The Campaign Spot

The Cost of Obama’s Gulf Oil Permit Slowdown

Yesterday, I reported on Louisiana Gov. Bobby Jindal pointing out that during a late winter of skyrocketing gasoline prices, the president who keeps taking credit for increased domestic oil production has actually slowed the approval of leases and permits in the Gulf of Mexico to a crawl.

A report by Greater New Orleans Inc., an organization of businesses large and small in Southeast Louisiana, lays out how the Obama administration is approving only a fraction of the new permits, significantly less than preceding administrations in both deepwater projects and shallow water projects, that getting approval from Obama’s Department of Interior takes much longer than before he took office, and how Obama’s administration rejects a much higher percentage of proposals for drilling than before he took office.

On October 12, 2010, the U.S. Department of Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE, the renamed Minerals Management Service) announced  that the federal government would lift the drilling moratorium.

In addition to its Economic Impact Study, released after the Deepwater Drilling Moratorium was lifted, Greater New Orleans, Inc. continued  to monitor and report on deep and shallow water permit issuance through the Gulf Permit Index (GPI). GNO, Inc. researchers aggregate public data from BOEMRE into graphs.

The GPI documents that both deep-water and shallow-water permit issuance continue to lag the previous year’s average:

The three-year historical average had been seven deep-water permits issued per month; now the Obama administration has it down to two per month.

The three-year average for shallow-water drilling permits had been 14.7 per month; the Obama administration now has that down to 2.3 per month.

The average approval time has increased from an average of 60.6 days in the preceding five years to 109 days in 2011.

And more drilling plans are rejected than ever. The five-year average had been 73.4 percent approval; now it’s down to only 34 percent of drilling plans approved.

The economic impact of the permitting slowdown – what some call a “permit-atorium” – is not limited to the increase in prices from reduced production and supply. The study also found a direct economic impact in the Gulf region:

Despite the relatively limited employment losses reflected in public employment data, this study provides evidence that businesses are indeed laying off workers, reducing hours and salaries, and limiting new hires as a result of the permit slowdown and  insecurity about future markets in the Gulf of Mexico. Forty-nine (48% of all surveyed)  companies reported laying off workers. Sixty-five (65.6%) companies surveyed reported no hiring or only replacement of lost employees. Of the companies that did hire, numbers were generally low with only one company reporting hiring over 50 workers in the last year. Some businesses have been cutting costs by reducing employees’ hours and/or salaries. Thirty-eight companies reported reducing hours and salaries of employees, sometimes as much as 40% in order to avoid layoffs.

The current increase in domestic oil production is in spite of the Obama administration’s policies, not because of it. When the President and his appointees have the power to increase domestic production, they are dragging their heels and rejecting proposals when they can.

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