Gasoline and oil prices increase as new permit given for deepwater drilling

The Obama administration has granted a permit for offshore oil drilling to Noble Energy. It’s the first offshore drilling permit in months, as offshore drilling procedures were put on hold after the BP oil spill. The volatility of gas and gasoline prices due to political turmoil in the Middle East means that the lift of the offshore drilling ban comes not a moment too soon.

First permit for offshore drilling issued in months

In Oct 2010, the national moratorium on offshore drilling was lifted. The New York Times reports that, for the first time since 2010, an offshore drilling permit has been given. The permit is a re-issue, not for a new site, for Noble Energy. This was given by the Department of the Interior. During the April 2010 Deepwater Horizon explosion and oil leak, Noble was necessary to stop operations as drilling is off the coast of Louisiana. Getting the brand new permit is great for the business. It means procedures can start again. About 6,500 feet below surface is where drilling is.

Judge claims Obama administration has to process permits

It was just one week after federal Judge Martin Feldman ordered the Obama administration to start taking permit applications and processing faster from a court in Louisiana when the Noble Energy permit was granted. The delay wasn't because of political agenda though, Director of the Bureau of Ocean Energy Management, Regulation and Enforcement, Michael Bromwich, explained. Currently there are six pending permits for deepwater drilling waiting for a response. For shallow offshore drilling, there have been 37 permits granted. Reuters reported that stock in businesses with stakes in offshore drilling went up with the news that a permit had been issued.

A rise in gasoline prices

Political turmoil in the Middle East has led to an almost consistent rise in gasoline prices over the past few weeks, according to CNN. Oil prices have fluctuated, however there have been guarantees from gas producing states, such as Saudi Arabia, that any drop in production would be made up. Despite those guarantees, the ongoing Libya demonstrations and similar situations in Bahrain, Oman, Yemen and Jordan have not inspired good confidence. Gasoline costs rose by 20 cents over the last week of February, marking a 27-cent rise in the cost of gasoline over the month of February. The national high of over $4.11 in July 2008 has not been met yet since gas is at an average of $3.34 a gallon currently.

Information from

New York Times

nytimes.com/2011/03/01/business/energy-environment/01drill.html?partner=rss&emc=rss

Reuters

reuters.com/article/2011/03/01/energy-drillers-idUSN0124305420110301

CNN

money.cnn.com/2011/03/01/news/economy/gas_prices/index.htm