LAFAYETTE — The oil and gas industry could be facing more regulations, sluggish permit approval and disappearing tax breaks under the next four years of President Barack Obama, the leader of an offshore energy trade group said Wednesday.
“The overall cost of business is going up,” National Ocean Industries Association President Randall Luthi told a crowd of about 300 attendees at a Greater Lafayette Chamber of Commerce business luncheon.
Beginning with a presentation slide that read “The Morning After,” Luthi said the only good news for the offshore oil and gas industry following Obama’s re-election Tuesday is that “I don’t think it’s going to get any worse.”
The comments come despite the fact that oil and gas drilling has been on the rise and most industry forecasts call for that activity to continue.
Luthi acknowledged the positive indicators for the industry.
“Things are on the uptick,” said Luthi, a former director of the agency within the U.S. Department of Interior that oversees offshore drilling. “Rigs and jobs are beginning to return to the Gulf of Mexico.”
There has been an overall increase in oil and gas production in the U.S., Luthi said, but production has been down since 2007 in areas overseen by the federal government.
“Yes, it’s up, but it’s not up on federal lands,” Luthi said.
While oil and gas operators are returning to the Gulf, Luthi cautioned that he expects the second Obama administration to more aggressively pursue tougher regulations.
“This is going to be a very, very, very active administration,” Luthi said.
Luthi said new regulations have been “pent up” pending the election and will be pushed along by a group of “reinvigorated and anxious” Democrats.
“The Republicans are going to see that there are consequences to losing an election,” he said.
Luthi also said that oil and gas industry tax breaks will likely be a prime target in efforts to tame the federal budget.
“There is going to be a lot of pressure to find money one way or the other,” he said.
Luthi lamented that the administration is unlikly to change course and open up new offshore areas to drilling, such as off the coasts of Virginia and South Carolina.
Mitt Romney had pledged to open up more of the mid-Atlantic region to offshore drilling if elected.
Obama’s leasing plan for federal waters over the next five years “does not open one new acre of offshore area in the United States,” Luthi said.
He said that under the right regulatory environment, the U.S. could soon achieve energy independence with robust offshore production, and activity in the Gulf could continue to boost the economy.
“Oil and gas jobs have been some of the best news in the economy for the past two years,” he said. “There is a promise of much more.”