Obumba Raises US Trade Deficit

Obumba has ordered an indefinite shutdown of all existing deepwater oil exploration in US waters as well as a six month moratorium on any new exploration after the Deepwater Explorer accident. Thirty-three rigs will be shut down, costing drillers $600,000 each per day and eliminating up to 40,000 jobs. Ouch!

This shutdown will reduce US supplied gas and oil by 5% while increasing imports the same within the next couple of years. In the longer term it will mean less US oil and gas and more imports for decades.

There are only 1234 deepwater exploration rigs in the world. These rigs cost up to $1B and take years to build. Plans have to be made years ahead of time to schedule a rig to drill a lease tract. You can't just run down to the local Rigs-R-Us and rent one on a whim. If the US idles rigs, they probably will be moved to where they can drill. If the US imposes a moratorium on offshore drilling, the rigs will be scheduled in drilling friendly places like Africa and South America.

So it could be years after drilling is permited until a rig shows up in US waters. All the while, the US suffers from energy dependence and hemorraging cash for imports.

The Deepwater Explorer accident was a tragedy but it is not in the US national interest to create a larger tragedy of a nation suffering from energy dependence, and high energy import payments that increase the US trade deficit.