How much did the 2010 Gulf deepwater drilling ban affect overall U.S. domestic production – in terms of output, jobs and economic activity?
A 2011 Quest Offshore Resources study found that the 2010 deepwater drilling ban and subsequent permit slowdown reduced total Gulf of Mexico capital and operating expenditures by a combined $18.3 billion for 2010 and 2011, relative to pre‐moratorium plans.
Since April 2010, 11 deepwater drilling rigs have left the Gulf of Mexico for countries such as Brazil, Egypt and Angola. Through 2015, the loss of these rigs is estimated to cost the U.S. economy more than $21.4 billion. As a result of investment decreases due to the moratorium, total U.S. employment is estimated to have been reduced by 72,000 jobs in 2010 and approximately 90,000 jobs in 2011.
More than $18 billion in lost capital and operating expenditures means lost investment and lost economic stimulus from an industry that’s a proven stimulus supplier. Deepwater drilling rigs departing for places where they can work means more lost American investment. And the job losses are remarkable, more than 160,000 over nearly two years. Upon hearing the study’s results, API President and CEO Jack Gerard remarked:
“The economic impacts of the moratorium are still being felt. We’re not doing what we should be doing to help meet our nation’s energy needs, deliver revenue to our government, and create jobs. This is not just hurting people in the Gulf, it is hurting people across the country.”
Key Quest study findings are as follows:
- Currently, Gulf deepwater permits are issued at less than half the rate compared with pre‐moratorium levels.
- Shallow water permits are issued at rates 40 percent lower.
- By issuing future drilling permits at pre-moratorium rates, the number of shallow water projects delayed could be significantly reduced from 85 (under the current path) to 37 from 2012-2015, and from 48 to 9 for the deepwater (see chart below).
- Increasing the number of projects would boost investment by more than $15 million from 2012-2015, raising average annual U.S. employment between 17,000 and 49,000 jobs per year over the same time period.
Certainly, the administration talks about more domestic oil and natural gas production. But what’s needed is less talk and more action. Gerard said:
“Energy policy needs a course correction. Our industry has a vision of an energy future that will support and create millions of jobs and strengthen our energy security. It is based on smart, realistic deployment of all of America’s energy assets, including our ample supplies of oil and natural gas.”
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