In case you missed it over the holiday break:
The Trump administration is poised to roll back offshore drilling safety regulations that were put in place after the 2010 Deepwater Horizon oil rig disaster in the Gulf of Mexico that killed 11 people and caused the worst oil spill in American history.
A proposal by the Interior Department’s Bureau of Safety and Environmental Enforcement, which was established after the spill and regulates offshore oil and gas drilling, calls for reversing the Obama-era regulations as part of President Trump’s efforts to ease restrictions on fossil fuel companies and generate more domestic energy production.
Doing so, the agency asserted, will reduce “unnecessary burdens” on the energy industry and save the industry $228 million over 10 years. ...
Industry groups like the American Petroleum Institute have long opposed the safety rules, calling them “flawed and costly.” The fossil fuel interest group warned in 2015 that the regulations would reduce capital investment in the Gulf by $4 billion a year and threaten 50,000 industry jobs. ...
The Obama-era rules, written in 2016, tightened controls on blowout preventers, devices that are intended to stop explosions in undersea oil and gas wells, and called for rig operators to have third parties certify that the safety devices worked under extreme conditions. In the Deepwater Horizon spill, a supposedly fail-safe blowout preventer failed after a section of drill pipe buckled.
As always with industry estimates you need to put them in context (ignoring the need to recognize that industry cost estimates are usually exaggerated to avoid regulations). The U.S. Energy Information Administration says that Gulf of Mexico oil production is 1.6 million barrels per day (2016). If the price per barrel is $65, then that leads to revenues of about $37 billion annually. The cost of the Obama-era rules is $22.8 million per year, about 0.06% of revenues or $456 for each lost job. The regulatory costs seem low to me, especially considering that the BP Deepwater Horizon blowout lead to 11 deaths and damages of $17.2 billion.
Note, that in contrast to API's warning that 50,000 industry jobs were at risk in 2015, the EIA said that "Oil production in federal Gulf of Mexico expected to continue increasing."
What am I missing?
