Administration: Drilling Moratorium Not as Bad As Predicted
The Obama administration released today its latest estimate of the economic cost of its moratorium on deepwater drilling in the Gulf of Mexico. And the numbers in the report indicate that the ban has less of an impact on the Gulf economy than was predicted by many opposed to the policy.
In a Small Business Committee hearing today, Sen. Mary Landrieu (D-La.) pushed back against the findings of the report, countering that Gulf coast residents are suffering because of the moratorium.
The Department of Commerce report says that the estimated job losses from the drilling ban are lower than previously thought because many deepwater drillers have not fired many of their employees, the report says. In total, the moratorium will result in the temporary loss of 8,000 to 12,000 jobs in the Gulf. Many of the jobs will come back once the moratorium is lifted. Small businesses will be impacted the most, the report says.
The report also says that there will be comparatively small reductions in oil production because of the moratorium:
The other primary economic consequence of the moratorium is delayed oil production. Consistent with other studies, we estimate that the moratorium will reduce Gulf of Mexico oil production by about 31,000 barrels per day in the fourth quarter of 2010 and by roughly 82,000 barrels per day in 2011. These are small reductions compared to world production, and are occurring at a time when both crude oil and product inventories and global spare oil production capacity are at high levels, hence they are not expected to have a discernable effect on the price of oil.