NY Times Fails to Account for Lag Time on Job Losses
Clifford Krauss’ and John Broder’s report in the August 25th New York Times claims that industry and government projections of job losses due to the Obama administration’s deepwater drilling moratorium are unlikely. They write:
Yet the worst of those forecasts has failed to materialize, as companies wait to see how long the moratorium will last before making critical decisions on spending cuts and layoffs. Unemployment claims related to the oil industry along the Gulf Coast have been in the hundreds, not the thousands, and while oil production from the gulf is down because of the drilling halt, supplies from the region are expected to rebound in future years. Only 2 of the 33 deepwater rigs operating in the gulf before the BP rig exploded have left for other fields.
While it is too early to gauge the long-term environmental or economic effects of the release of 4.9 million barrels of oil into the gulf, it now appears that the direst predictions about the moratorium will not be borne out. Even the government’s estimate of the impact of the drilling pause — 23,000 lost jobs and $10.2 billion in economic damage — is proving to be too pessimistic.
While Broder and Krauss acknowledge that it is too early to determine the long-term effects of the moratorium, the labor data they used for the near-term effects also appears to be premature. The authors fail to account for the economic lag from when the rig exploded on April 20th to when the unemployment kicks in. As reported by the Bureau of Labor Statistics, in June there wasn’t a noticeable jump in unemployment in the oil industry where one might expect to see it. Yes, the oil companies have hired laborers to service and paint the rigs, but a much better estimate of the near-term employment effects of the drilling moratorium will in August, September and October.