WASHINGTON, Aug. 14 (UPI) -- The gulf oil spill will do more damage to the U.S. energy industry than any incident in decades, slowing production and vastly increasing costs, experts say.
Because of the BP oil leak, the Gulf of Mexico is no longer viewed as the nation's best future source of crude oil and natural gas, the Los Angeles Times reported. The disaster will likely lead to an overhaul of government review, more rigorous testing for new projects and the need for better technology, the Times said.
"The days of easy oil are over," Michael Klare, program director at the Institute for Policy Studies in Washington, told the Times. "Only the tough crude remains, in unfriendly parts of the world or in difficult places where the technology and the regulations have not caught up. There are bound to be greater risks."
Higher costs and increased restrictions, such as a temporary moratorium on new deep-water drilling, will likely hurt the smaller oil companies and drillers most at first.
"Small oil companies and drillers will go out of business, and insurance rates for companies will skyrocket faster than healthcare costs," Phil Flynn, an analyst for PFGBest Research, told the Times.
Already, companies are pulling oil drilling rigs out of the gulf, including Houston-based Diamond Offshore Drilling Inc., which moved two deep-water rigs to other waters.
Proposed regulations being considered by Congress would increase environmental safeguards on offshore drilling, add a new tax to fund conservation programs and do away with an oil spill liability cap of $75 million.
Industry representatives argue new legislation should focus on improving safety instead of making domestic oil resources too costly or altogether unavailable.