In 1995, President Clinton signed the Outer Continental Shelf Deep Water Royalty Relief Act, which suspended royalty payments on deep water wells in the Gulf of Mexico, provided "the field is not economically viable without relief". Royalty rates are typically 12.5% to 18.75%. In other words, if MMS decides a well isn't going to be sufficiently profitable, they can (and will) simply GIVE the taxpayers' oil and gas to the oil companies, and not charge them for it!
To be clear, this law did not apply to the Macondo well, which was to pay 18.75% royalties. It does, however, apply to many other oil and gas wells throughout deep water off the Louisiana coast - wells that may be no safer than the Macondo well was.
As President Obama and Congress consider new laws and regulations to prevent more tragedies like the Deepwater Horizon spill, this seems like an excellent place to start. It seems to me that if an oil company cannot profitably drill in deep water, they shouldn't be drilling in deep water. Let's allow the beloved free market to decide where we drill, huh?
Moreover, this is a TERRIFIC tool to bring conservatives on board. They disapprove of government regulation? Well, ask them to agree that we shouldn't be using subsidies to encourage drilling! Of course, no Republican poltician would ever really go along with it - corporate welfare is their bread and butter. But ordinary folks who actually believe the bullshit the GOP feeds them can be swayed, as opposition to this law is completely consistent with conservative thought.
Speaking of conservatives, a particuarly annoying meme running among them right now is that the reason we're drilling deep water is because liberal tree-huggers won't allow drilling in shallow water. This is, of course, false, but it fits their preconceptions. Pointing out that we're SUBSIDIZING deep water drilling can go a long way to making them rethink their position.
Realistically, I don't think we can hope for more than a temporary breather sort of ban on deepwater drilling. At best, we'll put it off until the inevitable cycle of politics puts another oil-fed Republican in the White House, even if that takes 20 years. Sooner or later, the rich fields in deep Gulf of Mexico waters will be exploited.
But that does't mean we have to subsidize the race to deep water with taxpayer dollars.