As you probably already know, the Interior Department has graced us with a revised moratorium on offshore drilling. For those that opposed the original moratorium, a wide-ranging, knee-jerk reaction to BP's (BP) negligence in operating the Deepwater Horizon rig, the revision represents a disappointment does because it is a far cry from an improvement over the original ban. In fact, the revised moratorium is pretty much a bad sequel to a movie that was horrible to begin with.
The revision is Washington politics at its finest (or worst), a change in the game's rules because the first outcome was not to Uncle Sam's liking. After a district court struck down the original moratorium, an appeals court upheld the ruling, but that did not mean the feds would go quietly into the night. No, sir. The Interior Department issued a new moratorium that it says focuses less on the depths at which rigs operate and more on safety protocols. Essentially the new moratorium is applicable to all rigs with a blowout preventer, a now infamous piece of rig equipment following the Deepwater Horizon explosion.
The blowout preventer (BOP) guise combined with the fact that the new moratorium extends to drilling off the coast of California, the third-largest oil producing state, shows that these moratoriums are foolhardy. One analyst said in an interview with CNN in late June that blowout preventers on oil rigs are about as common as seat belts are in cars. In other words, the government's decision to not focus so much on depth while focusing more on BOPs does not represent much of a change because it would be difficult to find a rig that does not have a BOP.
The seat belt comparison is astute. Think about it: A seat belt does not prevent car accidents. The device is intended to reduce risk and make operating a car safer, a similar mission to what a BOP has on a rig.
Of course, this is not the only problem with the new moratorium. The revision repeats the same folly as its predecessor: It kills jobs. It is nothing short of amazing that Washington's chattering class, in the midst of a lethargic economy that is seeing scant private sector job creation, continues to do things to kill jobs.
Just look at the headlines. Sen. Mary Landrieu (D-LA) said that idling the Gulf's 33 deepwater rigs could impact 46,000 jobs. Diamond Offshore (DO), the largest U.S. provider of offshore contract drilling services has already sold one of its Gulf rigs and moved one to Egypt and another to Congo. The company said 250 U.S. jobs are at risk. The number of jobs at risk does not matter because in this economy, if the moratorium imperils one job, it is one too many.
What is clear is that at this point, the only moratorium revision the U.S. economy needs is a moratorium obituary.