January 3, 2011

Obama's energy jobs destroyed number

Obama: Frigging with Rigging
According to the Department of Energy, U.S. offshore oil production is going to drop by 11% in 2011.  The reason is the Obama administration's ban on deep water drilling that came about, conveniently, as a result of the Gulf Oil Spill.  What the President wants is green energy self-sufficiency - in other words energy self-sufficiency on his terms.  Setting aside the  President's hypocrisy on energy self sufficiency in the United States, there's the issue of the President once again, putting an agenda ahead of the needs of the American people.  In a time of economic trouble, shouldn't the President be doing as much as he can to mitigate the economic circumstances faced by the nation?

I'm not talking about the government adding more time to unemployment insurance or giving away more freebies like health care.  That's not solving the problem, it's dealing with symptoms of the problem. Cutting oil production by 11% means, necessarily, cutting jobs or cutting hours in jobs.  Does anyone have any information on jobs destroyed? I mean a fictitious number like 'jobs saved'.  The Wall Street Journal,  took a crack at it;

The impact of the delays goes beyond the oil industry. The Gulf coast economy has been hit hard by the slowdown in drilling activity, especially because the oil spill also hurt the region's fishing and tourism industries. The Obama administration in September estimated that 8,000 to 12,000 workers could lose their jobs temporarily as a result of the moratorium; some independent estimates have been much higher.
In order to really help the economy, assuming the United States isn't going to go the way of the command economy, the President, and Congress should be focusing on creating a positive environment for business which  will in turn foster job creation.

Yes, it really is that simple.  Don't interfere unless you have to do so.  The President is acting like a hovering parent who wants his child to grow up to become a lawyer when his child (the economy) wants to be an engineer.  You can't force people to do things they don't want to do, and if you could, if you had that power, would you really want to do it?  The same is true for the economy.  It's like a river that will find it's own natural course, based on the things in its path.  The government trying to alter the course of the river can do a lot, but mostly just damage. It's known as unintended consequences.

Getting back to the oil spill, yes, the spill required some sort of government response, but the type of response is what is in question.  According to the article in the Wall Street Journal,

The administration says it is simply trying to enforce new safety rules adopted in the wake of the April 20 explosion of the Deepwater Horizon drilling rig, which killed 11 workers and set off the worst offshore oil spill in U.S. history. Environmental groups say the administration is right to take its time because the Gulf disaster exposed the risks of offshore drilling.
But it would seem there is a more direct way to deal with the risk than stopping new development.  How about revisiting the safety regulation and enforcement?  I'm not a fan of more government regulation where it's not necessary, but it seems like a really long leap from there to banning new development.  The decision was obviously political.  The outcome however will be economic and have real-world implications, both short and long term.

The slowdown also has long-term implications for U.S. oil production. The Energy Information Administration, the research arm of the Department of Energy, last month predicted that domestic offshore oil production will fall 13% this year from 2010 due to the moratorium and the slow return to drilling; a year ago, the agency predicted offshore production would rise 6% in 2011. The difference: a loss of about 220,000 barrels of oil a day.

Drilling in waters of less than 500 feet also has been snared by the government's increased scrutiny. Regulators requested modifications to 101 shallow-water drilling plans in 2010, compared with 59 such requests in 2009 and just 31 in 2008. Rig operators say drilling permits once approved in a matter of weeks have taken up to five months to process as the government introduced new rules...

The lengthy delays in reviewing new permits have caught the industry off guard. When the Obama administration lifted its ban on deep-water drilling on Oct. 12, many experts had expected a few permits to be issued before the end of 2010, followed by a gradual ramp-up of activity this year...

But with no deep-water permits yet issued and companies still struggling to comply with new, tougher safety rules, experts say it could be 2012 before drilling approaches pre-disaster levels. Even when it does, projects that were once approved in weeks will likely take months to get past increased regulatory scrutiny.
Jobs destroyed?  It's impossible to count, just like jobs saved.  But clearly, over the first two years of the Obama administration the attitude has been "jobs be damned, we're going to get done our agenda items no matter what".  Whether it has been neglectful or nefarious in nature is moot - the real world results are unmistakable.  Jobs have been lost and future jobs will be destroyed.  You can argue all you want about a shift to green jobs but the technology is not ready and hasn't proven viable, so the gamble has not paid off and even if it does, it could take decades.  As a gamble that seems unnecessary.  Completely.

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