The six-month moratorium on new deepwater offshore drilling
announced by President Obama Thursday isn't likely to have a big
impact on the oil industry - unless it's a sign of things to come.
In itself, President Obama's decision to impose a six-month pause
on offshore oil leasing, announced Thursday, is unlikely to have any
great impact on US oil supplies or prices in the short run.
But within the oil industry, there is some concern that this
offshore drilling moratorium could be the beginning of a new oil
regime, with significantly tougher regulations to follow, as Mr.
US companies still see the Gulf of Mexico as their backyard with
a stable, relatively predictable political and regulatory regime.
But if new strictures on the oil industry are seen as being too
reactionary, the move could in the long run drive companies to less
tightly regulated places like Angola in their search for the next
big discoveries. That could mean a loss of jobs in Gulf states and
possibly weaken US energy security.
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"This could be a speed bump, or it could be the beginning of a
transition toward long-term decline in US oil production," says
David Pumphrey, an energy analyst at the Center for Strategic and
International Studies in Washington. "It could put us in the
position of importing more oil and possibly facing slightly higher
oil prices in future because less non-OPEC oil is moving into the
Obama's announcement Thursday marks a reversal of significant
chunks of the offshore exploration plan he forwarded in March. On
Thursday, he said he would:
Suspend planned exploration of two locations off Alaska's
Cancel August lease sales in the western Gulf as well as a
proposed lease sale 50 miles off the coast of Virginia.
Continue for six months an existing moratorium on any new permits
to drill new deepwater wells in the Gulf and other areas of the
outer continental shelf.
Suspend action at 33 deepwater exploratory wells being drilled in
the Gulf until investigations are complete on the causes of the Gulf
The president said to reporters that he had erred in one major
respect when he planned for more offshore oil exploration in March:
"I was wrong in my belief that the oil companies had their act
together when it came to [handling] worst-case scenarios."
Calling oil industry connections with federal regulators at the
Minerals Management Service "cozy and corrupt," Obama said he plans
to unveil "aggressive new operating standards and requirements" for
the offshore oil industry. …