Obama moratorium may be result of being twice bitten

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Despite howls from South Louisiana, President Obama hasn’t budged on his deepwater oil drilling moratorium, which will cost thousands of jobs.  Many people can’t understand why he is so steadfast on this particular policy response to the BP oil disaster, while being somewhat flexible on other issues, such as sand berms and skimmers.

Many conservative pundits imply that Obama’s slow response to the oil disaster and his drilling moratorium policy are payback to Louisiana, which voted for John McCain over Obama in 2008. It’s a pretty hideous thought, to which I reply: If the President has such a vendetta against Louisiana, why was he moving forward on coastal wetlands restoration, which is so important to Louisiana’s long-term future? Opting to tackle a hugely expensive problem in a state you can never win is an odd way to demonstrate political vengeance. Why not kick the issue down the road for a term or two (as other presidents have done) and let Louisiana wash away? Further, if Obama wanted to hurt Louisiana, why would he announce a massive expansion in offshore drilling areas in early March?

Obviously, explaining Obama’s motivation in terms of his “hatred” for Louisiana is too simplistic, and hardly accounts for the totality of his policies. But that hasn’t stopped some conservatives from holding fast to the premise, and promoting all kinds of bizarre conspiracy theories about the oil gusher that shouldn’t be dignified with a serious response.

When Obama signaled a desire to “make tough decisions” about expanding drilling in his State of the Union speech, many (including myself) assumed this was part of a compromise with pro-drilling Republicans, in order to pass an Energy bill in 2010.  Expanded drilling seemed to be a prime bargaining chip for Obama – a way to lure votes to pass legislation that would include a tax on carbon and other so-called “Cap and Trade” provisions. (Like many of the elements in Obama’s Health Care bill, the “Cap and Trade” idea was originally proposed by conservatives.)

Obviously, Obama’s strategy didn’t go as planned. The BP Macondo oil gusher erupted in April, and became a political nightmare for the administration. Obama suspended his plans to expand oil drilling and ordered a 6-month deepwater oil-drilling moratorium, despite Big Oil’s talking points and the sincere concerns from Louisianans worried about job loss. Climate change legislation – whose prospects were always dubious – lost all momentum after the brutal Health Care debate, and is now officially toast.

So, again: What accounts for Obama’s intransigence on the moratorium issue? Surely, a six-month stoppage of deepwater drilling after the biggest environmental catastrophe in memory is not a wildly unjustified overreaction. Big Oil has always downplayed the catastrophic risks of blowouts, and lied – there’s no other word for it – about their ability to clean and mitigate massive oil spills. The excruciating saga of “top hats,” “top kills” and other experimental solutions, designed and built on the fly, has been a cruel, absurd spectacle for Gulf Coast residents to witness. Now a tropical storm might push oil far into Louisiana’s precious estuaries.  Is it so extreme for Obama to order the oil industry to “pause before they play” rather than “drill, baby, drill” during an ongoing catastrophe?

Perhaps not. We still don’t know the long-term effects of this disaster. But the immediate flip side is jobs: thousands of good jobs in a catastrophe-stricken state that is all too dependent on oil. Why doesn’t Obama opt for a less draconian solution that will cost fewer jobs while preserving safety? Why not require mandatory relief wells for deepwater drilling, or have revolving safety inspections at each rig, or allow drilling that doesn’t tap oil reservoirs? Why insist on a moratorium that will cost thousands of good jobs during a slowing recovery? It’s puzzling. While “hatred of Louisiana” is too simplistic an explanation, we shouldn’t dismiss the possibility of a political angle. After all, Louisiana does have a governor with aspirations to national office. And, as web pundit Mike Stagg points out, the moratorium directly affects the business interests of two of the state’s biggest Republican contributors.

But do we really think Obama’s commitment to a moratorium is about sticking it to Gov. Bobby Jindal or Republican businessmen? While perfectly sufficient for many talk radio loons, that theory still doesn’t explain why a few months ago Obama wanted to help Jindal’s state with coastal restoration, and enrich Louisiana oil service titans by expanding drilling operations in the Gulf.

A recent Wall Street Journal cover story offers a remarkably informative background to the moratorium, which may help us better understand Obama’s uncharacteristically firm commitment to the moratorium. It shows that the policy responses to the BP Oil Gusher disaster did not occur in a vacuum.

The moratorium was not a separate, discrete decision made after an isolated “one-time” disaster event. It occurred after a series of decisions by the Obama administration to expand and promote oil drilling despite repeated warnings from courts, scientists and activists, that industry and government were ignoring large, environmental risks inherent in oil drilling. My interpretation is that Obama repeatedly decided to “bet” against the (small) chance of an oil catastrophe, in order to have an offshore drilling “bargaining chip” that he thought would lead, eventually, to an Energy bill. For him, it was a political means to a desired end – and he got badly burned. Then, as the dimensions of the disaster became clearer, he overreacted with a harsh measure against Big Oil, whose untimely disaster spoiled his big legislative goals.

Here are select quotes from the WSJ story. Please read it in full and tell me your view in the comments:

Less than four months after President Barack Obama took office, his new administration received a forceful warning about the dangers of offshore oil drilling.

The alarm was rung by a federal appeals court in Washington, D.C., which found that the government was unprepared for a major spill at sea, relying on an “irrational” environmental analysis of the risks of offshore drilling.

The April 2009 ruling stunned both the administration and the oil industry, and threatened to delay or cancel dozens of offshore projects in Alaska and the Gulf of Mexico.

Despite its pro-environment pledges, the Obama administration urged the court to revisit the decision. Politically, it needed to push ahead with conventional oil production while it expanded support for renewable energy.

The U.S. Court of Appeals reversed its decision and allowed drilling in the Gulf to proceed—including on BP PLC’s now-infamous Macondo well, 50 miles off the Louisiana coast.
The Obama administration’s actions in the court case exemplify the dilemma the White House faced in developing its energy policy. In his presidential campaign, President Obama criticized the Bush administration for being too soft on the oil industry and vowed to support greener energy forms.

But, once in office, President Obama ended up backing offshore drilling, bowing to political and fiscal realties, even as his administration’s own scientists and Democratic lawmakers warned about its risks.


Along with cleaning up the [scandal-plagued Minerals Management Service, the Interior Department] had to wrestle with a five-year drilling plan the Bush administration had filed just days before leaving office. The plan sought to open the waters in most of the U.S. outer-continental shelf to oil and gas exploration between 2010 and 2015. The push into ever-deeper waters in the Gulf, which began in earnest in the mid-1990s, reflected the reality that drilling in shallower waters was largely tapped out.

To buy time and work out its own policy preferences, the Obama administration reopened the Bush plan for public comment.

The administration was apprehensive about expanding offshore drilling. But it also hoped to get a legislative package on climate change through Congress. At the center of the bill was a controversial and potentially expensive provision requiring companies to acquire permits to release carbon dioxide.

To navigate Capitol Hill, the administration needed to strike a balance between the “green energy” projects favored by environmentalists and liberals, and the traditional oil and gas projects favored by Republicans, whose support would be crucial in the Senate. Continuing to promote offshore drilling was part of that bargain.

Still, inside the administration there was debate about the right policy for offshore drilling.
On Sept. 21, Jane Lubchenco, Mr. Obama’s handpicked head of the National Oceanic and Atmospheric Administration, filed a lengthy comment on the Bush-era drilling plan still under review. She cited several concerns, including the government’s tendency to underestimate the likelihood of oil spills and to downplay their potential environmental impacts. She also noted the government’s penchant for cribbing from older, often outdated, environmental analyses.
She cited a Congressional Research Service study from earlier in the year. “The threat of oil spills raises the question,” the report said, “of whether U.S. officials have the necessary resources at hand to respond to a major spill.”

So first there was an alarming court ruling about oil spill risk and preparedness. Despite environmental concerns from officials in his own administration, Obama (reluctantly?) allied with Big Oil to argue that new drilling was necessary. Perhaps he thought the risk was low enough, and the ends (a climate/energy bill) justified the means (expanded drilling).  Strike one.

The administration’s struggle to find middle ground on its offshore policy came to a head in Senate hearings in mid-November, just weeks after a drilling rig off the coast of Australia had suffered a deepwater blowout, creating an oil leak that would go on for months.

MMS Deputy Director Walter Cruickshank assured the panel that such fears were misplaced. The Australian rig wouldn’t have been licensed to operate in U.S. waters, he said. The U.S., he said, had “what we believe is the most aggressive oil spill contingency planning…in the world.” Two weeks before the Deepwater Horizon explosion, President Obama offered a plug for wider offshore exploration. “Oil rigs today generally don’t cause spills,” he told a gathering in Charlotte, N.C. “They are technologically very advanced.”

Sen. Robert Menendez (D-NJ) pointed to an enlarged photo of the Australian rig in flames and asked rhetorically whether he was “just being old-fashioned” to worry that a similar blowout could occur in the U.S.

So after the inconvenient court ruling comes the Montara oil gusher off Australia’s coast. But instead of reversing itself out of caution, the Obama’s administration “doubled down” on not having an accident. They “kept much of the Bush [drilling] plan intact, and even added for the first time new lease sales off the coast of Virginia”. They joined The Petroleum Institute in arguing that drilling was safe, relying “extensively on environmental impact analyses carried out in April 2007 that the court had found wanting”. Strike two.

On April 20, with the blowout on the Deepwater Horizon drilling rig, everything changed.
The Macondo spill has forced the administration to take many of the steps it dismissed as draconian last summer in the wake of the appeals court ruling. On May 27, Mr. Salazar canceled a lease sale in the Gulf set for August. He ordered that all lease sales set for 2011 had to face tougher environmental scrutiny.
And he ordered a six-month moratorium on all drilling activity in the Gulf of Mexico. That moratorium was struck down as arbitrary by a federal judge in New Orleans in June, but Mr. Salazar has fought back, insisting the moratorium remain in place. So far the judge’s ruling stands.

The BP/Macondo disaster was strike three for Big Oil.

The WSJ article demonstrates that the Macondo was not an isolated event. It occurred after the Obama administration repeatedly sided with Big Oil after a court ruling and a blowout in Australia. Obama’s team hoped the disaster risks were justified by the larger goal of nominally bipartisan energy legislation in 2010. But now “Cap and Trade”  is dead, along with thousands of birds and fish in the Gulf. Obama bet with Big Oil again and again, and eventually lost big. Now he feels burned, and is in no mood to err on anything but the side of extreme safety.  Perhaps, viewed in this larger historical context, the moratorium seems much less extreme than it does as an isolated policy decision.

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