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Deep water drilling in GoM to stop for 6 months May 27, 2010

The white house just announced that all deep water drilling operations will have to shut down for at least 6 months. All operations at 33 deep-water rigs in GoM have to stop no matter of its operation status.

I expected this to happen in light of BP oil well explosion and it did. Many people in Louisiana will lose their jobs and incomes. They will be on the unemployment line until this ban is lifted. It will set back the progress of US deep water drilling for more than a year or two. Oil companies may pull their capitals away from the United States and seeking other nations for better returns and opportunities.

By that time, new regulations will be put into action which will further curtail oil productions from GoM.

That’s one of the reasons why all oil companies stocks have been under a lot of selling pressure.

The bottom line is this: the decline of US oil production will accelerate and import will have to rise to fill the widening gap. Oil prices will go up because of lower supply.

Saudis, Iraq, Iran and Venezuela are laughing all the way to their banks.

Global wealth transfer from countries such as U.S. to oil exporting countries will pick up pace and many Americans have no idea about this at all.