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Category — Oil Spill (BP-Horizon)

Collateral Damage: Lost Gulf Rigs from Obama Obstructionism (10 down, more to go?)

“The Gulf Spill of 2010 maybe be remembered as much or more for the economic damage it did because of the Obama’s regulatory overreaction than for the environmental damage it wrought. Two wrongs do not make a right.”

Ten oil rigs have left the Gulf of Mexico since the Obama Administration imposed a moratorium on deepwater oil and gas drilling in May 2010 and others could follow soon, a detailed July 2011 report from Sen. David Vitter’s (R-La.) office shows.

The ten rigs named in the document are: Marinas, Discover Americas, Ocean Endeavor, Ocean Confidence, Stena Forth, Clyde Bourdeaux, Ensco 8503, Deep Ocean Clarion, Discover Spirit, and Amirante. The rigs have left the Gulf for locations in Egypt, Congo, French Guiana, Liberia, Nigeria and Brazil.

It gets worse.

Several of the remaining rigs could be relocating soon, according to the report. These include the Paul Romano, the Ocean Monarch and the Saratoga. Moreover, eight other rigs that were planned for the Gulf have been detoured away, Don Briggs, President of the Louisiana Oil and Gas Association (LOGA), points out.

“When you have companies that would be spending hundreds of millions of dollars, or some cases, billions of dollars, they need certainty,” Briggs explained. “We don’t have that now and I don’t expect that we will anytime soon. We will be in a deteriorating position until this changes.”

Briggs has also questioned the necessityof the moratorium that was imposed in response to the explosion of British Petroleum’s (BP) Macondo oil well on April 20 of last year. The accident resulted in the death of 11 workers and caused an estimated five million barrels of crude oil to spill into the Gulf.

The federal regulatory schemes that are now aimed against Louisiana will ultimately work to the disadvantage of industry in other parts of the country, Bonner Cohen, a senior fellow with the National Center for Public Policy Research (NCPPR), has warned. [Read more →]

August 18, 2011   17 Comments

The Catastrophe That Wasn’t: The Gulf Oil Spill in Perspective

Picture your neighbor’s pool.  Unless you live in Malibu, it’ll contain about 6,000 gallons.  That’s the “Gulf” for purposes of discussion.  Now go to your garage, get a quart of oil and pour it in when he’s not looking.  Pretty good sense of the oil spill in the Gulf of Mexico, right?

Nope, not even close.  Put a drop of that oil onto a sheet of paper and carefully cut it in half.  Now do it again and toss that quarter of a drop into the deep end.  Even this quarter droplet (about the size of the comma in this sentence) is about 10% too large, but NOW you have a sense of what 4.9 million barrels of oil in the Gulf looks like.[1]

Now that we’ve grappled with the issue of scale, let’s look at the aftermath of this ‘catastrophe.’  According to the government scientists, seventy-five percent of that sliver of a droplet has now evaporated, been eaten by microbes, skimmed or burnt. (This estimate is in dispute, but every day the released oil is being reduced to get to that figure, if not beyond it.)

Now, you’re going to need to borrow your kid’s microscope for the rest of this exercise…. [Read more →]

August 25, 2010   17 Comments

Obama Gives Oil and Gas a Cold Shoulder (Ducking Houston on his recent visit)

President Obama did not include Houston on his visit to Texas last week rallying his base and raising funds for Democrats for the November elections. The President was originally expected to be here but ended up in Austin and Dallas. Was this bypass a duck-out? After all, Congressman Kevin Brady (R. Tx.) pointedly invited the president to meet face-to-face with Houston energy workers on the other Gulf Crisis—the federal offshore drilling moratorium that threatens tens of thousands of jobs here and in much of the Gulf Coast region.

Sure, Obama’s Texas visit was not about helping Republican candidates or hosting a Tea Party event. But why couldn’t the president reserve an hour to talk to workers whose livelihoods depend on Houston’s largest industry – an industry that is being victimized by the President’s everyone-is-guilty drilling policy? “I have seen enough to know that people are hurting,” said Michael Bromwich, Obama’s hand-picked moratorium advisor, recently. Surely the president needs to talk to the oil and gas workers in order to share that understanding—and to know that time is of the essence when it comes to lifting the moratorium.

Obama’s cold shouldering of the industry is no accident. It is an open secret that the White House intelligentsia (called by some the “‘green’ dream team”) does not like oil or even natural gas. They like solar, wind, and other esoteric energies that just happen to be more expensive and less reliable—and, on close inspection, environmentally suspect.

For a president interested in job creation, and at least nominally in favor of energy affordability, Obama is proving to be his own worst enemy and at odds with the average American. The polls reflect public concern with the explosive growth in government being driven by the party in power. From health care to energy, most Americans believe the country is headed in the wrong direction. [Read more →]

August 18, 2010   5 Comments

Blowout Prevention Act–or Oil-Production Prevention Act?

Today, the House Energy and Commerce Subcommittee on Energy and Environment will hold a hearing on the Blowout Prevention Act of 2010. A draft of the legislation and other pertinent documents are available on the Subcommittee’s Web site.

Although the draft legislation and hearing documents address serious problems brought to light by the Committee’s ongoing investigations, the Blowout Prevention Act would throw the baby out with the bath water.

To restate the obvious, although oil spills are bad, oil is good. Without oil, there would be no modern commerce and no mechanized agriculture. Life for most people would be “nasty, brutish, and short,” and many of us would not even be alive. Another obvious point — British Petroleum (BP) is to blame for the worst environmental disaster in U.S. history, not the oil industry as a collective entity.

Yet the draft legislation that Chairmen Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) will promote at today’s hearing could shut down all offshore drilling in the United States.

The draft text says the federal government “shall not issue a permit to drill for a high-risk well unless the applicant for such permit demonstrates . . . and the appropriate federal official determines that . . . the applicant has an oil spill response plan that ensures that the applicant has the capacity to promptly stop a blowout in the event the blowout preventer and other well control measures fail.”

Sounds innocent enough. However, the bill defines as “high-risk” any “offshore oil or gas exploration or production well,” not just ultra-deepwater rigs. In addition, at both the June 17 Oversight and Investigations Subcommittee hearing and the June 15 Energy and Environment Subcommittee hearing, Chairmen Waxman, Markey, and Bart Stupak (D-Mich.) emphasized that none of  the major oil companies, individually or in combination, could have stopped the spill after the blowout preventer failed:

  • “BP failed miserably when confronted with a real leak, and ExxonMobil and the other companies would do no better.” — Chairman Waxman, June 15
  • “It could be said that BP is the one bad apple in the bunch. But unfortunately, they appear to have plenty of company. Exxon and the other oil companies are just as unprepared to respond to a major oil spill in the Gulf as BP.” – Chairman Stupak, June 15
  • “Yet when you’re asked can you stop the massive quantities of oil that are now ruining the beaches and marshland, killing the wildlife, and devasting the economy, you [BP, ExxonMobil, Chevron, Shell, ConocoPhillips] say no. You say you’re not well equipped to deal with it, and these catastrophic impacts are simply unavoidable.” — Chairman Markey (hearing transcript, pp. 220-221), June 15

The implication is obvious: The federal government “shall not” issue any more permits for offshore drilling, because nobody knows how to “promptly stop a blowout in the event that the blowout preventer and other well control measures fail.” Rep. G.K. Butterfield (D-N.C.) put it this way: “BP ignored a very simple rule. If you can’t plug the hole, don’t drill the well.” But, as the BP disaster shows, some holes cannot be plugged, at least not in time to prevent gigantic spills. Logically, the bill implies that no permits to drill should be granted and that existing permits should be revoked.

How might Chairmen Waxman, Markey, and Stupak reply to this criticism? [Read more →]

June 30, 2010   6 Comments

Obama’s BP Time (“We’re from the government and here to help you”)

The current oil spill, like the financial crisis before it, has given ammunition to those who believe that the free market is dangerous and that deregulation leads to crises. President Obama, in his June 15, 2010, address to the nation, specifically blamed the lax oversight of BP’s operations on a “failed philosophy that views all regulation with hostility — a philosophy that says corporations should be allowed to play by their own rules and police themselves.”

This gets to a core debate between Left and Right[1] but overlooks the real nature of the problem. For many on the Right, government is the problem, while many on the Left see government as the solution. (This holds true in many different policy areas, from health care to industrial policy, among others.) But a major part of the problem is not government bias or objectivity, but rather government competence, which is not being addressed by most commentators.

Without a doubt, the ‘anti-government’ ideology that has been trumpeted by many on the Right is flawed. There are many things that government should not do, some of which are promoted by those on the Left. The failure of the Mineral Management Service to oversee the safe operation of the Deepwater Horizon (and other operations presumably) in an appropriate manner certainly highlights the fallacy of the belief that industry can regulate itself.

No doubt, this attitude amongst political appointees in the agency put in place by the Bush Administration played a role in creating this shortcoming, and the recent revelations about cozy relations with industry (including sex and drugs, even better than money!) have been repeatedly cited to confirm this. [Read more →]

June 23, 2010   6 Comments

The BP Spill: Self-Regulation, Public Property, and Political Capitalism

[Editor note: Some important facts are emphasized in this post: the Gulf oil spill occurred on property owned and managed by the federal government, and the operator-at-fault (BP) has been the most politically active in its industry. Sheldon Richman is editor of The Freeman magazine and www.thefreemanonline.org, where this article first appeared.]

With some 7,000 barrels of oil spilling into the Gulf of Mexico each day from BP’s exploded Deepwater Horizon well, offshore drilling and oil-industry regulation have returned to the front pages.

The familiar old trap is set: Do you want unfettered markets and oil spills or government regulation and safety?  The implied premise is that the oil industry operates in a free market. So, the argument goes, the only alternative is government regulation.

On first glance that story is plausible.

From USA Today:

The company that owns the offshore well spewing crude oil in the Gulf of Mexico and other major oil companies spearheaded a campaign to thwart a government plan to impose tighter regulations aimed at preventing similar disasters, according to government records.

Tighter regulations would have required that drillers perform independent audits and hazard assessments designed to reduce accidents caused by human errors, but the federal Minerals Management Service (MMS) has so far not imposed the rules in the face of near unanimous opposition from oil companies.

Oil executives — including BP, which leased the rig that exploded April 20 — argued that the industry had a solid environmental record and most companies had voluntarily adopted similar safeguards to protect against a major spill. They also said the new rules would have been too costly.

So: the MMS wanted to regulate, but the industry said it could regulate itself at lower cost, insisting it was a good steward of the environment. This is not to say that MMS was right and the companies wrong. For reasons provided below, government regulation is fatally flawed. Further, this is not just a simple matter of regulation. More fundamentally it’s a matter of ownership. The government has proclaimed itself the owner of the offshore positions where oil companies drill. In a free market those positions would be homesteaded and managed privately with full liability. In the absence of a free market and private property, built-in incentives that protect the public are diminished if not eliminated. Bureaucrats and “political capitalists” are not as reliable as companies facing bankruptcy in a fully freed market. [Read more →]

May 27, 2010   5 Comments

Turning Tragedy into Triumph (BP Gulf oil spill)

April saw two devastating disasters in the energy industry: a methane explosion at the Upper Big Branch mine in Montcoal, West Virginia that claimed 29 lives, and another explosion at the Deepwater Horizon drilling rig in the Gulf of Mexico, which took 11 more.  The latter incident, because of the tens of thousands of gallons of oil now pouring from the ocean floor each day, will impact the Gulf region for years if not for decades to come. 

These tragedies are a terrible reminder of the trial-and-error nature of life.  Humans have accomplished many wonders over the millennia – wonders that ended the vicious cycle of crushing poverty that has been mankind’s lot throughout most of history.

But these accomplishments have often come at a very high price.  Because it is in our nature to strive to better our condition and that of our children, life will never be without risk.  As terrible as the consequences of failure can be, it brings with it the seeds of hope.  Hope that we can learn from our mistakes and, if not succeed next time, at least not fail in the same way.  From such tragic lessons come knowledge and strength. [Read more →]

May 3, 2010   10 Comments