Offshore slowdown, like other intrusions, erodes employment

Bob Tippee

A costly slowdown in permitting of shallow-water drilling in the Gulf of Mexico shows in microcosm how regulatory juggernauts wreck economies.

After the Apr. 20 explosion and blowout of the deepwater Macondo well, the administration of US President Barack Obama imposed a moratorium on all offshore drilling. Although it lifted the explicit ban on shallow-water work within a month, it hasn’t allowed activity fully to resume.

Bernard L. Weinstein, associate director of the Maguire Energy Institute at the Cox School of Business at Southern Methodist University in Dallas, says the Bureau of Offshore Energy Management, Regulation, and Enforcement issued only six permits for new shallow-water wells in the 5 months after the Macondo accident. Before the spill, the Department of the Interior, through the old Minerals Management Service, issued 10-15 wells/month.

Weinstein says this “apparent hesitancy” to permit drilling in shallow water “has subjected the industry to a period of extreme economic duress, with related spillover effects on Gulf Coast households and businesses.”

His study, sponsored by the Shallow Water Energy Security Coalition, estimates the shallow-water slowdown has put 40,000 jobs in jeopardy (OGJ Online, Oct. 7, 2010).

Weinstein makes other frightening economic extrapolations certain to be challenged by drilling opponents.

Yet facts are clear. The administration is limiting economic activity without good reason. Its stance is eroding Gulf Coast employment amid a national recovery too feeble to redress unemployment at its most painful level in decades.

Furthermore, the “de facto moratorium” in shallow water, as it is known, represents just one manifestation of the Obama administration’s signature zeal for regulation. Across the economy, government intrusion analogous to the offshore hobble—little of it warranted or wanted outside extremist political circles—is limiting investment by threatening profits, thereby demolishing the real engine of job creation.

To recycle an analogy popularized by the incumbent interior secretary, an economy can do little for employment with bureaucratic boots on its neck. For the sake of American jobs, the government needs to change footwear.

(Online Oct. 8, 2010; author’s e-mail:

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