The Downside of the Drilling Ban Redux

By Niraj Chokshi

Last week, I argued that President Obama's offshore drilling moratorium could make things worse. The expensive daily price of leasing an oil rig could make it cost-effective for companies that can't drill here to move their rigs elsewhere, possibly for good. That would increase our reliance on oil-transport vessels, which have spilled more oil than rigs have over the last 50 or so years, at least according to some figures compiled by professors at Tulane's Energy Insititute.

In an editorial today, The Wall Street Journal echoes my point, arguing that the moratorium will hit the Gulf economy hard:

The larger concern is that the moratorium is laying the groundwork for a lasting Gulf drilling stoppage. Drilling platforms require enormous capital investment and overhead. The rigs are leased at a cost between $250,000 and $500,000 per day. Owners are cumulatively losing millions of dollars a day as their rigs sit idle in the Gulf, and they will soon begin contracting to other countries that want the drilling and jobs. Those rigs will not be available for Gulf work even when the ban is lifted.

But Timon Singh, the online editor of U.S. Infrastructure, disagrees, at least in part. There's a greater cost, he writes, "when you consider the current price-tag for the Gulf of Mexico oil spill is currently $1 billion and is expected to climb to $25 billion."

Agreed. By pushing rigs away, we may very well decrease the risk of domestic spills and cleanup, but I was arguing that we increase the risk of global spillage. Rigs would still be operating, just not off our shores. We would still need oil, but we'd be more reliant on transport vessels to get it. And those vessels are historically prone to spill more oil than rigs are.

Of course, this whole debate could be rendered pointless if the spill forces us to come to terms with our dependence (arguably, over-dependence) on oil.

This article available online at:

http://www.theatlantic.com/technology/archive/2010/06/the-downside-of-the-drilling-ban-redux/57899/