The social and economic consequences of President Obama’s offshore drilling moratorium are starting to manifest themselves and will rapidly worsen. News spread this week that eight of the 33 deepwater rigs in the Gulf of Mexico had either left or were finalizing their plans to do so. Workers, businesses, lending institutions, and our state and local governments have started making plans for dealing with the economic disaster that is accompanying the ecological one in the Gulf.
Unfortunately, the myth that shallow-water drilling isn’t being affected by the deepwater moratorium is rapidly being exposed as a cruel hoax. Not a single federal permit for shallow-water activity has been granted since the April 20 disaster. Some 16 shallow-water rigs that were all engaged before the incident are now sitting idle. In 30 days, that total will grow to 34 rigs. Approximately 50 offshore marine service and supply vessels are already out of work and that number will expand to over a hundred very soon. Louisiana’s shipbuilding industry—a critical player in our state’s economy—is bracing for a potentially devastating drop in new business orders and the likely cancellation of some existing contracts.
An economy is an organic entity. It is a complex, interdependent set of financial relationships that feed off each other in good times and kill each other off in down cycles. The ill-conceived drilling moratorium has now set into motion destructive economic chain reactions that won’t stop offshore or on the coast. They will spiral out to other parts of the state and nation very quickly.
The moratorium is another example of an obvious shortcoming of President Obama. He often lets his words outrun the facts. He did it, for example, when he said he would close the detention facility at Guantanamo Bay shortly after his inauguration. It is still there because no better alternative has been found to deal with the dangerous individuals housed there. The same thing is happening with the drilling moratorium.
The federal judge who recently imposed an injunction against the moratorium cited the lack of justification for imposing it, especially in light of the economic consequences that it would generate. His 22-page ruling was an indictment of the rush-to-judgment process that the Obama administration used in taking this far-reaching action. He strongly called into question the fact that the vast majority of the experts the administration charged to make recommendations regarding the catastrophe were opposed to a moratorium.
Once again, the president’s words raced past the facts, and workers, businesses, and governments in Louisiana will soon be paying a steep price for it.
President Obama could have taken a different approach, one in which strong actions could have waited for facts. Instead of a moratorium, he could have announced an immediate, full-blown critical review of the drilling companies’ safety procedures, maintenance records, key equipment reliability, and top-to-bottom rig inspections. That would have been fair, time-critical, and appropriate. When he uttered the words “six months” and “moratorium,” he not only sealed the fate of deepwater drilling, but of the related and interdependent economic relationships that are now beginning to tumble into disarray far beyond the shores of the Gulf.
There is time to salvage some of this damage, but not much time. The disease now spreading through the organic economy will run its natural course. Words will not heal it. Actions hurt it, and only action will give it a chance to survive.
Dan Juneau is the President of the Louisiana Association of Business and Industry.