Oil-drilling freeze: Schlumberger has vindicated President Barack Obama’s Gulf of Mexico drilling moratorium. The six-month freeze elicited howls that the decision would compound the economic consequences of the environmental disaster. But it has shaved just 3.5 per cent from the oil service giant’s profit this quarter. Warnings from many corners that the ban would be just as damaging as the massive BP leak that inspired it look increasingly absurd. A pause to confirm deep-sea safety was worth the modest cost.
Strong US activity drove Schlumberger’s bumper profit, further suggesting that the criticism of the temporary drilling ban was little more than politically motivated hype. True, there will be additional costs in the months to come. And the hit suffered by rival Halliburton was greater, at closer to 9 percent. But as with Schlumberger, frenetic drilling in US shale more than made up for the loss. Indeed, Halliburton’s North American revenue increased 13 per cent.
The impact on the region – though painful for those involved – is also being scaled back. The White House now says as few as 8,000 jobs may have been cut, from an initial estimate of 23,000. Either way, it’s a far cry from the 1 million losses Cumberland Advisors projected from an extended moratorium.
The fact the freeze hardly registered in the results of America’s leading oil services companies puts the ban in better perspective. For all but a few, the financial and economic impact of the drilling hiatus is likely to be soon forgotten. The cost easily could have been far bigger by listening to the moratorium doomsayers.