The Louisiana Delegation’s Letter To Barack Obama On The Moratorium

Here’s a copy of a letter the Louisiana congressional delegation is sending to the president today, as the state’s patience with his policies on offshore oil dwindles to zero…

The Honorable Barack Obama
President of the United States
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear Mr. President,

We write regarding the loss of economic activity and jobs as a result of the de facto moratorium on energy production in the Outer Continental Shelf (OCS) of the Gulf Coast.  The moratorium on drilling was expected to end on October 12, 2010, but that date has passed and our constituents in Louisiana continue to be impacted by this decision.  While our constituents were among the hardest hit, the “ripple effects” of this moratorium have had an impact far beyond the oil and gas industry in the Gulf Coast.

Analysis provided by your Administration indicates that the economic impact of the moratorium led to nearly $2 billion in reduced industry spending and a loss of up to 12,000 jobs.  Studies commissioned by business and industry leaders independent of the government report even higher figures.  As we work to restore US manufacturing jobs, offshore energy production can be a driver for national independence and innovation.  Instead, the current decision to limit OCS drilling has paralyzed an important domestic industry, cut thousands of jobs, and stifled economic investment and growth at a time when job creation is paramount.

Most obviously, the decline in domestic oil production has contributed to higher gasoline prices for all Americans.  As gas prices increase, our economic recovery will continue to be inhibited.  It has been reported that one-fifth of the current price increase of oil is related to a weaker dollar.  Clearly, increased domestic oil production mitigates this effect and should be supported by your Administration.

But the energy industry in the Gulf Coast doesn’t just supply gasoline for our cars, heat for our homes, or employment for those in the oil and gas business.  It powers key industries throughout the country that are essential to our economic recovery.  Typical are boat builders who manufacture the ships that service and maintain rigs at sea employing thousands directly and indirectly. For example, in Louisiana, just one boat building company spends an average of $35 million per boat.  To build these boats, the company purchases $40 million of steel, $50 million worth of engines from Caterpillar (a major manufacturing employer in Illinois), and hundreds of millions more from other companies.  The current regulatory slow down has led to cancelled orders for many of these boats.  Put differently, the regulatory slow down has cancelled the jobs for these Americans who manufacture these products.  Please note that these are well paying jobs with good benefits.   These jobs are only replaced, if at all, by lower wage service jobs.  This keeps unemployment statistics down but does not create a brighter future for those who have been forced into them.

As Congress prepares to enact major cuts in spending aimed at reducing our deficit, we should not deny royalties and other revenue from oil and gas development that could assist in paying down the deficit. Wood Mackenzie, a highly respected energy research and consulting firm, recently released a study showing that a 1-year delay in the permitting process will likely result in a loss of nearly $10.8 billion in government revenues, further exacerbating our problem.

As you know, we strongly opposed the original moratorium on deepwater drilling, and were encouraged to see it formally rescinded by Interior Secretary Ken Salazar.  However, the de facto moratorium which replaced it has created a new climate of uncertainty.  There is now a confusing and cumbersome permitting policy on drilling, with nothing being approved.

Like you, we are interested in restoring America’s economic vitality.  As such, we believe this is best accomplished by resuming domestic energy production in the OCS and stimulating the affiliated manufacturing base simultaneously.

We would appreciate the opportunity to discuss with you as a delegation how this can most effectively be done to benefit all stakeholders.  We respectfully request to meet with Chief of Staff William Daley to further discuss this matter.



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