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Monday, May 31, 2010

OIL AND POLITICS

     There's no question that the BP oil spill in the Gulf is a disaster of monumental proportions. Attempts to stop the flow of oil have so far been unsuccessful and the actual damage to the coastal environment and the economies of the area can only be estimated. But, almost since the giant rig burned and sank, the politics of the event have taken off in erratic bursts like so many rockets and flares in a Fourth of July fireworks display; more characterized by heat and intensity than by substance and thoughtful choices. In this current political environment, caution, thorough analysis and attention to the "law of unintended consequences" should be foremost.


     The anti-business Left sees this disaster as a rallying point. "Corporate greed" is the simplistic and ubiquitous mantra chanted by these commentators as if it explained all we need to know about this and possible future spills. Early investigations indicate the proximate cause of the blowout was human error on the rig. Bad decisions made earlier with respect to the procedures and equipment make no sense in terms of major costs savings ("corporate greed") vs. putting a 560 million dollar rig and a producing well worth millions more at risk. Energized by other's misfortune, the super environmentalists and proponents of big government regulation, are already talking about the end of deep water drilling and some would even terminate production on existing wells in the Gulf. There is an increasing drumbeat of criticism of Obama for not showing enough anger and using the presidential pulpit for blatantly political theatrics. Others on the Left are irresponsibly exhorting the public to "take to the streets" in mass protest against BP and the always "evil"(since it's past association with Dick Cheney) Halliburton. What either of these "responses" would hope to accomplish isn't identified.

     Some basic facts suggest a more cautious approach. First and obviously, the well must be capped. Then the technology can be generalized to the off shore drilling industry as a whole and the appropriate government regulations for both prevention and mitigation of future accidents can and should be put in place. The ideological blame game is pointless and divisive. Blaming "Bush-Cheney deregulation" for their "friends in the oil business" has become a stale cliché. Clearly the cozy relationship between the industry and it's regulators is inappropriate but it was Obama's head of the Minerals Management Service that was fired after the recent revelations of lack of diligent supervision.

     The resolution of the BP situation in the gulf has already produced a moratorium on future federal off shore drilling leases and will make it much more difficult to persuade governors of affected states to cooperate, but the future of offshore drilling in the U.S. comes up against several important facts. Current critics are often the same voices claiming that we need to "reduce our dependence on foreign oil" and sending dollars to dictators i.e. Saudi Arabia and Iran. Ignoring the fact that most of the foreign oil imported by the U.S. comes from Canada, Mexico and Venezuela, these critics also ignore the fact that the Gulf of Mexico provides almost thirty percent of U.S. domestic production.

     It is simply unrealistic to think that "renewable energy sources" i.e. windmills and solar panels which are used to produce or replace electricity production, can have a significant impact on the need for fossil fuels for decades. Electricity will not drive the transportation industry i.e. trains, planes, ships, and is still years away from having a large impact on automobile use, in spite of the growing trend in the production of hybrids. In the short and medium term, natural gas, which the U.S. has in abundance offers the best alternative to oil and coal based electricity. It also offers the potential for a viable alternative to gasoline powered vehicles. In the long term, nuclear power generation offers the greatest potential.

     The U.S. needs a "comprehensive" energy strategy which includes all the assets currently available; nuclear electrical generation, natural gas, clean coal, wind and solar but also the careful and unpoliticized exploitation of oil resources.

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