HOUMA, La. — The sign atop the Southern Sting tattoo parlor in nearby Larose captures the feeling of many business owners in this area.
Around a relief of a dismembered human torso is written the message: “BP took our arms. The government is taking our legs. How will we stand?”
When I was in this area last June, local anger was directed squarely at BP for unleashing the worst oil spill in U.S. waters. It threatened the livelihoods of local fishermen and raised the prospect of stricter regulations for the energy business.
Government is target
Now, a year after the accident that killed 11 workers aboard the Deepwater Horizon drilling rig, followed by a ban on deep-water drilling that has brought the offshore industry to a halt, the anger once directed at BP has shifted to the government.
“The moratorium hurt us as much as the spill hurt us,” said Tony Alford, president of the South Central Industrial Association, which represents 200 businesses in four southern Louisiana parishes. “Even a year later, we’re still feeling the effects. There’s still some anger at BP, but it’s more of a government thing now.”
Slower pace for permits
Deep-water drilling permits are again being issued in the Gulf, although both the applications and the approvals are coming at a much slower pace than before the spill.
For the energy companies here, many of them small and midsize businesses that supply and support offshore projects, the effects of the moratorium float like a shroud over the local economy. The trickle of new permits simply isn’t enough to offset the delays that stretched from six months to a year and may continue for months to come.
“Unless they start issuing about 15 permits a month, this area’s going to hurt,” said David Rabalais, executive director of Terrebonne Port, the local port authority. “There’s a lot of concern, there’s a lot of scared people, and there’s a lot of companies that aren’t doing anything right now because they don’t know what the future’s going to hold.”
Some companies are starting to worry that the business might never come back, or that the lag in new business will be far longer and more pronounced than they thought.
That’s a sobering thought for the region where offshore drilling was born and where the energy industry has been a way of life for decades.
To the untrained eye, the economy in southern Louisiana has actually benefited from the spill. The preliminary February unemployment rate for the Houma area was 5.8 percent, well below the national average and a decline from the previous month.
But those figures hide a troubling trend. A year ago, Houma’s unemployment rate was about 4.9 percent, and many of the family-owned businesses here have struggled to maintain their payrolls for the past year. Now they may be reaching their breaking point.
The government officially lifted the moratorium last October, but no deep-water permits and few shallow water ones were issued until just recently, and even now, the flow of business isn’t enough to help companies like Gulf Island Fabrication in Houma, which builds offshore drilling equipment.
“We were all hopeful that once the moratorium was lifted, it would be business as usual, and it’s just not,” said Kirk Meche, Gulf Island’s president and chief operating officer. “We’re in limbo. I have been chasing jobs for eight to nine months. It’s scary.”
Three years ago, Gulf Island diversified into boat building and dry dock work, which has helped its main production plant here weather the permit slowdown without letting workers go. Its Texas operations near Aransas Pass, though, have cut about 80 percent of their workforce in the past year, Meche said.
Gulf Island, which is publicly traded, reported fourth-quarter earnings plunged 63 percent, to $1.7 million on a 43 percent decline in sales. Results for the first quarter, which will be released next week, will likely show a similar decline, Meche said.
“We’re not generating enough revenue to justify any significant earnings,” he said. “We’re still limping along.”
The government, of course, had to do something to respond to the Deepwater Horizon disaster, and the accident itself raised safety questions about offshore drilling procedures. But many here say the response was too heavy-handed. Thought government regulators say they’re mindful of the effect their decisions have on the industry, the moratorium didn’t seem to account for the terrible ripple effect, felt far beyond the companies that actually do the drilling and lease the prospects.
Can’t do without it
In southern Louisiana, the economy can’t stand without the energy industry. The marshes and bayous are infused with an entrepreneurial zeal that measures success in businesses built and leaves little time for introspection.
The government’s concerns that the Deepwater Horizon may have pointed to systemic failures in offshore drilling simply don’t compute in a place where the industry has provided so much to so many for so long.
While the anger with BP may still linger, it’s the government that now dominates the discussions. As folks here see it, BP made a big mistake. In responding to it, the government did the unthinkable.
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