Drilling halt may be worse than oil spill: critics

HOUSTON (Reuters) - A backlash is building against the Obama administration's offshore drilling moratorium, which some argue worsens the harm to a Gulf Coast economy already losing fishing and tourism business to the oil spill.

Louisiana politicians, including Sen. David Vitter and Governor Bobby Jindal, have sent letters to President Barack Obama urging reconsideration of the May 27 executive order.

"It's the wrong thing to do at the wrong time," said Chris John, a former member of Congress who is now president of the Louisiana Mid-Continent Oil and Gas Association.

"It may be good politics, but it is bad economics," said Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business in Dallas.

"The last thing we need is to enact public policies that will certainly destroy thousands of existing jobs while preventing the creation of thousands more," Jindal wrote in a letter dated Wednesday. Vitter sent a similar letter Thursday.

The order to idle 33 deepwater rigs could sideline as many as 7,000 highly paid rig workers and cost four to five times as many support jobs at catering, service boat and drilling supply companies, the oil and gas association said.

As a result, Royal Dutch Shell, Exxon Mobil, Chevron, Marathon and other companies have begun curtailing Gulf of Mexico operations to comply with the moratorium.

John said great harm has been done to the environment, fishing and tourism, so care needs to be taken to avoid a repeat of the April 20 explosion at a BP Plc rig that killed 11 workers and started the nation's worst oil spill.

But John worries the moratorium could drag on longer than the announced six months as a special commission created by the president organizes and studies the disaster and companies work to comply with new regulations.

"If this is tied to the commission he's set up, I've never met a commission that's reported to Congress on time," John said.

Even in coastal areas partially dependent on fishing and tourism damaged by the spill, local officials want offshore drilling to continue.

"Quite frankly, if we can't get the president to reconsider, then the oil on the beach is the least of our worries. Our economy will be decimated," said Charlotte Randolph, president of coastal LaFourche Parish.

Nine out of 10 of the top taxpayers in LaFourche Parish have facilities at Port Fourchon, a huge offshore oil industry service port on the Gulf Coast, Randolph said. Seven of nine parish council members have oil-related jobs, she said.

"In terms of capital expenditures and wages, offshore drilling has to have a bigger economic impact than fishing," Weinstein said.

The moratorium could hurt the entire U.S. economy and energy security, critics said.

Thirty percent of U.S. domestically produced oil and 13 percent of natural gas comes from the Gulf, and 80 percent of the Gulf's oil and 45 percent of its gas comes from waters deeper than 1,000 feet, government data show.

"This could have a serious and long-term negative impact on specific regions and industries and wind up increasing our reliance on imported oil," Weinstein said.