New Rules for Offshore and Natural Gas Drilling
April 14, 2015
The Department of Interior Proposed New Rules for Offshore and Natural Gas Drilling; Producer Prices Rose 0.2% in March for the First Increase Since October; Retail Sales Weaker Than Expected.
- The Department of the Interior proposed new rules for offshore oil and natural gas drilling on Monday that would impose tougher standards on equipment designed to keep control of a well and will require better real-time monitoring of deep-water operations. The regulations are aimed at preventing incidents similar to BP’s 2010 Deepwater Horizon accident, which resulted in the death of 11 workers and was the biggest offshore oil spill in U.S. history. The department estimates that the rules will cost the industry $883 million over a 10-year period, though it says they also will benefit the industry with $656 million in time saved and reduction of potential spills. The new standards are set to take effect later this year, though the government will allow three to seven years for companies to become compliant given the length of time it will take to install the required technologies. [WSJ] [DOI]
Economic Indicators & News
- Producer prices rose 0.2% in March for the first increase since October, indicating stabilizing inflation in the American economy. Energy led the rise in overall prices with a 1.5% increase after being static in February and many consecutive months of declines, while food prices continued to fall with 0.8% and 1.6% drops during the previous two months, respectively. Excluding food and energy, producer prices rose 0.2%, slightly higher than the 0.1% increase anticipated by economists. Gasoline prices jumped 7.2% in March, which was the biggest gain in the segment since September 2012. Producer prices still remain 0.8% lower than they were in this period last year. [BLS]
- Retail sales were weaker than expected in March with a 0.9% increase from the previous month, as gasoline sales dipped 0.6% and the rate of personal savings increased to 5.8%, the highest level since 2012. Americans increased spending on furniture and buildings supplies while cutting back on purchasing electronics, appliances, and groceries. The most strength in personal consumption came in a 2.7% rise in motor vehicle sales. [Census]
- Business inventories rose slightly more than expected in February with firms adding 0.3% to their stockpiles of goods, indicating anticipation for increased retail sales in coming months.Despite weak sales during the month, inventories rose 0.5%, excluding autos, and businesses would take 1.36 months to sell all of their goods. Sales in the first quarter of 2015 were impaired by harsh winter conditions. [Census]