As the federal regulators argue the merit of drilling moratoriums and sluggish permit processes stemming from the Deepwater Horizon tragedy, as well as continued analysis of many oil industry endeavors—including the Keystone Pipeline backed by Louisiana Sen. David Vitter—local entities are pushing for action by attempting to highlight the otherwise hidden effects of the slow drill turnover.

Greater New Orleans Inc., a regional economic alliance, composed a study on the indirect damage done to businesses related to drilling for oil or extracting natural gases, even though they don’t drill.

The results of that study were released on January 30, and the end result: the decline in profits is more common than not.

“When the Federal Deep-water Drilling Moratorium was enacted, communities of Southeast Louisiana feared widespread lay-offs, as drilling in the Gulf of Mexico is a critical component of local economies,” the study’s summary stipulates. “At first blush, the overall Louisiana Mining industry employment does not seem to be as impacted by the permit slow down as expected. Yet, despite the relative limited employment losses reflected in public employment data, this study provides evidence that businesses are indeed laying off workers, reducing hours and salaries, and limiting new hires as a result of the permitting slow down and insecurity about the future markets in the Gulf of Mexico.”

The overall employment data collected since first quarter of 2009 shows the current job rate is actually improved since before the Gulf disaster and the subsequent moratorium—around 40,000 statewide. But the businesses involved are suggesting there is a direct corollary between the moratorium and the sluggish profits in the drilling economic network.

The 228 respondents, representing engineering, marine services, and oil or gas across the Gulf Coast, said that despite many efforts to maintain work by cutting hours or dipping into reserve funds, their profits were sluggish or falling during the time of the moratorium.

“While large companies may represent the most significant economic impact, the decrease in revenues of small businesses has the potential to be devastating to individual families and communities,” the study finds.
“While there is still further research to be done, these data indicate economic and community impacts of the permit slowdown that have not been adequately represented.”

The drilling moratorium took effect in the immediate aftermath of the BP oil spill. Even as late as 2011, over 90-percent of the territory offshore was still off limits. Under current conditions, tracts of Gulf land would only be up for annual lease and new tracts in the eastern Gulf could be closed to lease sales until 2014.

Story by William Dilella