In his first Oval Office address, President Obama Tuesday night gave no sign that the moratorium on deepwater drilling in the Gulf of Mexico (GOM) may be shortened to less than six months.
“I know this [ban] creates difficulty for the people who work on these rigs, but for the sake of their safety, and for the sake of the entire region, we need to know the facts before we allow deepwater drilling to continue. And while I urge the [presidential commission] to complete its work as quickly as possible, I expect them to do that work thoroughly and impartially,” he said.
A bipartisan commission has been established to examine the causes of the explosion aboard the BP plc-leased Deepwater Horizon rig nearly two months ago. It is expected to issue a report in six months, but it could take longer.
“The president doesn’t seem to be in a big hurry to lift the deepwater drilling moratorium while he cleans house at the Minerals Management Service [MMS],” wrote energy analyst Christine Tezak at Robert W. Baird & Co.
Companion legislation has been introduced in the House and Senate to lift the Obama ban on deepwater drilling. “This moratorium threatens to finish what the oil spill started. If it stays in place, even for six months, it will be a devastating blow to the economy of Louisiana and other Gulf states,” said Sen. David Vitter (R-LA), who sponsored the bill in the Senate.
“We don’t shut down the entire airline industry while NTSB [National Transportation Safety Board] investigates a plane crash and we shouldn’t do the equivalent to the energy industry,” said Rep. Pete Olson (R-TX), who offered the measure in the House.
This “is the worst environmental disaster America has ever faced. And unlike an earthquake or a hurricane, it’s not a single event that does its damage in a matter of minutes or days,” Obama said. The 1.5-2.5 million gallons of oil that are leaking into the GOM each day “are more like an epidemic,” he said.
“We’ve directed BP to mobilize additional equipment and technology. And in the coming weeks and days, these efforts should capture up to 90% of the oil leaking out of the well,” he said.
In response to the Deepwater Horizon disaster, Obama said his administration was restructuring the MMS, an agency that has become “emblematic of a failed philosophy that views all regulation with hostility — a philosophy that says corporations should be allowed to play by their own rules and police themselves.”
At MMS, which is in charge of regulating drilling and issuing permits, “industry insiders were put in charge of industry oversight. Oil companies showered regulators with gifts and favors, and were essentially allowed to conduct their own [rig] safety inspections and write their own regulations,” the president said.
He and Interior Secretary Ken Salazar “are bringing in new leadership at the agency — Michael Bromwich, who was a tough federal prosecutor and inspector general.” Bromwich will act as “industry’s watchdog, not its partner,” Obama said (see Daily GPI, June 16).
“One of the lessons we’ve learned from this spill is that we need better regulations, better safety standards and better enforcement when it comes to offshore drilling. But a greater lesson is that no matter how much we improve our regulation of the industry, drilling for oil [and natural gas] these days entails greater risk” as companies move to deep waters, he said.
“Because there has never been a leak this size at this depth [one mile below the surface], stopping it has tested the limits of human technology.”
In addition, “the tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now,” Obama said. He noted that now was the time for Congress to pass a broad energy and climate change bill.
“We believe the best chance to move climate change legislation remains in 2010 given the likely attrition of the Democratic majority in Congress” due to announced retirements, said Baird’s Tezak. “The window is narrow. The Senate will need to move its version of comprehensive legislation before the August recess to lease the fall session (and more likely a post-election lame duck) to reconcile its bill with the House,” she said.
Sens. John Kerry (D-MA) and Joe Lieberman (I-CT) introduced climate change legislation last May, while the House passed a cap-and-trade bill nearly a year ago (see Daily GPI, May 13; June 29, 2009). Both are aimed at reducing greenhouse gas emissions.
At a meeting with Obama Wednesday, BP CEO Tony Hayward agreed to establish a nearly $20 billion escrow fund to compensate workers, business owners and others who have been impacted by the oil spill (see related story). Ken Feinberg, a prominent Washington attorney, will administer the fund.
Feinberg headed the Sept. 11, 2001 Victim Compensation Fund, and six years later he ran the Hokie Spirit Memorial Fund after the shooting tragedy at Virginia Tech University, The Hill reported.
In addition, BP has agreed to establish a second $100 million fund to compensate rig workers who have become unemployed as a result of the federal government’s deepwater drilling moratorium.
Obama also said he has put Navy Secretary Ray Mabus in charge of developing a long-term Gulf Restoration Plan “as soon as possible.” The plan will be designed by affected states, local communities, tribes, fishermen, businesses and conservationists. “We will make BP pay for the damage their company has caused,” he said.
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