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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

BP: socializing the damage costs « Previous | |Next »
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.

LoomisRBPoilspill.jpg 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.

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.

| Posted by Gary Sauer-Thompson at 12:52 PM | | Comments (11)


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.

If there are few photos of dead wild life getting out, and media access is denied, then BP must have the Louisiana politicians in their pocket. Are there other explanations?

All well and good (well, not really). Anyway that's the way the world works, eh?

But it would be a whole lot easier to take if the likes of Andrew Forrest, Gina Rinehart and Clive Palmer didn't try to play the "powerless victim" card quite so often. Seriously, what a bunch of flippin whingers!

President Obama has become the most visible political casualty of the BP oil spill. He's not doing enough. He trusts BP too much.

Ah but mars these people truly and sincerely believe they are uniquely talented individuals without whom progress will be impossible. It's laughably egotistical I know, but having dealt with senior managers most of my working life I can testify that is how they think. They see themselves as heroic figures, battling the forces of mediocrity to Make Things Happen.

Forrest I recall promised a couple of years ago to create jobs for 50,000 indigenous Australians. Single-handedly, using the extraordinary combination of gifts that made him one of the heroes of Australian business. No of course he hasn't done it but that's beside the point ... in his own mind he has the power to do it and that is all that matters.

See also: Alan Bond, John Elliott, Rene Rivkin, Laurie Connell, etc etc

BP reported the seemingly good news that a containment cap installed on the wellhead was funneling some of the gushing crude to a tanker on the surface, BP then introduced a whole new new set of plans mostly aimed at capturing more oil.

I see what you mean, Ken.

The events of the last few months has got me thinking of a word which was used quite often when I was active at "demockracy". Sad to see it's still a useful description.

Bobby Kennedy is supposed to have said "There are those who look at things the way they are, and ask why... I dream of things that never were, and ask why not?"

We all know that talk is cheap these days. Yet some of us are stunned that we feel disillusioned.

The shine is quickly going off Obama. Have a look...

Dickinson points out that the Obama administration has been in favour of the greatest expansion of offshore drilling in half a century, went along with the politics of "drill, baby, drill and pushed for new offshore drilling in the Arctic, the Southeastern seaboard and new waters in the Gulf, close to Florida. Obama stated that oil rigs today generally don't cause spills.

Obama may be struggling re credibility, but on the other hand, the oil crisis has knocked the wind out of the sails of the Tea party Movement's shouting about bailouts and vowing to ''take back the government.''

Joshua Green in The Atlantic says:

The Tea Party movement, animated by intense disapproval of government activism, has smacked up against an unprecedented environmental disaster that is providing a vivid daily illustration of why an activist government is sometimes necessary. There is little doubt about which force is prevailing. According to a recent CBS News poll, a majority of Americans now oppose offshore drilling, and nearly two-thirds say Obama should be doing more to stop the spill. This desire for more aggressive government action is the antithesis of the Tea Party ethos, and poses a problem for a movement that had recently been gaining steam.

Obama's strategy has been to pick a fight over oil and attempt to draw a distinction between his own beliefs about the role of government and those of the Tea Party and its fellow travellers in cable television. He's also started talking about clean energy.

Does he actually mean it?

The pretty straightforward connection between the unavoidable environmental hazards of drilling for hydrocarbons below the ocean floor and America’s insatiable appetite for oil is b not being explicitly drawn.

The reason the Deepwater Horizon rig is there in the Gulf of Mexico is because the US consumes a quarter of world oil production even though it has only one-twentieth of the population.

Reducing US oil consumption would mean less deep-sea drilling, and less risk of another blow-out;

Peter Stock, it's quite likely that most of the wildlife is dying at sea, and won't make it to shore for months (if ever).

I don't doubt that BP has a few Louisiana politicians in its pockets, though.