Feds: Minimal impacts from drilling moratorium

[September 17, 2010]  WASHINGTON (AP) -- The deepwater drilling moratorium in the Gulf of Mexico has not increased unemployment in the region, says a new report from the Obama administration that counters the dire predictions of oil industry officials and Gulf Coast residents.

The report, being released at a Senate hearing Thursday, said the moratorium imposed after the BP oil spill might have temporarily cost 8,000 to 12,000 jobs on oil rigs and elsewhere. But it found no net job loss in the region, thanks in part to a big hiring push for cleanup crews and massive spending by BP on the recovery effort.

The scenario is far rosier than described in some previous reports, including an Interior Department estimate over the summer that said there could be 23,000 jobs lost from the moratorium.

The new report said other surveys, including the one by Interior, measured worst-case scenarios that never came to pass. Instead, the report said, the majority of rig workers have kept their jobs during the moratorium as the oil industry used the opportunity to repair rigs or kept skilled workers employed in anticipation that deepwater drilling would resume.

"Contrary to the worst-case assumptions in prior studies, many deepwater drilling operators and contractors have kept most of their employees on payroll," states the interagency report, which was to be presented to Sen. Mary Landrieu, D-La., a lead critic of the moratorium, at a hearing of the Senate Small Business Committee she chairs.

President Barack Obama imposed the deepwater drilling moratorium in May in the wake of the April 20 oil well blowout that killed 11 workers and spewed more than 200 million gallons of crude into the Gulf before it was capped in mid-July. Meant to allow time to ensure adequate safety and cleanup procedures are in place on other deepwater drilling rigs, the moratorium is scheduled to last through November, although federal officials have indicated it could end before then. It's also being challenged in court.

Officials in Louisiana and elsewhere contend the moratorium is an unnecessary job-killer, but Thursday's report disagreed. It found no greater rise in unemployment in the five Louisiana parishes most affected by the moratorium than elsewhere in the state or nation.

"There is no evidence of declining employment after the moratorium was announced," the report said.

The report focuses narrowly on the moratorium and does not seek to measure wider economic impacts from the oil spill itself -- for example, on fishing or tourism.

The report finds a modest impact on oil and natural gas production in the Gulf from the moratorium. Because active wells were allowed to continue to produce -- and only wells in the process of being drilled were stopped -- production would be delayed but not decreased overall. The report said there would be a reduction of 31,000 barrels a day in the fourth quarter of 2010 and roughly 82,000 barrels a day in 2011 -- relatively small numbers compared with overall supplies.

For comparison, the U.S. consumed more than 7 billion barrels of oil in 2008, according to the Energy Information Administration.

The moratorium should not affect the price of oil, the report said.

[Associated Press; By ERICA WERNER]

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