A story that’s been under the radar recently is the impact of the Obama administration’s delay in relaxing its drilling moratorium from last year.

In an editorial discussing the release of the report from President Obama’s commission on the causes of last year’s Deepwater Horizon oil spill, The Wall Street Journal writes, “The commission . . . offers an array of recommendations, most of which would severely restrict oil and gas drilling. Despite President Obama’s promises that the new Bureau of Ocean Management (formerly the Minerals and Management Service) is now a shipshape regulator, the commission recommends that Congress create another agency to supervise drilling. Now, there’s a new idea—another layer of bureaucracy to supervise the bureaucracy that failed. The report also advocates toughening the National Environmental Policy Act to make it harder for companies to obtain drilling leases. Another section doubts it is possible ever to drill safely in Alaska or the Arctic—a hardy perennial of the anti-oil lobby.”

The WSJ editors point out, “Though the Administration officially lifted its Gulf drilling moratorium and issued new safety rules two months ago, it has refused to permit a single new well. U.S. gasoline prices are now above $3 a gallon, and the decline in Gulf drilling will not help supply. Forecasters predict domestic production will fall at least 13% this year due in part to the Gulf lockdown.”

Indeed, the WSJ reported last week that “[m]ore than two months after the Obama administration lifted its ban on drilling in the deep-water Gulf of Mexico, oil companies are still waiting for approval to drill the first new oil well there. Experts now expect the wait to continue until the second half of 2011, and perhaps into 2012. . . . The impact of the delays goes beyond the oil industry. The Gulf coast economy has been hit hard by the slowdown in drilling activity, especially because the oil spill also hurt the region’s fishing and tourism industries. The Obama administration in September estimated that 8,000 to 12,000 workers could lose their jobs temporarily as a result of the moratorium; some independent estimates have been much higher. The slowdown also has long-term implications for U.S. oil production. The Energy Information Administration, the research arm of the Department of Energy, last month predicted that domestic offshore oil production will fall 13% this year from 2010 due to the moratorium and the slow return to drilling; a year ago, the agency predicted offshore production would rise 6% in 2011. The difference: a loss of about 220,000 barrels of oil a day.”

Meanwhile, according to Bloomberg News, “Crude oil was little changed near a 27-month high as U.S. jobless claims jumped to the highest level since October and the euro surged against the dollar. . . . Yesterday, [oil] futures settled at $91.86, the highest level since Oct. 3, 2008. Prices have risen 15 percent in the past year.”

And The Cleveland Plain Dealer notes, “The U.S. Energy Information Administration said Tuesday that there is a slim chance national average gasoline prices could spike over $4 a gallon in September and an even better chance that average prices could run over $3.50 a gallon in the summer. The outlook is expensive for motorists and the U.S. economy as a larger share of family and business budgets could disappear into fuel tanks.”

The Obama administration’s drilling moratorium continues to have a real impact on the American economy and energy prices. It’s long past time for the administration to seriously re-examine its policies on domestic oil production.

Related:

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