- The Washington Times - Wednesday, June 9, 2010

As economic woes continue to mount, the Obama administration now says it will work quickly to reopen some exploration and development of offshore oil and natural gas. Unfortunately, this is not enough. I believe our national priorities are the following: The oil spill in the Gulf of Mexico must be contained and the damage cur- tailed. The causes of the accident need to be understood and corrected so that future episodes can be prevented.

However, our country cannot afford to use this accident as an excuse for an overbroad moratorium that stops progress to the detriment of our economic and national security. We do not need to choose between energy security and environmental safety. We need to continue to strive for both.

The moratorium immediately shut down 33 deepwater rigs in the Gulf of Mexico, including 22 near Louisiana. According to the Louisiana Department of Economic Development, this action could cost 3,000 to 6,000 Louisiana jobs in the next two to three weeks and potentially 20,000 by the end of next year. For every one employee on an oil rig, there are nine employees onshore supporting that one employee. These are good paying jobs that contribute to the Gulf region’s economy.

Further, estimates show lost wages per month from direct and indirect jobs are $165 million to $330 million, and the idle offshore service vessels used by the 33 platforms represent $1 million in lost revenue per day. Expensive to run, these exploration and production operations, once stopped, could take years for the industry to get back up and running as the exploration and production process for oil and natural gas is slow.

Already residents, business owners and local politicians in these coastal communities are asking the president to reconsider as these actions have created much uncertainty and economic instability, with the potential for ripple effects far and wide. Manufacturers who make and supply the equipment, services, engines, boats and materials such as steel and concrete can expect massive economic consequences the longer this moratorium goes on. As a result, thousands - if not hundreds of thousands - of jobs will be lost.



As Louisiana Gov. Bobby Jindal stressed in a letter to Interior Secretary Ken Salazar, “During one of the most challenging economic periods in decades, the last thing we need is to enact public policies that will certainly destroy thousands of existing jobs while preventing the creation of thousands more.”

Placing a moratorium on offshore exploration and production is not the measured response America needs during this challenge. In the face of an environmental and economic crisis, thoughtful and deliberate action is called for. The decision to put deepwater drilling on hold is counterproductive and could exacerbate the effects of the accident.

The Gulf provides about a third of the nation’s domestic oil and 10 percent of its natural gas. Eighty percent of that oil and 45 percent of that natural gas comes from deepwater wells more than 500 feet down in the water. Virtually all of these wells have been developed and operated without loss of life or damage to the environment.

Petroleum and natural gas account for over a half of all industrial energy use in the United States. Stopping domestic deepwater production will mean higher energy prices by mid- to late summer and could put manufacturers at an economic disadvantage globally. In fact, we are already seeing upward pressure on natural gas prices. Manufacturers and Americans already suffering will be faced with even higher costs for electricity, heating and cooling and gasoline. Higher prices hurt job creation and our manufacturers’ ability to compete in hotly competitive and growing global markets.

Freezing the exploration and development of our nation’s oil and natural gas resources and shutting down known resources will make us more dependent on foreign countries for energy. The economic consequences for the Gulf region and the country are too great for snap judgments or caving in to political pressures.

Stopping progress is not the answer. We urge the administration to step forward and fully lift the moratorium on exploration and drilling so we can get back on a path to energy security.

John Engler is chief executive officer of the National Association of Manufacturers.

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