Obama admin loses bid to keep oil drilling ban
WASHINGTON (Reuters) - The Obama administration lost another legal skirmish on Thursday when a U.S. judge refused to put on hold his decision lifting a ban on deepwater oil drilling imposed after the worst spill in U.S. history.
After striking down the moratorium on Tuesday, a federal judge in New Orleans rejected an administration request to allow the six-month ban to stand while the government appeals his decision.
Judge Martin Feldman issued a brief order denying the stay request, pointing to his previous ruling that criticized the ban as arbitrary, too far-reaching and not justified given the impact on thousands of oil industry workers and communities.
The government has appealed to the U.S. Court of Appeals for the Fifth Circuit and can ask it to stay Feldman's decision. It says it is also revising the ban to make it more flexible and possibly open some areas to drilling but has not said when it will issue a new moratorium.
Feldman's latest ruling was more unwelcome news for the administration, which has been on the defensive over what critics call a slow and ineffective response to the 66-day-old spill in the Gulf of Mexico.
The U.S. government imposed the moratorium after a well owned by BP Plc ruptured on April 20, unleashing millions of gallons of crude into the sea in one of the biggest environmental catastrophes ever to hit the United States.
Obama is struggling to convince Americans that his administration is on top of a crisis that has eclipsed his efforts to reform the way Wall Street banks operate and tackle a near double-digit unemployment rate ahead of crucial congressional elections in November.
A new Wall Street Journal/NBC News poll found half of those surveyed disapproved of Obama's handling of the spill, echoing other surveys showing voter discontent with his response.
The two-month-old spill has shut down rich fishing grounds, threatened the Gulf Coast's tourism industry, tarred beaches and killed hundreds of turtles, birds and dozens of dolphins.
BP SHARES HIT NEW LOW
It has also shattered investor confidence in BP, a staple of British pension funds, as estimated clean-up costs soar into many billions of dollars.
The British energy giant has seen its shares lose almost half their value since the spill.
BP's U.S.-listed shares hit a new year low on Thursday, trading at $28.95 in afternoon trading. The company's stock closed down 2.47 percent in London.
In Washington, the administration faced pressure from Republican lawmakers to ease the offshore drilling ban.
At a Senate energy committee hearing, Republican Senator Lisa Murkowski said she was worried the owners of offshore rigs that have been idled by the moratorium will take their business out of the United States.
"We're starting to see what I'm calling this flight of investment from the Gulf," Murkowski told a hearing attended by Interior Secretary Ken Salazar.
Oil services companies, who say the ban is too far-reaching and will lead to major layoffs, went to court this week to overturn the ban, leading to Feldman's ruling.
Salazar told the hearing he was aware of the moratorium's impact on the Gulf Coast economy, but it was necessary "until we get to a level where we can provide a sense of safety to the American people that drilling can in fact continue."
BP CAPTURES MORE OIL
But analysts said the ban is at odds with Obama's avowed desire to make the United States less dependent on foreign countries for its energy needs.
"By taking deepwater supplies out of the equation, U.S. self sufficiency in oil could fall to around 30 percent in 2035 from around 40 percent if deepwater production is allowed," said Jonathan Barratt, managing director of Commodity Broking Services.
BP said on Thursday its oil-capture systems at the leak collected or burned off 16,830 barrels of oil on Wednesday, a 38 percent drop from its record rate of 27,100 on Tuesday due to a 10-hour shutdown of one of the systems.
The shutdown happened when an underwater robot apparently hit a containment cap atop failed blowout preventer equipment that channels oil to a drillship a mile up on the water's surface, according to the U.S. Coast Guard.
BP removed the cap Wednesday morning to assess its condition, then replaced it about 10 hours later. In the interim, crude gushed unchecked from the leak site.
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