Obama's De Facto Moratorium

On Tuesday, the Obama administration finally lifted its moratorium on drilling in the Gulf. However, concerns are already being voiced that the administration is keen to maintain a de facto moratorium that could keep future energy exploration from occurring in the area.

Federal regulators are still writing up regulations that will apply to future drilling, and concern exists with regard to them on two fronts. First, it is unclear how onerous new regulations will be. But of deeper concern, say experts, is the prospect that regulation could roll out over many months. Industry operators have indicated that this will make it hard to set budgets for ongoing exploration.

Dr. Joseph Mason, who has extensively studied the impact of administration policy and proposals with regard to energy, including the moratorium itself, recently told the Christian Science Monitor that “when [energy firms] can’t plan around [regulation], they move.”

That is also a result that business groups say could obtain if the administration continues to pursue several tax increases targeted at the energy industry. The U.S. Chamber of Commerce has recently voiced concern regarding some $38 billion in new taxes on the oil and gas industry proposed in President Obama’s FY2011 budget. Business leaders say those tax increases, if implemented, could threaten millions of jobs, reduce domestic economic output, and create incentives for energy companies to relocate outside the U.S. on a long-term basis.

The bottom line as Dr. Mason put it to the Christian Science Monitor seems to be that with regard to Obama administration-created challenges facing the energy industry, “we’re not out of the woods yet.”