Four critical errors in the gulf

Andrew Langer President, Institute for Liberty
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Missed warning signs

As the gulf oil spill saga continues, it is important to reflect on the decisions that have brought us to where we are today. Regulators and some in Washington allowed one foreign-run company, BP, to continue operating even though time and again the company failed to uphold the industry’s accepted safety standards. Between 2007 and early 2010, OSHA cited BP for almost 800 “egregious, willful” safety violations.

Each of these violations occurred before the gulf spill and demonstrates that BP was consistently ignoring safety concerns. OSHA safety records illustrate a systemic problem in BP’s culture regarding the safety of its operations and workers. BP’s major disasters in recent years such as Prudhoe Bay and the Texas City refinery explosion were clear warning signs that BP had fundamental problems in its operations. BP is, without question, the industry’s safety outlier as it has time and again failed to implement the rigorous standards that its industry peers implemented to keep their facilities, environment, and the public safe.

BP’s lack of responsibility however should not lead one to believe this is an industry wide practice. The oil and gas companies have followed industry practices and standards that are more rigorous than those set by the U.S. government.  These rules and regulations have been effective and have allowed the industry to operate successfully.  BP is the only exception to an otherwise accountable energy sector. Most energy companies have gone to great lengths to ensure they meet or exceed the proper safety standards. A recent info-graphic by the American Energy Alliance demonstrates the vast difference between industry safety standards and BP’s practices. BP simply did not adhere to industry safety standards and records show that the gulf spill could have been prevented if the company had simply followed the same guidelines as others in the energy field.

Politics over policy

The non-partisan Center for Responsive Politics has reported that Barack Obama was the leading recipient of political contributions from BP employees in the last election.  Obama also nominated in 2009 Steven Koonin, then BP’s Chief Scientist, as Under Secretary for Science in the Department Of Energy. Longtime BP Executive Sylvia Baca was appointed Deputy Assistant Secretary for Land and Minerals Management by the Obama administration.  It is also known that under the Obama administration, the Minerals Management Service (MMS) approved BP’s environmental impact and exploration statement for the deepwater site. These close connections between the Obama administration and BP may have made for good politics but certainly lead to poor judgments and bad policy.

Missed Economic and Policy Priorities

The oil spill has been a devastating blow to those living in the Gulf states. However, this tragedy has lead some in Washington to believe that it is the right time to issue a moratorium on deepwater drilling. Contrary to what the White House has said, halting offshore production is costing the region high paying jobs and driving away employers. In a weakened economy this moratorium would only bring further economic pain to those in the Gulf Coast that have already endured so much.  This policy would place devastating economic hardships on families trying to pay mortgages and put food on the table.

The moratorium championed by the Obama administration would force oil and gas corporations to take their operations elsewhere. These facilities, investments, and high paying jobs would end up in foreign waters.  Threats of a moratorium have pushed companies such as Anadarko to announce their intentions to remove significant portions of their operations out of gulf waters and to relocate in foreign waters. Suspending production activities and relocating major drilling facilities will have a crippling impact on employment and the economy of Gulf states.

Public policy is about making choices–and the only way policymakers can make the right choices is if they prioritize them properly. Because those who make drilling policy refuse to properly assess and compare risks, they cannot prioritize, and thus make bad decisions. In this case, the quest to ameliorate risks associated with drilling in shallow water near the shore failed to recognize the potential risks associated with drilling in deeper water. A blow out can be controlled in 500 feet, but it becomes impossible to do so in 5,000 feet.

President Obama’s policy would not only influence the bottom line of oil companies but also those that work as vessel operators, dock workers and the numerous other jobs that assist energy extraction.  Right now with far too many out of work in the Gulf we must be thinking of ways to create jobs and stimulate the American economy, not send these opportunities elsewhere.

Oil spill commission

In order to ensure that an accident such as the gulf spill is not repeated, the government must carefully and objectively investigate what went wrong. To many the answer is simple: BP was out of line and should be punished. But, even though the Obama administration established a commission to lead this effort, those appointed are far from the right folks for this important job.  Richard Lazarus has been named Executive Director of the commission even though he lacks any technical expertise in the energy industry. Lazarus is an environmental lawyer whose resume includes arguing cases before the Supreme Court on behalf of environmental interests.

The commission needs individuals with a deep understanding of engineering and offshore drilling. A technical background would allow them to pinpoint where BP made mistakes and how to prevent future accidents. Unfortunately almost the entire commission is deficient in the technical expertise needed to find the root cause of the BP spill. America deserves an objective commission not the partisan politics that are slowing down the clean up process in the Gulf.

These partisan policy moves are further evidence that the White House is anti-business and would rather score political points than solve the economic pain that people in the Gulf are feeling. The reality is that punishing the entire oil and gas industry because of one Bad Player (BP) is both bad policy and bad politics.

Andrew Langer serves as president of the Institute for Liberty, a DC-based non-profit organization dedicated to defending America’s small businesses.