NEW YORK (
) -- The post mortems on the
oil spill have begun, but there's still no clear answer about when life for the oil business in the Gulf of Mexico will return to healthy conditions.
On Monday, President Obama's point man in the Gulf of Mexico for the BP oil spill, Coast Guard Admiral Thad Allen, said during testimony in Washington D.C. that allowing the company responsible for an oil spill to be in charge of its cleanup creates a potential conflict of interest.
"We need to really think about what we mean by the concept of responsible party and how we want that to work in the future," Allen told the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. "Something we might want to consider is the creation of a qualified individual that would represent the industry, oversee the response, and have access to the resources."
Allen's arguments are logical enough, but how about potential conflicts of interest at the level of the federal government, when it comes to issuing reports on the success of the oil spill containment and cleanup, and the minimal economic impact from the federal moratorium on drilling in the Gulf of Mexico waters?
Recently, the White House issued two reports on the BP oil spill -- mind you, an environment crisis that at one point was sinking Obama's poll numbers almost as much as the state of the U.S. economy. The first White House report claimed that almost all of the oil from the BP oil spill had disappeared from the surface of the Gulf of Mexico. Independent scientists criticized the report, and said when you "do the math" it doesn't add up to all the oil that was spewed by the runaway BP Macondo well into the Gulf of Mexico.
The second White House report claimed that there had been minimal job losses as a result of the federal ban on deepwater drilling in the Gulf, in contrast to the dire predictions from the oil and gas industry at the time the drilling moratorium was enacted. This claim was countered, not surprisingly, by executives in the oil and gas industry who say that a simple tally of jobs lost so far as a result of the drilling ban does not accurately represent the long road back to normal drilling in the Gulf of Mexico, a process that could take years.
The debate over the Gulf of Mexico doesn't just have potential repercussions for the oil spill companies led by BP, that is, if BP is ever allowed to drill in the Gulf again. All the oil spill companies, including deepwater engineer
, rig operator
, have major business interests tied to the Gulf.
Anadarko has been the most optimistic of the group, saying at a recent Barclays Capital conference that it is ready to begin drilling again the moment the ban is lifted in November.
Transocean has been moving rigs out of the Gulf of Mexico for contracts elsewhere, and currently has more rigs idled than has been common in its recent history.
Halliburton is sticking with its earlier estimate that the net impact of the oil spill and drilling ban on its earnings this year will be less than 10 cents per share.
All the oil and gas companies have been chiming in on the issue as the oil spill itself receded into the deep and into history. The CEO of
recently told the
Wall Street Journal
to expect 20% higher operating costs in the Gulf. The Total CEO cited permitting delays as one reason, and
has also claimed that permitting delays, even on shallow water projects, are already a major headache in the Gulf and will continue to be a major issue.
Also testifying at the hearing in Washington D.C. on Monday, White House oil spill commission co-chair Bill Reilly said that the U.S. government was forced to "improvise" in its handling of the massive BP oil spill, as spill response technology failed to match advances in offshore oil and gas development.
Some would say that the White House has been improvising in its rosy scenario for the Gulf of Mexico portrayed in its two recent BP oil spill and drilling ban post mortems. Reilly criticized the government, too, asking, "How did we get into a situation where the need to improvise was so great?"
Given that's it's post mortem time for the BP oil spill, and given that it's an act of improvisation to predict when the Gulf of Mexico drilling operations will return to normal,
recently asked readers,
When do you think drilling operations in the Gulf of Mexico will return to normal?
aren't as optimistic as the White House. Approximately 68% of survey respondents think that Gulf of Mexico's oil industry will get back to normal "later" rather than "sooner."
Only 32% of readers predict that the Gulf of Mexico drilling rigs will get back to work "sooner."
Only time will answer this question for the Gulf of Mexico economy, and one can only hope that when the oil drilling ban settles, the future energy regulation from the federal government and the practices of the oil and gas firms don't continue to be acts of improvisation.
--Written by Eric Rosenbaum in New York.
>To contact the writer of this article, click here:
>To follow the writer on Twitter, go to
>To submit a news tip, send an email to:
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.