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June 10, 2010
BP gives the impression that the oil spill, which is in the process of trashing beaches, wetlands, wildlife ocean and fishing industry in the Gulf is the acceptable cost of doing business. The public deeply distrusts BP, with good reason, as its record to date has been cutting corners to make profits. BP (Bad Petroleum) is undoubtedly willing to cost the rest of the country a near infinite sum to preserve its future profits.
Rick Loomis, The oil slick in the Gulf of Mexico is seen from a helicopter, Los Angeles Times, May 6, 2010
The era of cheap oil is over and we need to question the energy companies, governments, regulators and the International Energy Agency who are continually overstating how much accessible oil remains in the ground. We may well have entered the peak in oil production.
So we need to question BP's narrative, rather than say we are pretty happy with a modern, fossil-fuel based economy. We can begin to do this in terms of the external costs of oil production. The BP oil spill is now causing political ripples in Washington, and damage control in the form of limited "media access to the coastline.
George Monbiot in his recent The oil firms' profits ignore the real costs in The Guardian addresses the environmental damage caused by BP's Deepwater Horizon oil spill in the Gulf of Mexico. He says that:
BP's insurers will take a hit, as will the pension funds which invested so heavily in it; but, though some people are proposing costs of $40bn or even $60bn, I will bet the price of a barrel of crude that the company is still in business 10 years from now. Everything else – the ecosystems it blights, the fishing and tourist industries, a habitable climate – might collapse around it, but BP, like the banks, will be deemed too big to fail. Other people will pick up the costs
The economic and environmental damage will be socialized. That is how capitalism currently works, and the energy companies will make sure that this business -as-usual continues.
This oil spill now poses a real problem for the Obama administration. It wasn't going away, and Obama needs to do something about it, even if he can't plug the leak, given the regulatory capture by BP.
Update
Business -as-usual means the corruption of the regulator---the Minerals Management Service the agency in the Interior Department charged with safeguarding the environment from the ravages of drilling.
Tim Dickinson in The Spill, The Scandal and the President says that this agency has been allowing big oil industry to self-regulate for years. Big oil, in effect, ran the corrupt agency in the sense that whatever Big Oil wanted, they got. The Obama administration failed to clean the regulator up and they kept in place the crooked environmental guidelines the Bush administration implemented to favor the oil industry.
Dickinson says that in the application that BP submitted for its Deepwater Horizon well only two months after Obama took office BP claims:
that a spill is "unlikely" and states that it anticipates "no adverse impacts" to endangered wildlife or fisheries. Should a spill occur, it says, "no significant adverse impacts are expected" for the region's beaches, wetlands and coastal nesting birds. The company, noting that such elements are "not required" as part of the application, contains no scenario for a potential blowout, and no site-specific plan to respond to a spill...Among the sensitive species BP anticipates protecting in the semitropical Gulf? "Walruses" and other cold-water mammals, including sea otters and sea lions.
Though walruses, sea otters, sea lions and seals do not live anywhere near the Gulf MMS gave the oil giant the go-ahead to drill in the Gulf without a comprehensive environmental review. This is Kafkaesque.
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It's how capitalism has ALWAYS worked. It stems from a Hobbesian world view in which victory belongs to the strong. The first to claim land were somehow or other entitled to own it, and to hell with everybody else. Capturing your own water was your absolute entitlement and if that meant everyone downstream died of thirst, tough. Anything valuable in your land was yours, and if you caused a bit of pollution getting it out, that's not your problem.
In many ways the history of developed countries consists of attempts to find non-violent ways to mediate between the interests of the owners of capital and the mass of ordinary people. There's never been any doubt that the owners of capital have the most power in this dynamic relationship, and that if the state tries to upset the power relationships too drastically, the owners of capital will take steps to restore their privileged position.