The Obama administration regularly protests that it is not anti-business, and of course we take them at their word. But what then to make of the administration’s actions through the Department of the Interior and the Environmental Protection Agency?
Early in the administration, Carol Browner, the environmental “czar,” made it clear that the EPA intended to move ahead with identifying carbon dioxide (CO2) as a pollutant under the federal Clear Air Act, which would then allow the EPA to issue regulations on CO2 emissions, requiring permits before new CO2 emitters could be licensed. Taken to their logical conclusion, these regulations could result in homeowners needing a federal permit to install a new fireplace or build an outdoor grill.
The release of the Climategate files last year, and the recent landslide in Congress, made a formal CO2 regulatory “cap and trade” program politically impossible, but that didn’t slow the EPA — even though the discredited IPCC report was explicitly used as justification for CO2 regulation. The EPA announced regulatory guidelines for greenhouse gases, as they prepare for the new permitting process that is supposed to take effect on January 2, 2011 — less than two months from today.
This new permitting process will affect most large industry in the U.S. Like every regulatory process, it imposes costs on the businesses that need the permits. What’s worse, however, is that the additional load on the EPA’s bureaucrats, along with the problems of turning the “guidance” into real regulatory decisions, will mean that the regulation process itself will slow to a crawl. Scott Segal, director of the Electric Reliability Coordinating Council, noted in a statement that:
Internal EPA sources have … conceded that it will be two years before EPA can start making permit determinations. In this period, the energy and manufacturing sectors will essentially be in a construction moratorium … .
Now add to that some of the regulatory actions that occurred following last summer’s Gulf oil-well blowout. The Department of the Interior issued a six-month moratorium on deep water drilling in the Gulf — which was promptly struck down by the courts. Unwilling to see a little thing like a court order get in their way, Interior promptly issued a new moratorium, based in part on a scientific review.
Except the scientists and engineers who had provided technical input on the report immediately protested that the conclusions issued in the report weren’t the conclusions they had drawn. The Department of the Interior had to back off and issue an apology.
That report is back in the news this week, as the inspectors general at the Department of the Interior issued their own report, finding that political considerations had led the Department of the Interior to overstate the science.
In the meantime, Interior has issued new regulations and a new permitting process for deep-water drilling in the Gulf; so far, it doesn’t appear that any new drilling has been approved under these regulations.
That hasn’t been the only impact on oil production. More traditional shallow water drilling has also been brought to a near-complete stop, not through an explicit change in policy, but simply by slowing the permitting process. The effect is that there has been a nearly complete moratorium on drilling — shallow water or deep — in the Gulf. Similar problems are slowing or stopping oil exploration in Alaska.
Of course, the effect on drilling companies has been dramatic. Many companies have simply moved their rigs away from the United States, looking for more congenial locations. The financial impact has been immense. This week, Seahawk Drilling, a smaller drilling company based in Houston, quoted their president and CEO, Randall Stilley:
Due to dramatic delays in the issuing of shallow water drilling permits in the U.S. Gulf of Mexico resulting from the Macondo well blowout, as well as the continued low prices for natural gas and the economic slowdown, Seahawk’s liquidity and operations have been adversely affected. As previously announced, we have engaged Simmons & Company International to explore strategic alternatives for the company in order to examine all possible options to best realize the potential of our assets and maximize value to our shareholders.
Translated from the special lingo of financial statements, that’s “the slow-down in drilling permits has so impaired our business that we’re looking to sell assets in order to survive.”
The Obama administration wants people to believe that they are not anti-business, but their environmental policies alone are wiping out small businesses, and promise to stall large projects waiting for regulatory approval, probably for years.
Ian Fleming, through his character Auric Goldfinger, proposed this law: “Once is happenstance. Twice is coincidence. Three times is enemy action.”
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