Journal of Gov’t Failure: The Great Oil Spill of 2010 Part II

The failures of government that helped spawn this oil spill disaster just keep coming. Here is what I’m looking at so far:

  • Oil spill liability to private parties and the environment were capped at $75 million for responsible companies in 1990. This gave them less incentive to make responsible drilling decisions, believing that if things went wrong, they wouldn’t have to pay for damages greater than $75 million. But to be fair, BP has waived that liability, promising to reimburse all those damaged.
  • In 1995, the Republicans in Congress and President Bill Clinton in the White House signed into law the Deep Water Royalty Relief Act which incentivized drilling in deeper, more expensive, and more dangerous locations; the greater the estimated cost of drilling, the greater the royalty relief.
  • In 1998, President Clinton extended a moratorium on new leases issued by the Department of the Interior in the Gulf of Mexico. Oil companies were restricted from drilling in waters east of the Mississippi-Alabama border, constraining and pushing outward drilling leases.
  • According to the Wall Street Journal mandatory government models used by oil companies to predicting oil spill damages were never updated after 2004 and “gave very low odds of oil hitting shore, even in the case of a spill much larger than the current one.” This gave oil companies further misinformation to calculate risk and plan for worst case scenarios.
  • On top of the ethical scandals rocking the Minerals Management Services (MMS), the Obama Administration – in a futile attempt to save face – is seeking to rename the MMS to the Bureau of Ocean Energy Management, Regulation, and Enforcement. I see it more of an insult to my intelligence, but that’s just me.

Now it should be made clear that 100% of the responsibility for the spill rests on BP and their neglect for safety, and they should be made to pay for all damages they cause to both the economy and the environment.

Democrats will surely find it easy to point blame at previous Republican politicians (including their all-time favorite, President George W. Bush). Republicans could also make quick work of government bureaucracy and bolster their argument of its inefficiency, especially under Democratic leadership. But the truth falls somewhere in between. The federal government, spanning four presidencies and seven Congresses shares responsibility for fostering an unethical, unsafe, and irresponsible drilling environment.

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One thought on “Journal of Gov’t Failure: The Great Oil Spill of 2010 Part II

  1. CWS says:

    Very well laid out and researched (both this and the previous post), excellent work.

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