New Oil Drilling Ban: Obama Tries to Grant People’s Wish

Although BP had a breakthrough in the oil-stopping effort with a new cap successfully installed on the undersea well, big oil ventures were deeply affected by it. After the previous oil spill proposal was rejected by a federal appeals court, the Obama administration again proposed a new, modified oil spill policy. The former proposal was rejected because it lacked objective criteria and was not scientific. But the new version requires drilling companies to obtain equipment that has been certified as safe before drilling, the criteria of which is clear, scientifically sound and hard to dispute. If the government simply issues fewer or no new certificates, the deep-sea drilling industry must obey. As a result, the international price of petroleum will go up.

But what’s interesting in this policy is that it has a time limitation. Like the old version, the time limitation is still half a year — that is, until the end of this November. Congressional elections will be held in November, and the new drilling ban will come to an end three weeks after this election takes place. If Obama doesn’t extend the time limitation, the ban will be dismissed. So the point of Obama’s short ban is not only to rectify, or even prohibit, the deep-sea drilling industry — it’s to please his voters.

Different political parties hold different views on the BP issue. To Democrats, the lesson from oil spewing is that the government administration hasn’t supervised the drilling industry effectively, and they all believe that Obama has been too soft on petroleum companies. But Republicans disagree. They believe that the root cause is the incompetence of those in power. Swing voters think there should be stricter regulations for this industry, but the government also needs to consider the possible economic loss and unemployment. The data on Pollster.com shows that, for the first time, there are more people who doubt the Obama administration’s effectiveness. So this short-term drilling ban is actually a political tool to maintain impatient supporters of the Democratic Party.

I believe that after the midterm election, whatever the result is, it will be difficult for Obama to prolong this ban. There are two main reasons: taxes and unemployment. There are more than 7,000 government-confirmed leasing projects in the Gulf of Mexico, 60 percent of which belong to the deep-sea oil drilling industry, whose oil makes up 80 percent of the total in the U.S. This short-term ban on production does not constitute a real impact, but if extended over time, the daily output of the next decade is bound to be greatly reduced. Some research indicates that it could be 50 million barrels less per day, which would seriously impact the revenue, especially now that the government deficit is 10 percent of GDP, so any loss in revenue would be painful. On the other hand, the ban would force the petroleum companies to take away oil derricks (each derrick needs more than 1,000 employees), and the related workers would have to be dismissed, which would raise unemployment figures. Currently in the Gulf of Mexico, there are 55 oil derricks. In June, the unemployment rate was 9.5 percent. If a few more tens of thousands of people lose their jobs, this figure would break through a certain psychological barrier of a double-digit unemployment rate, which would be a disaster for the Democrats.

BP’s oil-spewing situation could be a reflection of how modern life relies too much on petroleum. A wise politician would draw a new blueprint telling voters to learn a lesson from this and move forward to a new lifestyle, but Obama lacks this.