Free Markets, Free People

If ignorance is bliss, this is one happy White House

The cluelessness continues in the White House about the impact of the 6 month moratorium on drilling in the Gulf in waters over 500 feet. Taking the BP disaster as 100% certain without out such a moratorium, the administration has effectively stopped work on 33 deepwater exploration rigs in the Gulf . Energy Tomorrow gives a good round up of what the experts are saying about this policy:

•Adam Sieminski of Deutsche Bank predicted that U.S. oil production could fall by 160,000 barrels of oil per day by next year. (Financial Times)

•Bernstein Research said delays from the moratorium and rising costs stemming from new safety regulations are likely to raise the marginal cost of deepwater production by about 10 percent. (Financial Times)

•Paul Cheng of Barclays Capital warned that the higher costs could eliminate small independent companies who compete for drilling projects against the majors. (Financial Times) He also predicted an 11 percent drop in deepwater oil production. (Houston Chronicle)

•The Houston Chronicle reports that two large oil-services companies are relocating workers from the Gulf of Mexico to onshore North America drill sites and Brazil.

•The National Ocean Industries Association (NOIA) predicts that relocation is just part of the pain to be suffered by energy workers. Burt Adams, NOIA’s chairman, said in a statement, “the [president's] order will be felt by the families of tens of thousands of offshore workers who will be unemployed.”

The American Petroleum Institute (API) estimates that the moratorium will cost us 130,000 barrels of oil a day by 2011 and up to 500,000 a day by 2013. And it could put up to 46,200 jobs at risk short-term and as many as 120,000 over the long term.

So the blanket moratorium has some real down-side to it. And it is important that our leaders understand that and are sensitive to it, especially when we’re in the economic doldrums right how, the oil spill has all but devastated fishing in the area and the resort towns who normally thrive in the summer are feeling the impact of the spill. Risking that many jobs with a blanket moratorium is just not good policy.

So how sensitive to all of this is the White House? Louisiana governor Bobby Jindal found out recently:

Jindal said he had a conference call with President Barack Obama’s senior adviser, Valerie Jarrett, and appealed to her to shorten the six-month moratorium, arguing that a half-year pause would force oil companies to move drilling operations overseas for years and that the federal government could easily impose new safety standards and monitoring in a shorter time frame.

“She asked again why the rigs simply wouldn’t come back after six months,” Jindal said. “What worries me is I fear they think these rigs can just flip a switch on and off.”

Gross ignorance is all that can be called. These rigs cost about $500,000 a day for oil companies. You do the math. Those owning the rigs probably wouldn’t mind sitting around, doing nothing and getting paid 90 million for each rig. But the oil companies are going to move them, while they have them under contract, to foreign leases they own in order to seek oil.

Exploration rigs have always been at a premium (which is why their daily rate is so high), and they’re constantly working somewhere – as long as the price of oil supports such exploration. But since half a year is the apparent non-negotiable moratorium, those rigs are going to pull up stakes and move to foreign leases – leaving the oil untapped, and providing jobs elsewhere. We end up with higher unemployment and more dependent on foreign oil than ever.

And our leaders haven’t a clue.

~McQ

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28 Responses to If ignorance is bliss, this is one happy White House

  • It’s been obvious since day one of Obama’s (eternal) campaign that neither he nor his advisers had any grasp of business or economics.  This is simply another example.
    The only other possibility is that they DO understand business and economics…and that the obvious and easily-foreseen consequences of their actions and policies are intended.
    Neither scenario gives any reason for confidence.
     

    • How many ways can you call this imbecile of a President ignorant on business or economics ?  Let me count the ways.
      We’ve had program after program to try to keep the housing market alive.  Then comes word that Obama wants to get rid of the home interest deduction.  Even talking about it causes a “chill” in the housing market.

  • Actually, McQ, it’s worse than you portray.
    Idle rigs don’t just move to happier hunting grounds.  I’ve seen acres of land rigs stacked so close you could walk over their components.  I’ve seen the Gulf estuaries clogged with stacked off-shore rigs.
    When rigs go idle, some of them never return to service, though they are perfectly serviceable.  Of course, the waste involved in THAT is immense.  Cold-stacking a rig often is a death sentence.
    One of the land rigs I worked on in the late 70s was built in 1952, and it was a very productive unit (very dangerous to work on, but we made a lot of hole in the Austin Chalk play).  But brand new diesel-electric rigs were idled, too, and many were just scrapped.
    The idea that Valarie Jarrett is a player in this decision…which is based on a lie by Salazar…is past outrageous.

    • They’re only talking drilling Rags. Producing rigs aren’t included. It’s a drilling moratorium.

      • Well, I’m damned if I can think where I mentioned production rigs, McQ.  I kinda know what the moratorium entails.  Sorry if I made myself misunderstood.

  • “And our leaders haven’t a clue”.
    Let me spin a totally wildass scenario for you – The author of the Manchurian Candidate was thinking waaaay too small……Manchurian CandidateS, plural, many…many many many….
     
    I’m beginning to think this many sabots tossed into the gears, and they way they keep tossing MORE in to, uh, “fix” the already jammed gear box has become completely deliberate.  This storm is getting TOO perfect.
     

    • Cloward-Piven is not a conservative conspiracy theory.  The guys wrote what they wrote, and they apparently are getting some coinage.  I cannot find any other rational explanation for the economic policies in play here, since even Leftists with an economic education really have clear cause-effect models they cannot ignore.

      • It’s horrifying, but I think that you and looker are right: this sort of behavior, especially when considered in light of the history of the people in question, can only be seen as deliberate.  In short, we have a gang in the White House, aided and abetted by a handful of powerful democrats in the Congress and the media, who are bent on destroying the country.  They are taking advantage of an oil spill to do a bang-up job on the Gulf coast.

        November can’t get here fast enough.

        The only very grim silver lining in this cloud is that there are a f*ckload of idiot democrats and “independents” who will suffer right along with the rest of us.  O’ course, if the past is any guide, they will NEVER admit that the problem is due to Imeme and his policies.  It’ll be Bush, Big Oil, Wall Street, and the left’s usual suspects.

        • My counterargument is Erb. It is adequate to explain the facts that Obama really does take far-left economics and political theory seriously, and the only solution he can see is to do the hard-left thing some more, only harder.
           
          You’d think the cognitive dissonance involved in being in effectively full control, but seeing virtually nothing go according to your theory, would eventually result in a revised theory, but it can take time. How long has improvement been just around the corner now? Perhaps he’d work it out and be an older-but-wiser Obama in 2017, but we don’t have that sort of time.

          • I could buy that but for…
            “I cannot find any other rational explanation for the economic policies in play here, since even Leftists with an economic education really have clear cause-effect models they cannot ignore.”
            THE ONE has many people around him about whom this applies.  He may be an absolute ignoramus (IS an absolute ignoramus on any number of topics), and still that would not explain his conduct.

  • If you can’t bring down the US militarily, how else are you going to do it?

  • The experts, recommended by the National Academy of Engineering, say Interior Secretary Ken Salazar modified their report last month, after they signed it, to include two paragraphs calling for the moratorium on existing drilling and new permits.

    Is it possible that Interior Secretary Ken Salazar violated 18 USC Sec. 1001 ?

    • I think that, on a facial reading of the code, you have an excellent argument.  The problem, of course, is that Holder heads the DoJ…

  • Ignorance is BLISS and insanity is only a STATE of mind.
    That explains why Progressives are always in a STATE of  BLISS

  • See this article about the responsibility of the EPA for oil spills

    http://climateaudit.org/2010/06/02/epa-and-the-national-contingency-plan/

  • Next year is going to look good for me, I have oil stock and I hoarded some gold.  For the rest of the country? Not so much. Oil prices will be above $100 soon enough. Hope you all have at least a five gallon can with gas stored somewhere safe for emergencies, we could easily see gas rationing again.

  • But think of the jobs that he will create when he nationalizes and unionizes people who work in unemployment offices.

  • Its classic Obama:  1.  Stop business.  2.  Create new welfare programs.  3.  Repeat.

  • “If ignorance is bliss, this is one happy White House”

    That’s a great title, one of   your best.

    The only thing wrong with it is…

    Obama and crew aren’t ignorant or clueless.

    They know exactly what they’re doing.

  • They need six months to put in new regulations? I bet they could ask industry now and they could provide decent, really useful ideas. Nothing like watching BP’s share price implode to encourage them to come up with some best practices, even if they cost more.

  • Folks, we are in deep trouble.

  • This administration knows exactly what they are doing.  It is their intent to destroy the oil industry to force their cap and tax bill through.  The expets who supposedly agreed with the moratorium never even read it.  They are now distancing themselves because they didn’t recommend anything.  Obama is lying, for him, the end justifies the means.  His job is to destroy america.  The exact opposite of what he was voted to do, but the true purpose of what Soros selected him to do.  We were duped and now America will suffer for it.  The biggest news story of the day should be the “experts never read moratorium, and never agreed to it”, but our corrupt main stream media will never breath a word about it.   You can find the story on the internet on “free republic”.

  • Of course this is simply one more industry Obama has set out to destroy.  With all the millions of  jobs he seems so intent on eliminating, he’ll reach his goal of a socialist nirvana quite soon.