I don't want to write a long post on energy economics here. But whereas there's no doubt of a tragic impact of the out-of-control, ongoing ruptured deepwater well spill, up to 5000 barrels a day will have a political impact on offshore drilling: if we run into anything like the political overreaction to Three Mile Islands, which essentially halted nuclear power plant construction these past 3 decades, it could cripple our energy economy. I don't mean to underestimate the ecological and coastal economic impact of the spill, and I'm not excusing whatever BP errors were made, including the critical path for implementing a technical solution to contain the gusher. [My understanding is that there are two solutions currently under consideration: (1) a giant inverted funnel with oil being transferred to a tanker (up to a month); (2) relief wells (up to 2 months).]
Let me point out that (1) the BP well is not that only offshore well in the world and generally speaking most wells have never had a spill, and (2) this is the first notable spill since the late 1980's Valdez incident.
Many of the political reactions are obvious: there's going to be inevitable Big Oil bashing; the I-told-you-so drilling environmentalists/prohibitionists; not-in-my-backyard Gulf Coastal political populism, such as Crist's famous second thought on Gulf of Mexico oil drilling; predatory lawyers in search of a class action suit (name it--shrimp boat operators, etc.); and Congressional hearings, where politicians will take the politically courageous stand of saying they are against oil spills and of bashing BP management for incompetence or negligence. There will also be a likely delay, until past the mid-terms, on cap-and-trade given the use of offshore drilling as a sweetener to attract GOP support.
What interests me in particular is understanding why, with all the commercially successful implementations of offshore drilling, this one resulted in a disaster, and second, why it could take up to 6 weeks or so to implement a cap to mitigate the spill.
There's also the debate going on, which seems to be stimulated by Rush Limbaugh and other media conservatives, about whether the BP oil spill has become Obama's Katrina moment. The predictable progressive defensiveness is that only a few people have died because of the oil spill. That is a disingenuous comparison; there was an evacuation plan for New Orleans that the New Orleans mayor and Louisiana governor refused to implement BEFORE Katrina touched down and Bush pushed for an evacuation. (Don't forget--the levee system failed AFTER Katrina.) A salient point here is that Bush visited Louisiana within a few days of the crisis. Obama hasn't visited the area (yeah, he's dedicated other resources, but so did Bush; one of the clear successes of Katrina was the exemplary work of the Coast Guard).
Whereas it is admirable to have resources on the ground to clean the spill, I'm actually more interested in knowing why both BP and the US government seemed to underestimate the nature of the spill at the get-go, and it's not clear what the government's contingency plans are in the event of an offshore rig disaster. For example, DHS should have contingency plans against infrastructure attacks, and an offshore drilling well is highly relevant. Presumably offshore drillers have to submit contingency plans for incidents to various government regulators.Either there were plans or there weren't; if not, why not? If there were plans, what went wrong in this case? I made similar criticisms about Katrina: I mentioned about how I would have had regular status: basic overview of operations, objectives, deliverables, milestones, status reports, etc.
I'm not necessarily asserting these things aren't happening here--but for a media-savvy administration, if they are doing these things, they are doing an incompetent job communicating them. I simply think this fits a well-defined pattern of Obama analysis paralysis--remember his wavering response to the Russian invasion of Georgia back in the summer of 2008? Remember his response to the staffing request for the Afghanistan surge?
Obama: The "Dangers of Too Little Government"?
Quote of the Day, John McEnroe, Tennis Pro: "You Cannot Be Serious"
Never underestimate Obama's capacity for topping his last rhetorical absurdity. We have the following extract from Obama's commencement address at the University of Michigan:
Government is what ensures that mines adhere to safety standards and that oil spills are cleaned up by the companies that caused them. We've also clearly seen the dangers of too little government, like when a lack accountability on Wall Street nearly leads to the collapse of our entire economy.Unless what Obama means by "the dangers of too little government" is what motivated Arizona to create its own state legislation due to Obama's failure to control chaos at the border, he is delusional. "Lack of accountability on Wall Street"? Since when, Mr. Obama? There's something called a "quarterly report" for publicly-traded companies. Where is the quarterly report for Washington DC? We have to wait 2 years to dump a Congressman, 4 years to dump a President, and 6 years to dump a Senator. Do you seriously want to claim the problem is "too little government"? What kind of government helps? The kind of government that promises pensions on the state and local level across the US, resulting in bankruptcies? The kind of government which has piled up a national debt almost equal to our GDP? The kind of government which protected us in Pearl Harbor, Oklahoma City and 9/11? The kind of government that has piled up over $40T in unfunded mandates for Medicare and social security? The kind of government that implicitly guaranteed expansion of the GSE's from around 6% to half of the mortgage market?
What Obama the Demagogue fails to mention that mines are not unregulated and neither are oil companies. If the government was perfect, we would never have had the Columbia shuttle disaster, we would never have invaded Iraq in 2003, we would not have had levee failures post-Katrina, and we would never have allowed predatory borrowers during the real estate bubble. Government regulation is not intrinsically good or efficient. It may result in unintended consequences.
Businesses are not perfect. Sometimes they fail. It's a consequence of taking risks. Ford made some financial decisions that let it ride out the recession without a government bailout; Chrysler and GM didn't. Was Ford's success due to government regulation or managerial competence? If it was government regulation, why didn't the same government regulation save Chrysler and GM? What we need to do is support what make Ford succeed--which was not government.
Political Cartoon
Eric Allie illustrates the ever-expanding pro-regulatory/anti-growth tentacles of the Obamapus.
Quote of the Day
A great pilot can sail even when his canvas is torn.
Seneca
Musical Interlude: "Standing" Songs
Elton John, "I'm Still Standing"
The Beatles, "I Saw Her Standing There"
Four Tops, "Standing in the Shadows of Love"
Jewel, "Standing Still"
