I found a very interesting article on the New York Times website relating to President Obama’s moratorium on deep-sea oil drilling. The article talks about how Obama will be extending the moratorium another 6 months which cancels exploratory drilling scheduled in Alaska this summer. The White House says they will also be administering harsher regulations to show that they are trying to fix things in response to the BP oil spill. I think this is an overreaction to the problem as oil spills do not happen very often.
The moratorium will cause a decrease in supply as big oil companies will not be able to drill as much as they normally could. Due to the shift to the left of the supply curve, the equilibrium price will go up which will effect consumers all around the world. I believe most people in the world want gas prices as low as possible so why is Obama doing this? The reason Obama introduced the moratorium on deep-sea drilling was so that United States citizens felt like the government was responding to the oil spill adequately. Instead what they are doing is raising prices of gas which is one of the biggest issues that Americans have today.
The moratorium also decreased jobs for Americans as these rigs employed thousands of Americans. So instead of repairing the government’s image like the Obama administration wanted, they put a lot of people on the Gulf Coast out of work and raised gasoline prices.
Even though Obama did lift the moratorium in mid-October the amount of crude oil that the companies could have drilled is permanently reduced. Before the moratorium, oil rigs were already drilling but after they were forced to move to other places around the world to drill. The oil rigs are not going to come back to Alaska, etc. because they already spent millions of dollars to get to other places to drill. I cannot see a decrease in gas prices coming anytime in the near future but we’ll see.