WASHINGTON – United States Senator Mary L. Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship, today reiterated the devastating effect of the Obama Administration’s deepwater drilling moratorium on hundreds of Gulf Coast small businesses that support offshore energy development. Chairing a hearing to receive a report from Administration witnesses about the economic impact of the moratorium, Sen. Landrieu dismissed conclusions that that job loss from the moratorium was either minimal or temporary.
“In this morning’s press, there were articles that stated the Administration’s analysis estimates that the moratorium has had ‘minimal’ impacts on Gulf Coast employment,” said Senator Landrieu. “Well, 5,000, 10,000, or 12,000 jobs lost in the area that the study covers is a significant impact for our communities. This is not a small loss by any means, and the study itself fails to account for the workers who have had their hours reduced or did not file for unemployment insurance.
“I also challenge the underlying premise in this report that job losses are temporary since drilling activity will resume immediately after the moratorium is lifted. This assumption overlooks the current slowdown in permitting for shallow water drilling. Our Gulf Coast small businesses that service these rigs, and include suppliers, restaurants, and grocery stores will have difficult ramping back up operations. In addition, the cleanup work from the oil spill has declined significantly since last month and will not offset the many jobs lost from September through November. For these reasons, I remain concerned about the economic harm coming as a result of the moratorium, not just during the moratorium.”
During the hearing U.S. Department of Commerce witnesses unveiled a report estimates that the moratorium is causing the loss of 2,000 direct jobs, 8,000 to 10,000 indirect jobs, and a reduction in operator spending of $1.95 billion. Of the direct jobs lost, about 20 percent – or about 2,000 -- of the 9,700 rigs workers employed in April 2010 have been laid off or left the Gulf Coast. The International Association of Drilling Contractors has estimated that it is costing companies $3 million per day to keep these employees who are currently not working.
“Our committee has received testimony from Louisiana State University economists and Dun & Bradstreet experts on their economic impact analyses,” Sen. Landrieu said. “We have heard from elected officials and small business owners testifying about the local impact of the moratorium….We cannot continue to support a policy that will close the doors of our small businesses: We need to keep Main Street open for business in Louisiana, Mississippi, Texas and across the country.”
The reports also notes that while rig worker employment has not declined significantly, operators have reduced spending by lowering other costs, such as supplies, materials, and services, which are more discretionary. This reduction in spending is reflected in the $1.95 billion in reduced operator spending projected by the report.
The report concludes: “small firms with less financial capital will likely experience relatively larger employment losses. This is consistent with anecdotal evidence from small businesses in the Gulf Coast.
“I note that it has recently on July 10 - two days before the issuance of the second moratorium - the Department of Interior estimated that a 6-month moratorium would cost 9,000 direct jobs and 13,797 indirect jobs along with a freeze in $10.2 billion in industry spending,” Sen. Landrieu said in her opening statement. “I find it stunning that the Administration was aware that their actions might eliminate nearly 23,000 jobs in an already faltering economy, and proceeded anyway. However, that is precisely what they did – they imposed the moratorium in defiance of their own data. That decision has imperiled thousands of small businesses who are reliant on the revenue generated by the oil and gas industry.”
Sen. Landrieu also highlighted the punitive nature of the Obama Administration’s moratorium compared to other disasters, including the sugar refinery explosion in Georgia that claimed the lives of 29 people and the mine tragedy in West Virginia that killed 29 miners.
“I am highlighting these industrial accidents to illustrate how radical and unprecedented the blanket moratorium on deepwater drilling appears in comparison to the reactions that have typically accompanied industrial disasters,” Sen. Landrieu said. “The fact is that Louisiana’s coastline is a working coast that brings the country an abundance of seafood, energy, and navigation assets. The Mississippi Delta is our home and there is no one who wants drilling to be safer than we do. No one wants the water to be cleaner than we do. No one wants the seafood to be fresher than we do. We have balanced these industries safely for more than four decades. And I am confident that we can strengthen that record of safety as we move forward, while promoting a balanced and diversified economic future.”
On July 26, 2010, Senator Landrieu sent a letter to the Obama Administration, requesting that they conduct an economic analysis on the impact the moratorium has on small businesses along the Gulf Coast and throughout the rest of the United States. In that same letter, Senator Landrieu indicated that the Small Business Committee would hold this hearing on the drilling moratorium. To view a copy of the letter, please click here.