BP says it will pay for all the cleanup costs from the catastrophic oil spill from its rig in the Gulf. We’ll see. Remember the Exxon Valdez. BP Chief Executive Tony Hayward is a turnaround guy, brought in three years ago as the oil giant faced, among other things, one of the worst safety and environmental records among the majors. So far, Hayward is saying all the right things, including accepting responsibility, something unusual in his trade. But the ultimate costs could be in the billions.
The spill exposes harsh realities. Extractive industries are messy and dangerous. As the easily reached oil becomes more scarce, what remains is harder to get, costlier to refine, and, as with high-pressure, deepwater drilling, carries bigger risks. Neither BP nor America is “beyond petroleum.” We want to drive, baby, drive. Even with the scary gasoline prices of a few years ago, which will return, transit systems around the country are facing funding crises while road building and saving GM and Chrysler formed the foundation of the Obama stimulus. Americans like their cars and most can’t imagine another way of arranging their lives. They may also want the idea of pristine shores and wetlands, but that’s like wanting a pony. In the end, drilling will prevail, even if it won’t fix the fundamental problem of world demand outstripping production.
Unlike the North Sea oilfields, American offshore drilling and production are lightly regulated with much voluntary, industry driven “compliance.” The energy sectors have almost as much money to lobby Congress as the big banks, maybe more. So the disaster in the Gulf is not surprising. The $500,000-per-rig automatic blowout preventers required in the North Sea would have shaved too much off profits, so they weren’t mandatory here.
So will the spill cause such a change in public opinion than it brings a fundamental shift in our thinking? You tell me.
Today’s Econ Haiku:
Thousands of lost jobs
Fliers get fewer choices
United we stand