Offshore Drilling: Common Sense & Real Economic Stimulus
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U.S. Sen. Kay Bailey HutchisonOctober 30, 2011 | 2,320 views | 1 comment
One year ago, the Obama administration officially lifted its moratorium on offshore drilling in the Gulf of Mexico. Nevertheless, an ongoing, heavy-handed regulatory environment has created a de facto drilling moratorium (a “permitorium”) that is jeopardizing domestic energy production, hundreds of thousands of jobs, and a national economic recovery.
Over the last year, the U.S. Department of the Interior (DOI) has granted only a few deep water drilling permits. It has been widely reported that paperwork required for drilling permits has skyrocketed from 30-40 pages per application to a staggering average of 3,600 pages. Not surprisingly, regulators’ average response time has slowed down drastically, too -- from 36 days to 131 days. At every step of the regulatory process, from application preparation to application review, new burdens and bureaucratic foot-dragging have resulted in dramatically fewer drilling permits.
Over-regulation has economic consequences. The Obama administration’s slowdown on permits and drilling means fewer jobs in the energy industry for years to come. For the immediate future, the administration’s actions mean lost jobs and lost tax revenue at a time of record-high unemployment and record-high federal budget deficits.
These are not theoretical losses. Nearly 40 percent of the deep water drills located in the Gulf of Mexico prior to the moratorium have moved to other countries. These departed rigs alone could have drilled an additional 60 wells, created 11,500 jobs, and generated $6 billion in private sector spending. Looking ahead, the continuing regulatory slowdown and “permitorium” could result in 125,000 lost jobs by 2015, $70 billion in lost private investment, and $18 billion in lost government revenue.
Over-regulation of offshore drilling will inevitably lead to a significant decline in domestic energy production, and higher costs for American families and businesses. Based on projections by the U.S. Energy Information Administration, domestic oil production is expected to decrease 20 percent this year and 42 percent next year from 2008 levels. As a result, we will pay more at the gasoline pump, and our economy will be even more vulnerable to the instability of foreign oil-rich nations.
In the last three years, gas prices have already risen by 88 percent. Reductions in domestic oil production will only add to the pressure on prices -- for gasoline, fuel oil, and electricity.
President Obama recently kicked off his “We Can’t Wait” campaign for his proposed jobs legislation. Much of this proposal repeats the same costly, ineffective approaches that were tried in the president’s 2009 economic stimulus program: hundreds of billions of dollars in temporary spending, creating a staggering debt. These policies will not spur private investment nor create jobs. Instead, they are proven to do exactly the opposite, leaving tens of millions of American workers stranded by chronic nine percent unemployment.
The administration doesn’t understand how to get our economy moving. It fails to recognize the immediate economic opportunities in the Gulf of Mexico, which do not require deficit spending nor tax increases to create jobs. If the administration’s permitting policies returned to pre-moratorium levels, 200,000 jobs could be created by 2013. This is a common sense and cost-effective approach for real economic stimulus!
Unless the current offshore drilling policies change, higher energy prices will continue to drive up operating costs for families struggling to make ends meet, and for businesses in every sector of our weak economy. With more than 14 million Americans currently out of work, we need sensible regulatory policies that will allow private investment and job creation.
Kay Bailey Hutchison is the senior U.S. Senator from Texas.