John: Louisiana Economy Depends on Gulf Oil

Posted May 24, 2010 at 4:59pm

The thoughts and prayers of the nation’s oil and natural gas industry, along with those of all Americans, continue to be with the workers, their families and the people in the Gulf of Mexico who are most affected by the Deepwater Horizon accident.

[IMGCAP(1)]As work to stop the spill and clean up the oil continues, the U.S. Coast Guard and Minerals Management Service have opened an investigation into the causes of the accident. Those responsible will be held accountable, but we need to let the investigators do their work, deliver their findings and then correct any deficiencies. While we remain dedicated to the containment effort and cleanup of the spill, some people have demanded a delay or a total ban on offshore drilling while others are using the accident to further a political agenda. Either option would be a serious mistake and would make us more dependent on foreign sources of energy.

I have lived in Louisiana all of my life and understand the unique relationship and coexistence among sportsmen, fishermen, shrimpers, and the oil and gas industry. The oil and gas industry has a $70 billion economic impact and creates 320,000 direct and indirect jobs in Louisiana. As I’ve often said, “The oil and gas industry needs Louisiana, and Louisiana needs the oil and gas industry.” I also believe that America’s national and economic security depends on having energy security that the Gulf Coast provides.

This tragic accident doesn’t change the reality that demand for energy is growing and that we’ll need more oil and natural gas to help meet that demand in the coming decades. The Gulf of Mexico represents 30 percent of the nation’s total domestic oil production. And the deepwater area currently provides about 70 percent of the oil and 36 percent of the natural gas from that region and will remain an essential piece of the nation’s energy portfolio for decades to come.

President Barack Obama struck the right balance when he recently reaffirmed the importance of domestic oil and natural gas production to the nation’s strategy for energy and economic security. Unfortunately, some lawmakers are calling for massive regulatory or legislative changes without waiting for the results of ongoing investigations or considering the unintended consequences these changes may have on our country and economy.

And suggestions from Capitol Hill that arbitrarily raise fees, in the name of the Oil Spill Liability Trust Fund, which would be used to finance unrelated programs or pay for additional government spending, must be turned aside. We must be sure we aren’t leaving the trust fund with nothing more than IOUs against future needs.

Current law protects taxpayers by holding companies accountable for all the costs associated with cleaning up oil spills. And regarding the much-discussed $75 million cap on economic damages, that liability limit does not apply in instances of gross negligence, willful misconduct or violation of applicable federal regulations. Frequently overlooked in the debate is the $1.6 billion in funds paid by industry that are reserved to offset economic damages and that injured parties can also pursue for damages in state court as well.

Any changes in the trust fund should be thoughtfully considered with an opportunity for all stakeholders to be heard. The priority should be focused on protecting the trust fund’s continued viability without undermining the oil and natural gas industry’s ability to insure capital investments and meet the nation’s energy needs.

Make no mistake: The industry’s top priorities are stopping the release, containing the oil and cleaning up the spill. In this effort, the industry has mobilized an army of companies, experts and equipment to help with response efforts. We’re committed to learning what happened and why and then applying what we learn so we can prevent such situations in the future. Our goal is to continuously improve the industry’s safety and environmental performance in all our operations.

This accident is a reminder of the difficult and dangerous work the men and women of America’s oil and natural gas industry do to provide energy for the nation. It’s also an opportunity for us to work harder to demonstrate our commitment to protecting the environment and creating technologies to ensure that accidents like this won’t happen again. The stakes are too high for us not to get it right.

Chris John is a former Democratic Member of Congress from Louisiana’s 7th district and is currently the president of the Louisiana Mid-Continent Oil and Gas Association.