But what is becoming a matter of debate is how much the six-month halt in operations will affect the region’s long-term employment as oil companies may consider moving to foreign waters, where regulations governing exploration and production are likely to be less onerous than what is expected to result from the current inspection process.
Additionally, some economists say the region may be impacted by mass lay-offs starting at the end of this year when companies react to a number of factors: unstable natural gas and oil prices, revenue losses resulting from the last six months, and a new regulation framework, the impact of which is expected to significantly shake up the economics of the area even if the details are not yet known.
According to Michelle Foss, chief energy economist at the Bureau of Economic Geology at the University of Houston, oil companies are facing “a lot of open-ended risk,” especially at the end of the year when drilling leases and contracts are up for renewal.
“There are enormous issues that need to be resolved and that’s not going to happen in two months, especially when no one knows where they stand right now,” Ms. Foss says.
Despite the uncertainty, the Interior Department report revised what it originally predicted would be 23,000 jobs lost due to the moratorium to a job loss between 8,000 and 12,000. The report says a primary reason for the revision is that the mass layoffs predicted as a short term impact of the moratorium did not materialize. Instead, the majority of oil companies maintained payrolls by redirecting workers to perform repairs or other jobs not related to drilling. The report called the losses temporary and added that “most [jobs] would return following the resumption of deepwater drilling” in the Gulf.