June 11, 2010
And Obama deserves his share of the blame for letting it happen on his watch. But it is extremely hypocritical of the drill-baby-drill crowd to frame it as a failure of government, or "Obama's Katrina".
Had the administration cracked down on offshore drilling practices before the disaster, Obama would have been assailed for government interference in free enterprise, job-killing overregulation, etc. — all the familiar arguments. Even now, as the BP well spews out of control, drilling proponents complain that any moratorium will kill jobs.
A failure of government, sure. But don't turn around and argue for government to continue to fail in exactly the same way.
This drill-baby-drill thinking ignores the economic externalities, the costs that don't show up on the balance sheets. Drill a well and the oil company makes money, the government collects a nominal royalty (maybe!), workers have jobs, the nation's need for energy is met (to some small extent). But there are consequences and costs beyond this narrow accounting. Obviously the Gulf spill is going to have billion-dollar impacts on the economies of the Gulf states — on fisheries, tourism, property values, jobs, long-term health costs. BP and/or the government may pick up part of the tab, but expect Gulf state residents to bear a large share of remaining costs.
Of course, there is no dollar price that can be placed on the damage to the coral reefs, wetlands, plants, animals, and beaches of the Gulf, which will be fouled for genrations to come.
And even if Deepwater Horizon had been successful, the long-term costs of releasing its carbon into the environment would not have shown up on anyone's balance sheet.
BP was doing what corporations normally do, gambling that they could get away with taking a few risks in order to maximize profits. It is up to government to take the wider view and protect the public interest vs the narrow corporate interest.
Government has a preventive role here. If anyone should argue that government should play a remedial role — get into the business of plugging oil gushers — we need to ask how much that would cost, and how much it would add to the budget deficit that everyone is so worried about. Actually, given BP's reseponse so far, maybe it wouldn't be a bad idea to create a Deep Sea Drilling Administration within the DOE and outfit it with the technology necessary to drill wells and control gushers. But that might be seen as "socialism" in some quarters.
Meanwhile, Obama, and all of us, can only wait for BP to contol the well, which, before the accident, everyone agreed was perfectly safe and presented no risks that couldn't be managed, down there, 5,000 feet below the sea.