem. Man made a decision and it happened to be the wrong one. Reguardless of regulations, man will be able to made the same decision again in the future, if that is his choice. Just as Obama did with Health Care. Most were against it and thought it was wrong, but he and the Congress paseed it anyway.

    • Endre Walls says:

      Two problems with your argument in my opinion Randy.

      First, the president doesn’t pass laws, he’s not a legislator and therefore only has the power to veto a law he is against, and that’s only under certain conditions. The constitution is a wonderful document – check it out. If most were against healthcare it wouldn’t have passed both chambers of congress. This is a democracy, but decisions aren’t made through popular consensus. You elect people to represent you and work to influence them to cast your votes for you on laws and rules.

      Second, Exxon, BP, Shell, and Chevron as well as others have a fiduciary responsibility to comply with safety standards. Should we be impressed when they do or should we push them to naturally exceed those standards putting environment and people ahead of profits? I think the latter, in a perfect world, should be true. That being said, man does make mistakes, which is why man should do the research necessary to minimize mistakes rather than use that as justification to “get back on the horse” as it were.

      That “can do” spirit is great provided we learn from past lessons to prevent future repeats of mistakes. Energy companies spend a lot of money paying people to do blogs to lobby the public, but not enough on making sure the energy they deliver is clean, environmentally responsible, and efficient. I think Exxon is ahead of the curve in this aspect, but the “drill baby drill” methodology doesn’t sit well with me at all. Exxon should continue to lead the R&D sector, and partner with philanthropic resources to expand research and development in order to meet tomorrow’s demand with a long-term vision in mind.

  3. Walter Johnson says:

    The Gulf Coast Deepwater ban was listed in large part because of the number of oil worker and related jobs involved. Along the Atlantic coast far fewer jobs are currently at risk.

    Oil companies including Exxon have a vested interest in working with the U. S. government to maximize safety. BP was nearly put out of business by its one now notorious oil leak from a blown well in the Gulf. The cost itself wasn’t what put BP at risk but the fact its stock and credit rating collapsed as a direct result of the spill and its uncertain cost. The same thing can happen to any oil company.

    Exxon should voluntarily adopt the most stringent safety standards and spend enough on enforcement of those standards if for no other reason than to protect its brand reputation.

    • Michael Wilson says:

      I do not have any association with Exxon, although I worked in the California oilfields around Kern Co. I believe that the company must have taken the strongest tack possible after the Valdez incident. The one great complaint that I have with all of the Oil Companies is that they don’t take a stand to help open up the KNOWN resources we have. It isn’t easy to fight the environmentalists but if we and they don’t start with this national security issue then it won’t be long before the last of your jobs will be going out of the country, that is a sure thing. Oh by the way Exxon you might just have to refine your products someplace out of the country also, because they still have the refineries in their sights. Someone better start fighting back on the fracking issues, in the gas drilling field or you will see that locked up also.

  4. Randy Robertson says:

    Exxon, BP, Shell, Chevron and the other majors have adopted the most stringent safety standards and spent enough on enforcement of those standards. The problem that no one seems to understand is, man made a decision. It was the wrong one, as the world has seen. For those of us in the industry it was wrong before the well blew out. The goverment and the Oil company can put new rules and regulations in place. BP had rules and standards in place to cover this problem. Man made a decision and it happened to be the wrong one. Reguardless of regulations, man will be able to made the same decision again in the future, if that is his choice. Just as Obama did with Health Care. Most were against it and thought it was wrong, but he and the Congress paseed it anyway.

    • Endre Walls says:

      Two problems with your argument in my opinion Randy.

      First, the president doesn’t pass laws, he’s not a legislator and therefore only has the power to veto a law he is against, and that’s only under certain conditions. The constitution is a wonderful document – check it out. If most were against healthcare it wouldn’t have passed both chambers of congress. This is a democracy, but decisions aren’t made through popular consensus. You elect people to represent you and work to influence them to cast your votes for you on laws and rules.

      Second, Exxon, BP, Shell, and Chevron as well as others have a fiduciary responsibility to comply with safety standards. Should we be impressed when they do or should we push them to naturally exceed those standards putting environment and people ahead of profits? I think the latter, in a perfect world, should be true. That being said, man does make mistakes, which is why man should do the research necessary to minimize mistakes rather than use that as justification to “get back on the horse” as it were.

      That “can do” spirit is great provided we learn from past lessons to prevent future repeats of mistakes. Energy companies spend a lot of money paying people to do blogs to lobby the public, but not enough on making sure the energy they deliver is clean, environmentally responsible, and efficient. I think Exxon is ahead of the curve in this aspect, but the “drill baby drill” methodology doesn’t sit well with me at all. Exxon should continue to lead the R&D sector, and partner with philanthropic resources to expand research and development in order to meet tomorrow’s demand with a long-term vision in mind.