Feb 03, 2016 - 5:00pm

Federal Government is Showing It's No Fan of Offshore Oil Drilling


Senior Editor, Digital Content

bloomberg_oil_rig_portfourchon_louisiana_1600px.jpg

Oil rig off the Louisiana coast.

As I’ve written previously, President Barack Obama is building his legacy on coal’s demise, but coal isn’t his only energy target. The bigger project is a "nothing-from-below" energy strategy of ending all fossil fuel use.

Here are two recent examples of how this is happening with offshore oil development.

A proposed Interior Department regulation will limit drilling in the Gulf of Mexico, FuelFix reports:

Announced last April by Secretary of the Interior Sally Jewel, the rule would tighten standards on blowout preventers – the device that failed in the case of Deepwater – as well as put more controls on how companies drill and monitor wells deep under the surface of the ocean.

The study released Monday by the Gulf Economic Survival Team –  founded by Louisiana Governor Bobby Jindal in 2010 in response to a post-Deepwater drilling moratorium in the Gulf of Mexico – and the consulting firm Wood Mackenzie, predicts the rule would raise drilling costs to such a degree it would push many offshore rigs out of the area.  It forecasts a 35 percent drop in oil production from the Gulf by 2030, resulting in more than 100,000 jobs lost, mostly in Texas and Louisiana.

Federal officials also dropped a regulatory obstacle out west. The Interior Department put a moratorium on hydraulic fracturing off California’s coast, the Associated Press reports:

The federal government has agreed to stop approving oil fracking off the California coast until it studies whether the practice is safe for the environment, according to legal settlements filed Friday.

Separate deals reached with a pair of environmental organizations require the Department of Interior to review whether well techniques such as using acid or hydraulic fracturing, also known as fracking, to stimulate offshore well production threatens water quality and marine life.

This is despite decades of safe, federally-regulated, oil production using the technology.

These efforts fit a pattern for the administration. In 2015, it used excessive regulations to make it nearly impossible to explore off the Arctic coast. Unsurprisingly, companies gave up and left.

And while the Interior Department is considering opening some of the Atlantic coast to energy development, it could give in to extremists and pull back its offer (like it did in 2010) when it finalizes its next round of lease sales.

Numbers don’t lie about the effects of these policies. While the U.S. has enjoyed an impressive boost in domestic oil production, it has come on state and private lands. As you can see in the chart below, production on federal lands—which includes offshore—are flat and remain an underutilized resource.


It would be one thing if demand for oil is expected to decline, but according to Energy Information Administration projections oil will make up one-third of all domestic energy consumption for decades to come.

There’s no assurance that the low oil prices we’ve seen for the last year will continue, just as we don’t know that the future geopolitical situation with regards to energy will be. Maintaining domestic sources is valuable for energy security and price stability.

While coal being shoved off the energy stage gets the headlines, the Obama administration's regulatory campaign against offshore oil could prove just as harmful to families and businesses.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.