Deepwater Horizon & The Real Costs of Oil
The picture remained bleak last week after BP announced the temporary failure of its massive 98-ton containment device at the site of the ruptured MC252 oil well in the Gulf of Mexico. BP had projected that in a best case scenario the device could collect up to 85% of the oil spewing forth from the largest of the three leaks, which began after the explosion of the Deepwater Horizon drilling platform last April 20.Projected cleanup costs for the BP disaster are staggering, not to mention its devastating impact on local ecosystems, economies, and the morale of all those who call the Gulf coast home. It is already estimated that the London-based energy company will be footing a bill of upwards to $15 billion, with that figure rising as the spill intensifies.
For three weeks now, Transocean Ltd. (the world’s largest offshore drilling contractor and owner of the Deepwater Horizon rig), British Petroleum, government officials, environmental groups, and concerned citizens around the world have been asking themselves, “what could have been done to prevent the spill from reaching such catastrophic proportions?” Recent developments reveal that the answer is to that question is “a lot more than many are willing to admit.”
In a recent appearance on the MSNBC program Hardball, Congressman Edward Markey of Massachusetts referred to the excessively permissive relationship between the oil industry and the Bush-Cheney administration. Former president Bush, vice president Cheney, secretary of state Rice, and commerce secretary Evans all came to the presidency with prominent ties to several renowned American oil companies including Halliburton, Chevron, and Tom Brown Inc.
Several of the federal government’s concessions to the oil industry have been made public over the past decade, but Congressman Markey’s recent comments revealed how the past administration’s nonchalant stance on the risks of a petroleum driven economy may have directly lead to the current ecological disaster.
Markey referred specifically to the last presidency´s decision to opt out of installing remote controlled devices capable of shutting off oil flow in case of emergency—not unlike the current dilemma now facing the Deepwater Horizon Unified Command team in the Gulf of Mexico.
“…the Clinton administration recommended, for example, that an acoustical trigger that would have made it possible to shut down the well by remote control, be installed as an essential piece of equipment,” said Markey.
“But when the Bush-Cheney administration took over, they made a determination that it was too costly to build in that extra safety precaution. And, again, when there is an assumption that an accident cannot occur, $500,000—which is what that acoustical trigger would have cost—seems very expensive.
“But when 5,000 barrels per day are spilling out into the Gulf, destroying people‘s livelihoods, it doesn‘t seem that costly at all. And so that was the ethos that existed inside the Bush-Cheney era. And I‘m afraid we‘re now living with the consequences of those assumptions.
Governmental neglect did not die out however even as the Obama-Biden administration came into office pledging major environmental reform and transparency. A May 7 report on the independent news program Democracy Now! detailed the current scandal involving Secretary of the Interior Ken Salazar as uncovered by the Washington Post and the Center for Biological Diversity in Tucson, Arizona.
According to the report, the Mineral Management Service (MMS)—the federal agency that manages U.S. natural gas and oil reserves—granted BP a “categorical exclusion” from a full environmental risk assessment before giving the company the go-ahead to begin offshore drilling at the Deepwater Horizon platform just over a year ago.
MMS waived the assessment by using a loophole in the National Environmental Policy Act intended for minimally intrusive environmental projects such as building outhouses and hiking trails. Kieran Suckling, executive director of the Center for Biological Diversity, explained the escape clause:
“Well, when a federal government is going to approve a project, it has to go through an environmental review. But for projects that have very, very little impact like building an outhouse or a hiking trail, they can use something called a categorical exclusion and say there’s no impact here at all so we don’t need to spend energy or time doing a review.
“…[W]e looked at the oil drilling permits being issued by the Minerals Management Service in the Gulf, and we were shocked to find out that they were approving hundreds of massive oil drilling permits using this categorical exclusion instead of doing a full environmental impact study.
“And then, we found out that BP’s drilling permit—the very one that exploded—was done under this loophole and so it was never reviewed by the federal government at all. It was just rubber-stamped.
Ironically, the MMS website states that the government agency “…plays a key role in realizing President Obama’s and Secretary Salazar’s vision for energy security for the 21st century. Under their leadership, MMS has already begun the enormous work of implementing that vision—by continuing to support safe development of conventional energy sources [emphasis added] while also moving this nation toward a clean, renewable energy future.”
News of the Salazar incident is disparaging at best and only goes to show that America’s dependency on oil transcends political parties and promising reform slogans.
America’s résumé of major environmental mishaps even made headlines on Wall Street recently. An article in The Wall Street Journal’s Market Watch even attributed the birth of default credit swaps, which played a major part in the recent meltdown of the U.S. economy, to the 1989 Exxon Valdez oil spill off the coast of Alaska.
"After the Exxon Valdez spill, an Alaska jury demanded $5 billion in punitive damages from Exxon…[t]he thinking at the time was that the giant oil company should forfeit roughly a year's worth of profits,” read the article.
“Exxon moved to protect itself by raising a $4.8 billion credit line from J.P. Morgan…to protect itself in turn from an eventual default by Exxon, [J.P. Morgan] came up with a novel financial instrument called the credit default swap. Now a $30 trillion international marketplace, credit default swaps were also at the core of the global financial market's biggest blowout in decades.
Looking Forward
Is America’s past and present unwavering dependency on oil worth really worth all that? Further reliance on oil, coal, and nuclear power only leave the door open to future catastrophic occurrences like that of the Gulf Coast. Clean, distributed energy production offers real solutions that avoid altogether jeopardizing the welfare of the planet and its people.
Many perceive the catastrophic nature of the Deepwater Horizon oil spill to be merely a sign of the times. May the current crisis open America’s eyes to a system in crisis; may the nation and its leaders come together and demand a more sensible and sustainable way of living that serves as an example to the rest of the world and guarantees a clean future for generations to come.
