Uncertainty Causes Oil Rigs to Flee
August 26, 2011
A year ago, three oil rigs fled the Gulf of Mexico for better opportunities abroad. Now, it's 10. Make no mistake, the toll is rising on a business environment marked by the Obama administration's uncertainty, says Investor's Business Daily (IBD).
The massive planning, capital, project management and luck required to produce energy are uncertain enough, but the climate of government caprice makes it even worse. The 2010 BP oil spill proved Obama's anti-energy production talk was more than rhetoric -- it was policy.
- It started to create uncertainty when the president arbitrarily demanded $20 billion from BP to set up a cleanup fund for its spill in April last year.
- Then the president issued an arbitrary moratorium on offshore drilling, idling rigs and throwing hundreds of thousands of Americans out of work.
- When a court ordered him to stop, he played three-card monte with the energy industry with an unannounced but real permit moratorium until another judge stopped him.
Meanwhile, lease sales hit their lowest level since 1958.
- The president finally set an auction for December 14.
- But the Interior Department nearly tripled the minimum bid price for deepwater leases in the Gulf of Mexico from $37.50 an acre to $100 an acre.
Why the big increase? More regulators, of course.
Meanwhile, even companies that got permits years ago can have them revoked for minor irregularities. This happened to Exxon Mobil, which spent $300 million to make a billion-barrel discovery of oil, only to have its permit pulled on a technicality. It's now suing.
With such uncertainty, it's no wonder that oil producers -- which create thousands of high-paying jobs -- are heading for places like the Congo. The only certainty now is uncertainty. Until that stops, more rigs will flee, says IBD.
Source: "Rigged For Failure," Investor's Business Daily, August 24, 2011.
Browse more articles on Environment Issues