The recent BP oil rig explosion in the Gulf of Mexico is now almost certainly going to be an environmental disaster. The resulting loss of fishing grounds and other seashore and ocean jobs will also be economically devastating to a region of the country that can ill afford it. And both sides are screaming.
The tree huggers are using this as an example of why we need to move quickly to clean renewable energy sources. They would advocate to shut down offshore drilling… and onshore drilling, and digging, and chicken farming while we’re at it.
The drill-baby-drill crowd is chanting ever louder to drill here, drill now. This disaster is evidence of how much oil is under there, and that once we get it safely ashore we’ll all be better off. Stuff happens. We’ll clean it up and we’ll be fine. It’s Obama’s fault anyway, or maybe some loony eco-terrorist.
As in many such situations, both sides are a little right and a little wrong… and in this case, a lot of nuts. We do need to move to green energy and cut our dependence on oil. But that’s a long road and will require a lot of government incentives to get it moving. As much as running my life on sun and wind sounds appealing, I’m not about to put a mast and a sail in the bed of my truck. So in the mean time, we do need to exploit our domestic oil and coal reserves. And that means taking on some environmental risk.
But what no one seems to be talking about here is the role of greed in the recent disaster. This oil spill should not have occurred. Modern undersea drilling specifies using redundant blowout valves. This means that when the primary valve fails, as happened in the gulf, the secondary valve can still stop the oil flow. Most countries require the use of such devices for wells drilled off their shore. However, in this country we have no such regulation. We assume that because it’s the right thing to do, companies will put them in anyway. Well guess what? That’s more expensive. So in an easily predictable outcome, BP opted not to install them. For BP, it was a balance sheet risk. The cost of cleanup versus the cost of the valve mitigated by the small risk of a failure. They gambled. They lost. None of which helps the shrimp farmers and seaside resorts. None of which save the Everglades or the Delta.
Over and over companies demonstrate that left to their own devices they behave selfishly. And realistically, that’s not unreasonable behavior. But it is yet again more evidence that the government plays a role in regulating and controlling some of the parameters of business to insure the safety and well being of the people. Capitalism by itself doesn’t get you there.
That is the real lesson in all this.