On Monday, Navy Secretary Ray Mabus, who was appointed by President Barack Obama to lead the federal government’s oil spill recovery efforts, held a town hall meeting in Theodore, Alabama. Rather than dictating their plans to the citizens, he said the government wants to listen to the residents of the coast as it makes decisions on the best long-term recovery plan for the region.

Better late than never, right?

The Alabama Press-Register reports that during the meeting, Mabus told residents that the projects that have the best chance of being funded are those that create jobs, correct longstanding problems, and move the economy away from its dependence on oil and gas production and toward renewable energy production.

The cry that needs to be heard loud and clear by the government from coastal residents and local business leaders: end the moratorium, now.

Under the current stall of gulf coast drilling, the opposite of each one of Mabus’s goals will take place. Jobs will not be created, but lost. Not only will longstanding problems of the region not be addressed, but instead more will form. And speaking of dependency on oil, our dependency on foreign oil will increase as a result of the moratorium.

While the government aimed to impress this moratorium on “big oil” conglomerates, they failed to take the time to consider the detrimental effect on independent oil and gas producers.

Don Briggs, President of the Louisiana Oil and Gas Association, explains in The Daily Advertiser, that these independent producers are the ones who stand to suffer the greatest from the moratorium. They produce and drill nearly 50 percent of all wells and represent 70 percent of all lease activity in the Gulf of Mexico. These independent producers account for about half of the nearly 400,000 jobs, $70 billion in the economic values and $20 billion in the federal, state, and local revenues generated by the industry in 2009 alone.

In the absence of this opportunity, more than 200,000 jobs in the gulf region will be lost during the six month suspension. Briggs asks for the government to lift to moratorium so that Louisiana can “get back to what we do best, and that’s fueling the country.” While the states in the gulf region are the ones to feel the initial shock, the rest of the country will soon be affected; “from the gas pump to the grocery store” the American economy will take a turn for the worse.

Dan Juneau, President of the Louisiana Association of Business and Industry, argues in the Daily World that not only will hardworking Americans be out of work, but companies are moving their jobs, research, and development overseas where drilling is permitted. These actions further our dependency on foreign oil and compromise the vitality of both our economy and national security.

Juneau contrasts the current moratorium to the “fiscal tempest,” as he refers to it, which devastated Louisiana unemployment rates, property values, and outmigration in 1986. Juneau has experienced economic turmoil first-hand and if the moratorium is not lifted, he believes the country will enter an “economic miasma” again. The difference, he contends, is that this crisis was man-made by a “governmental edict” and thus the government maintains the ability turn it around. Listening to residents and business leaders in the area, such as Dan Juneau, is a good first step in this turn-around.

As outlined above, all of the consequences of the current moratorium are counter-productive to the goals Mabus explained during Monday’s townhall.

While local residents have objected to the moratorium since its first mention, it is nice that the federal government is finally willing to listen. Let’s just hope that they really hear the need to lift the moratorium and follow through before the region and the country suffer any greater loss.

Allison Meese is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm

Original Article

The Gulf coastal states still face a long road to recovery, but one of the biggest things standing in their way is the moratorium on all new offshore drilling.

Producing oil has never been risk-free. But until the Deepwater Horizon disaster, there had not been a major offshore drilling accident in the United States since the Santa Barbara blowout in 1969.

In fact, the amount of oil lost in rig accidents has averaged 45 barrels a year. That’s a commendable record.

Surely lessons have been learned from the Gulf disaster. Five task forces assembled by the American Petroleum Institute and comprised of offshore drilling experts are working on ways to improve drilling practices throughout the industry. Much better government oversight is inevitable.

But it’s not necessary to wreck the economy to bring about needed changes. After the Exxon Valdez tanker accident, tankers were required to follow more stringent safety procedures. But tankers continued to deliver oil. In the wake of the Three Mile Island nuclear accident, new reactor safeguards were adopted. Nuclear power plants weren’t shut down. Nor did space flights stop following the Challenger disaster.

A moratorium on offshore drilling does more harm than good. The ban not only did nothing to plug the gushing well, but — more ominously — might lead to unintended economic consequences.

By suspending deepwater drilling for at least six months and possibly much longer, President Barack Obama’s plan would compound the Gulf’s economic problems, particularly joblessness.

The livelihoods of some 120,000 people who work on rigs or for supply companies are at risk.

The president is also making it more difficult for major oil companies and independent producers — which are mainly U.S.-based investor-owned companies such as Exxon Mobil, Chevron and Conoco-Phillips — to compete with foreign national oil companies for the world’s remaining oil resources.

The geopolitics of oil is vast and ever-changing, but one element is of absolute importance. Investor-owned international oil companies control only 7 percent of the world’s oil — most of the rest is owned by national oil companies in such countries as Saudi Arabia, Kuwait, Venezuela, Iran, Mexico, Russia and China.

Since these national companies hold most of the onshore wells, offshore is one of the few areas of potential expansion for investor-owned companies.

Now, that expansion could be in serious jeopardy. Given the drilling moratorium and much tighter rules on global offshore production, oil companies will face much higher operating costs.

That’s going to allow countries with oil to extract much better terms from major oil companies. The majors may be forced to share expertise and technology with national oil companies to secure access to offshore fields, especially those in deepwater areas off Brazil and West Africa that are responsible for an increasing share of global oil production.

Desperate for reserves, it’s likely the major companies will have to agree to joint ventures and technology sharing before they can get new license allocations.

Anyone who questions the importance of deepwater drilling ought to know that it accounts for 30 percent of domestic oil production in the United States. According to a study by IHS Cambridge Energy Research Associates, the growth last year in Gulf deepwater production offset about 4 percent of U.S. oil imports.

That might not seem like much, but it was the first time in many years that the level of dependence on foreign oil actually declined. Globally, deepwater production more than tripled in volume from 1.5 million barrels a day in 2000 to 5 million barrels a day in 2009.

The average size of a new deepwater discovery in 2009 was about 150 million barrels of oil, compared with an onshore average of only 25 million barrels. Think about it: if deepwater production was viewed as its own “country,” it would exceed that of every other country except Saudi Arabia, Russia and the United States.

If oil companies are forbidden to drill in the Gulf’s deepwater areas, they will almost certainly move their rigs to other regions of the world. The last thing we need are public policies that destroy thousands of existing jobs while preventing the creation of thousands more.

In a time when our options are limited, and every technology has its own set of problems, we need to take advantage of all our resources. Our government’s approach should be to expand offshore oil production with the proper safeguards, not warp its development.

Sullivan S. Marsden, Jr. is a professor emeritus of Energy Resources Engineering at Stanford University.

Original Article