Obama's War on Oil Crushing Small Businesses, Jobs

By Bob Beauprez
Friday, February 03, 2012

When the Deep Horizon well in the Gulf of Mexico exploded in May of 2010, the Obama Administration was quick to climb the rostrum of political opportunity and seize full advantage from public outrage directed at BP, the energy company responsible for the well. “We will keep our boot on their neck until the job gets done,” raged Secretary of Interior Ken Salazar in reference to responsibility for stopping the leak and cleaning up the contamination.

Holding BP responsible was fair enough, and nobody was rushing to defend the company. However, Salazar and his boss, Barack Obama didn’t stop there. Salazar quickly imposed a permitting moratorium that essentially shut down the gulf. Louisiana Governor Bobby Jindal and Democrat Senator Mary Landrieu as well as other elected officials immediately objected saying it would devastate the gulf economy far beyond the already significant impact of the well explosion, particularly to the energy, fishing, and tourism industries.

Eventually, U.S. District Judge Martin Feldman overturned the moratorium and ordered Interior to begin permitting according to existing regulations. Salazar re-instated a second moratorium within days, which caused Feldman to find him in contempt of the previous court order noting that the Administration had shown “determined disregard” for the court. In a separate ruling, the court found that new regulations imposed unilaterally by Salazar also violated his authority and federal law and struck them down, as well.

Obama extorted $20 billion from BP to fund an escrow damage account without constitutional authority or judicial foundation. Columnist George Will was appalled. The use of "raw political power, without recourse to courts that exist for this sort of thing, under laws, with due process, essentially confiscates $20 billion from a publicly held corporation, about half of its shares held by Americans, to be dispensed, again, without judicial supervision, as the political branch sees fit" resembles the action of a tyrant ruling a "Northern Hemisphere Venezuela" rather that the United States of America Will said on the ABC News program, This Week.

Interior has effectively maintained an "informal moratorium" by stalling and delaying permitting. The results have been devastating just as Gov. Jindal warned. A study just completed by Greater New Orleans, Inc., or GNO, an economic development agency, found that the many small and medium size business that are dependent on the energy business in the gulf are shedding workers, exhausting personal savings, and leaving the gulf in an attempt to survive. It’s a tale of economic destruction that was created by excessive over-reach for perceived political gain by Salazar and the Obama White House.

New Orleans Fox 8 News Report

In a survey of 100 business owners or company executives associated with the oil and gas industry in the gulf, GNO found that 50 percent had been forced to lay off workers as a result of Salazar’s moratorium. Thirty-nine percent reported retaining staff but being forced to reduce salaries and cut hours.

Of the 100 companies surveyed, 41percent are not making a profit, 76 percent have drained cash reserves, and 82 percent have been forced to tap into personal savings as a result of the permit slowdown – 13 percent said they had completely exhausted their personal cash.

Forty-six percent of the companies surveyed reported moving some or all of their operations away from the gulf in an attempt to survive.

"Small and mid-sized companies are the hidden victims of the permit moratorium and ensuing slowdown," said Michael Hecht, President and CEO of GNO, Inc. "While global companies can simply shift their assets, these Louisiana companies – through no fault of their own – have endured significant, and now documented, financial hardships."

Although the moratorium is technically lifted, permit issuance is slow at best. According to GNO’s most recent published Gulf Permit Index report for January, 2012 the rate of issuance of deep-water permits are 71% fewer than the historical average. Just two permits per month have been issued over the last 90 days. Barely two-per-month shallow-well permits are being issued, too, which is 84% less than historical levels.

In his recent State of the Union Address, Barack Obama tried to claim credit for increases in oil and gas production in the U.S. Production in some parts of the nation has happened in spite of his Administration, not because of it. Advanced technology and the success of fracking to open more reserves to production from Texas to North Dakota and Pennsylvania to Alaska are responsible. But, in the gulf – where 30 percent of domestic oil and 13 percent of natural gas is produced – Obama’s policies have damaged not only energy production but the economy and lives of countless Americans. That’s a tragedy Barack Obama didn’t mention in his speech and a reality he chooses to ignore.