According to a new study from the independent advisory firm Grant Thornton, policies pursued by Democrats purportedly in response to the April 2010 BP oil spill would reduce energy production in the Gulf of Mexico and advantage massive foreign state-owned companies at the expense of independent U.S. businesses. Specifically, the Obama administration and Congressional Democrats have moved to remove liability limits, impose restrictive permitting requirements, increase penalties and raise taxes on energy firms. Some of the detrimental results of such policies are outlined below.
-- According to Rob Moore of Grant Thornton, “As all of the costs associated with operating in the Gulf continue to rise, deepwater drilling will increasingly become the province of only the largest, most well-capitalized companies.” The study suggests that smaller, independent U.S. energy companies will be consolidated into major energy companies as they face difficulties obtaining permits and coping with higher costs of doing business.
-- Of course, these same policies will also benefit the large foreign state-owned companies like Gazprom (Russia), Petrobras (Brazil) and CNPC (China). State-owned companies already control 77 percent of the world’s oil reserves and many of these companies are run by countries that are members of OPEC. Thus, Democrats’ policies will leave the U.S. ever more dependent on unstable, foreign sources of energy prone to price manipulation.
-- The Grant Thornton study also concludes that as large companies consolidate control of Gulf reserves, production will actually decrease. “Consolidation of Gulf oil and gas properties into fewer hands could actually result in a decline in Gulf production. Large integrated oil and gas companies will now have even more properties to evaluate; consequently, mature fields and declining wells will likely not receive the attention needed to maximize the production of these fields,” the analysis notes.
-- U.S. national security goals would also be adversely effected. The U.S. imports 60 percent of its crude oil and reducing this dependence is a national security imperative. However, in order to meet this goal, developing Gulf reserves is necessary according to the study. Deepwater Gulf discoveries are expected to add 900 million barrels per day in oil production by 2020, but Democrats’ current policy course would forsake these gains.
Coming on the heels of the acknowledgement that the White House knew well its arbitrary drilling ban would kill 23,000 jobs in the U.S., Democrats should immediately move to end the moratorium and shelve these other misguided policies that would reduce energy production, increase dependence on foreign energy, and undermine national security.