19 June 2010

Gulf #oilspill economic impact not what it seems

Crude is currently trading eight percent below where it was the day the BP rig in the Gulf of Mexico blew up.

CBC quotes a TD economist as saying that:

“It probably won't have a huge impact [on global oil production]. Deepwater drilling accounts for about seven per cent of global output right now.”

But the same online piece notes that Gulf of Mexico production accounts for 30% of American domestic output.

Now if there should happen to be a complete moratorium on new drilling and exploration in deep water as a result of the BP disaster, that could have interesting repercussions.  All those rigs currently being used in the southern US will be available for renewed exploration efforts in other parts of the world.  Like say offshore Brazil or offshore Newfoundland.

And hey, notice that the CBC article refers to tougher regulation.  That doesn’t mean something like a ban;  it just means Americans will start applying the same sorts of regulation that other countries take for granted and where exploration and production is going on as always.