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Environment

BP will pay for the Gulf oil spill, but will the rest?

The Magna Carta stated that “No man of what state or condition he be, shall be put out of his lands or tenements nor taken, nor disinherited, nor put to death, without he be brought to answer by due process of law.” Adopting that belief, the US Constitution’s fifth and fourteenth amendments guarantee both citizens and “legal persons” due process. With the creation of a USD 20 billion escrow account by BP that guarantee now stands null and void. Due process has been sacrificed in favor of maintaining the appearence of a strong Presidency.

To be clear, BP must carry substantial blame for what happened. And given the very public pressure on it, it is clear that BP will pay both now and later. Indeed, President Obama made it clear that the escrow account is “not a ceiling.” But there is plenty of blame to go around beyond BP. What of the others?

Let us start with the oil industry itself. BP has been criticized for being totally unprepared to handle this oil spill, despite having submitted contingency plans for a much larger spill. Yet, virtually the same contingency plan, prepared by the same consultancy, was submitted by all other companies. In short, nobody in the industry ever expected or planned for this spill.

What about the regulator? BP might have been at fault for not being prepared, but the regulators did little better. It is, after all their job to hold oil companies responsible for their preparedness and safety standards. But rather than ensure accountability, regulators have ensured confusion prevails, in order to keep the oil flowing. As the NY Times reported:

Deepwater rigs operate under an ad hoc system of exceptions. The deeper the water, the further the exceptions stretch, not just from federal guidelines but also often from company policy.

So, for example…when company officials wanted to test the blowout preventer, a crucial fail-safe mechanism on the pipe near the ocean floor, at a lower pressure than was federally required, regulators granted an exception, documents released last week show.

And finally, what about the American people themselves? Deepwater oil exploration started in the Gulf in the 1970s, but expanded in the 1990s after new technology made it possible. But it was also encouraged by federal incentives. At the heart of that expansion has been America’s addiction to oil. This is a general and global challenge – as easily accessible oil reserves are depleted, oil prices go up and US citizens complain about their commute getting more expensive. The US government then encourages oil companies to go deeper under the ocean and further into the wild for oil, and simultaneously encourages them to ignore its own regulations. 

Of course, when things go wrong someone must be blamed. So much the better if that evil is foreign and not the American President or the people themselves. Thus, rather than blame regulators who granted BP the fatal exception, President Obama has taken to bullying a foreign owned corporation. Quick to find someone to blame, and to score political points, the US Congress too has already found BP guilty. Yet, Congress conveniently ignored that for every safety rule that BP might have broken, it had federal permission to do so.

Ironically, the American government and industrial lobby have in the past protected American corporations guilty of massive damage abroad. As John Elliot points out, the US protected Union Carbide and its CEO Warren Anderson in the aftermath of the Bhopal gas leak in 1984.

Since then Anderson has been protected by the US business-political establishment from being extradited to India to answer for the appalling human and environmental damage wrought by his company’s gas leak in Bhopal a few days earlier. That was one of the world’s worst industrial disasters, leading to the death of over 5,000 people and continuing ill-health of over 500,000.

Now that same American establishment that has protected Anderson has been pillorying Tony Hayward, BP’s chief executive, following BP’s oil leak in the Gulf of Mexico. The tirade has been led by President Barack Obama, who has been behaving like a spoiled child for the past 50 or so days, casting around for someone to blame when it is his own officials who are primarily at fault.

The real tragedy in all of this is that the focus on finding someone to blame will prevent a fix of the problem. In particular, two issues will remain unresolved.

First, the regulators that encourage risky oil drilling will not be held accountable. By finding a single organization to blame, the US President has made it easy to explain the disaster: “BP was reckless.” Yet, such a simple explaination hides the truth – that at fault was a complex system of oversight and ownership – and prevents fixing what does not work.

Second, and more important, it hides the fundamental fact from the US public – that deepwater drilling is dangerous. If the US wants to avoid another Gulf disaster the only way to do that is by not drilling in the Gulf. And the only way to do that is to reduce America’s dependence on oil. Of course, that requires some difficult changes in America’s lavish lifestyle. But that is hardly a message President Obama can deliver to his public – that it is their lifestyle that led to the Gulf’s oil spill.

In “What’s wrong with democracy” Loren Samsons points out that a democracy requires leaders that are willing to challenge the popular will. This is a startling contrast to modern political leadership, as demonstrated by President Obama. The tragedy is that the political posturing of Obama and Congress will force us to repeat the mistakes that led to the Gulf oil spill. And those that are really responsible for it will not be held accountable.

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Discussion

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  1. Thanks a lot
    this is good Article. I want you will send me in future good article.
    With due Regards,
    Rekha Rathore
    Assist. Professor
    S.D. Institute of Mgt & Technology
    Jagadhri.

    Posted by REKHA RATHORE | June 21, 2010, 8:11 am
  2. “And the only way to do that is to reduce America’s dependence on oil. Of course, that requires some difficult changes in America’s lavish lifestyle. But that is hardly a message President Obama can deliver to his public – that it is their lifestyle that led to the Gulf’s oil spill.”

    Well said “Dweep Chanana”. The great oil glutton has contracted severe digestion pains in trying to satisfy its extravagent craving for the limited fossil fuel resource. So the managed diet that you prescribe seems excellent counsel.
    Ken Bromfield MBE

    Posted by Ken Bromfield | August 31, 2010, 3:36 pm
  3. Thanks Ken, though it seems few in the US see the obvious connection.

    Posted by Dweep Chanana | October 24, 2010, 2:46 pm
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