'Permitorium' will restrict production, force gas prices up

Virginia Gov. Bob McDonnell says he is “extremely disappointed” with the Obama administration for blocking development of significant oil and natural gas deposits off the coast of Virginia over the next seven years in the wake of the BP oil spill.

The Eastern Gulf of Mexico and the entire Atlantic and Pacific coasts were declared off-limits to drilling by Interior Secretary Ken Salazar, who said Wednesday that his department will delay two lease sales planned for next year in order to conduct environmental impact studies.

American Petroleum Institute senior economic advisor Rayola Dougher warned that worldwide demand for new energy is projected to increase 49 percent by 2035, but production is only expected to increase 14.4 percent.

Restricting domestic oil production while worldwide demand continues to rise will have predictable results: higher gas prices for U.S. drivers, greater dependency on foreign oil producers, and reduced economic opportunities for Americans.

Offshore deposits alone could produce up to 2 million barrels a day over the next decade, creating $1.3 trillion in new federal revenue and hundreds of thousands of jobs. 

API chief economist John Felmy told reporters that since 95 percent of oil consumed in the U.S. is used for transportation, ramping up alterative energy sources such as wind or solar will not make up the gap.

“Thirty three major drilling rigs have been shut down, and there are no shallow water leases,” Felmy told The Examiner. “With $600 billion in projects on line, this is a major lost opportunity.”

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