Gulf Moratorium More Damaging Than the Spill?

A report prepared for President Obama by Interior Secretary Ken Salazar and others regarding suggested handling of the BP (NYSE: BP) and Transocean (NYSE: RIG) gulf tragedy may have a spurious heritage.

According to Salazar, the report, which included suggestions for 22 safety measures, along with a recommended six-month moratorium on drilling in gulf waters deeper than 500 feet, had been "peer reviewed" by a panel of seven experts. But a majority of the panel members, along with others who worked on the report, have had their feathers ruffled. It seems that they had agreed on an earlier version of the report that included the safety measures, but not the 500-foot moratorium.

Instead, they'd recommended limiting the moratorium to new drilling deeper than 1,000 feet. The panelists therefore have fired off a letter to several politicians. Their missive reads in part:

We broadly agree with the detailed recommendations in the report and compliment the Department of Interior for its efforts. However, we do not agree with the six-month blanket moratorium on floating drilling. A moratorium was added after the final review and was never agreed to by the contributors.

The letter predicted that a moratorium "…will not measurably reduce risk further and it will have a lasting impact on the nation's economy which may be greater than that of the oil spill." It also said, "We do not believe punishing the innocent is the right thing to do."

But the moratorium has been enacted, although not smoothly. As I told you recently, drilling contractors Diamond Offshore (NYSE: DO) and Noble (NYSE: NE) have had force majeure declared against them by their respective customers, Cobalt (NYSE: CIE) and Anadarko (NYSE: APC).

And Louisiana-based Hornbeck Offshore (NYSE: HOS), which transports crews and supplies to and from the rigs, has filed suit in U.S. District Court to thwart the ban's enforcement. In its filing, the company maintains that it is "suffering immediate irreparable harm."

Also, Louisianans are in an uproar about the potential impact of the moratorium on the state's employment picture. For instance, Senator Mary Landrieu (D-La.) has been pushing the administration on the number of energy-related jobs that will be sacrificed in her state by an extended drilling halt.

I don't expect the gulf to fully recover for a long time, maybe decades. In the meantime, I believe that oil prices will escalate, making it important that Fools be covered in the energy sector. Thanks to the current U.S. energy chaos, you may want to look towards companies with a global reach, like ExxonMobil.