The oil lease regulatory process is holding holding back oil exploration and production activity in the Gulf of Mexico. This delay is preventing economic benefits that will spread past the gulf states, to the entire country if only the gulf oil activity activity were allowed to match industry capacity.
That was one of the important findings Restarting “the Engine”–Securing American Jobs, Investment, and Energy Security, a study done by IHS CERA and IHS Global Insight which was released by the House Oversight Committee today (and embedded below).
Committee Chair Rep Issa commented about the study’s release.
“The Obama Administration has systematically blocked domestic energy production in the Gulf of Mexico, and today’s report puts that action in stark terms. It documents a 250 percent increase in the deepwater exploration permit backlog with a decrease of nearly 80 percent for plan approvals and deepwater drilling. That means a loss of $9 billion dollars in capital investment in 2011, along with a projected loss to the government of $25 billion in royalties and tax payments over the next 3 years, to say nothing of the tens of thousands of jobs lost.
“Our domestic energy resources are the largest in the world. Tapping these resources will create more than 500,000 jobs in the next three years, grow the economy and put us on the path to recovery.
The study looks at the plan and permit levels in the six months following the lifting of the deepwater activity moratorium in October 2010. The analysis finds a:
- 250% increase in the backlog of deepwater plans pending governmental approval
- 86% drop in the pace of regulatory approvals for plans
- 60% drop in all GoM drilling permits
- 38% increase in the time required to reach each regulatory approval required.
One unexpected finding from the study was that “an increase in oil and gas activity reverberates throughout the broader economy,” said James Diffley, senior director of IHS Global Insight’s U.S. Regional Economic Group. “Each new hire (in the Gulf) results, on average, in more than three additional jobs in an array of industries around the country” – not just in the Gulf region.
The study reports that there is some sort of logjam in the regulatory process, however it does not report what the logjam is or how it was caused. That answer may come from a study Issa released in late May when Issa’s House Oversight and Government Reform Committee issued a scathing report about the nation’s energy saying in part that the President has deliberately created policies which would cause energy prices to rise.
“The United States has the largest reserves in the world—resources that can provide good paying American jobs and fuel our economic expansion. But standing between that energy and U.S. consumers is an obstacle course of government red tape, regulation, delays and obfuscations,” Chairman Darrell Issa (R-CA) said. He pointed to statements by President Obama and Energy Secretary Chu about intentionally raising energy costs for Americans and how these goals are being implemented throughout the government.
The committee’s report found that U.S. domestic energy resources are currently the largest on earth—greater than Saudi Arabia, China and Canada combined. It also said that the recent EPA and Department of Interior regulatory actions, some in collaboration with environmental groups or outside normal scope, are having a detrimental impact on independent energy producers.
Once again it seems as if the Barack Obama’s politics has taken precedence of over the needs of the country, not just the energy needs but in this case a much-needed, no cost to the taxpayer stimulus to the economy.