The Obama Moratorium on Oil Drilling and Its Consequences

On Tuesday June 22, a federal judge by the name of Martin Feldman issued an injunction that ordered the Obama administration to refrain from enforcing a federal moratorium that President Obama had placed on all drilling on the outer continental shelf in water at depths greater than 500 feet.

"Overbearing," "heavy handed," "misleading," "confused," as well as "arbitrary and capricious" is how Judge Feldman in his ruling referred to Obama’s moratorium that banned all domestic oil drilling. President Obama had issued this drilling moratorium on May 6 in response to the massive BP oil spill from the Deepwater Horizon platform in the Gulf of Mexico. The moratorium was only supposed to be in effect until the end of May; however, Obama announced that the moratorium was to be extended for a full six months in the waning days of May, as the efforts to cap the BP oil spill and contain the expanding slick went nearly unabated.

Upon Obama’s announcement of the moratorium, a lawsuit was filed by Hornbeck Offshore Services of Covington, Louisiana, in conjunction with many other gulf area companies, in the hopes of getting a federal injunction established to lift the drilling ban moratorium. These companies argued in their lawsuit that the federal moratorium violates the Administrative Procedure Act and the Outer Continental Shelf Lands Act and is inflicting "irreparable harm" upon them and others in the region. The financial impact of this moratorium could indeed turn this crippling oil spill into a catastrophic disaster for Louisiana and other gulf coast states.

Governor Jindal of Louisiana specifically has been extremely vocal in supporting the lifting of the ban. He has claimed that the environmental disaster caused by the BP oil spill will only be exacerbated by the economic disaster that President Obama’s moratorium will create by the destruction of thousands of jobs in Louisiana and the Gulf region that are heavily reliant upon the oil industry.

His well-justified fear is that there are only so many deepwater drilling rigs available in the world. This moratorium for the United States effectively puts these rigs out of business domestically so they look to foreign venues such as one recently signed by Brazil’s Petrobras oil company. Ironically, this is a company that George Soros, who has strong ties to the Center for American Progress, has invested in lately. These rigs will likely be tied up in long term contracts with foreign oil exploration and drilling for years to come, if the moratorium is not permanently lifted quickly.

One has to suspect that this was the plan of the Obama administration as dictated to specifically by the Center for American Progress accordingly. Governor Jindal and his attorney general filed a brief in support of the Hornbeck Offshore Services’ lawsuit stating, "Having to wait an additional year or more for available rigs will turn the short-term adverse effects of the moratorium into a long-term economic disaster for Louisiana."

Judge Feldman also cited lies within Interior Secretary Salazar’s report that President Obama used to justify the moratorium. Judge Feldman wrote, "Much to the government's discomfort and this Court's uneasiness, the [Salazar report] Summary also states that 'the recommendations contained in this report have been peer-reviewed by seven experts identified by the National Academy of Engineering."

That claim within the report has proven to be demonstrably false, as a large majority of the experts involved in the peer review process have stated that they opposed the moratorium and have since denounced the report’s claim as having misrepresented their conclusions. Judge Feldman stated that this “misleading” claim on behalf of the government’s report brings about serious “"apprehension about the probity of the process that led to the Report."

As states Judge Feldman’s opinion, “As the plaintiffs, and the experts themselves, pointedly observe, this statement was misleading. The experts charge it was a ‘misrepresentation.’ It was factually incorrect. Although the experts agreed with the safety recommendations contained in the body of the main Report, five of the National Academy experts and three of the other experts have publicly stated that they ‘do not agree with the six month blanket moratorium’ on floating drilling. They envisioned a more limited kind of moratorium, but a blanket moratorium was added after their final review, they complain, and was never agreed to by them, a factor that might cause some apprehension about the probity of the process that led to the Report.”

It would seem that the Obama administration has accepted as fact the inept and bogus “scientific” data that has been under intense scrutiny in the Climate-gate scandal in the past year that garnered much worldwide attention due to falsified and cherry-picked data by scientists involved with global warming research. Obama has pushed for cap and trade and other onerous policies out of hyped fear generated from this unproven “science”. It would seem also that in true Rahm Emanuel fashion, President Obama was not about to let this disaster go to waste, but rather decided to exploit the issue in order to further push his energy policies of removing the United States from its reliance upon oil. The hypocrisy of this is that these oil rigs are still going to be in use elsewhere throughout the world, and the United States will have to now buy nearly all of its oil from foreign sources if the moratorium is re-established or if it is not adjudicated favorably to the Gulf areas, and the United States’ interests in within a few weeks time. George Soros will be a beneficiary of this policy as he has heavily invested in Petrobras oil as of late.

Judge Feldman further states in his ruling that the government failed to provide sound rationale for the over-reaching and all-encompassing moratorium that ultimately affects all domestic oil companies and their drilling rigs, regardless of the fact that most have exemplary safety records. Judge Feldman has likened it to stopping all air travel because of a single crash. He states, "If some drilling equipment parts are flawed, is it rational to say all are? Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines? That sort of thinking seems heavy-handed, and rather overbearing."

Judge Feldman further excoriates the Obama administration’s moratorium in his ruling by stating "the Court is persuaded that it is only a matter of time before more business and jobs and livelihoods will be lost. The defendants trivialize such losses by characterizing them as merely a small percentage of the drilling rigs affected, but it does not follow that this will somehow reduce the convincing harm suffered."  Further, Judge Feldman states, "The effect on employment, jobs, loss of domestic energy supplies caused by the moratorium as the plaintiffs (and other suppliers, and the rigs themselves) lose business, and the movement of the rigs to other sites around the world will clearly ripple throughout the economy in this region."

It has been estimated that should the moratorium continue that it could in fact kill 50,000 jobs in the Gulf Coast region with myriads more than that also will be negatively impacted via the ripple effect it would cause there.

Hornbeck Offshore Services as the plaintiff, "have established a likelihood of successfully showing that the Administration acted arbitrarily and capriciously" by having issued the moratorium. Further, "The plaintiffs assert that they have suffered and will continue to suffer irreparable harm as a result of the moratorium," continued Judge Feldman. "The Court agrees," he concluded.

The Obama administration asked for a suspension of the injunction immediately while they appeal Judge Feldman’s decision. This was done on June 23 of this week. Further, Interior Secretary Salazar also informed a senate subcommittee on Wednesday that the administration was in the process of revising the moratorium so as to be more in line with what Judge Feldman listed as his concerns regarding the “overbearing” moratorium.

It would seem that President Obama is indeed not going to let this crisis go to waste and fully intends on destroying the domestic oil industry accordingly. The cause of getting America to reduce its dependence on oil for its energy is arguably a noble one; however, the ramifications of compelling the country to immediately refrain from exploring or drilling for new domestic oil sources is guaranteed to have an egregious effect on the price of oil and cause the United States to have to purchase even greater quantities of the resources from foreign sources. This is absolutely inarguable as we currently do not have any viable replacement sources of energy that can be used in place of oil.

One can only hope that the Obama administration’s appeal will be adjudicated swiftly and justly so that no further economic damage is perpetrated upon the already suffering Gulf Coast region and indeed the entire United States. Our already anemic economic health is inextricably dependent upon the results of the ruling of this appeal.