6 ms·
BP knew for weeks in advance of the explosion that the well was unsafe, and had deliberately dialled-down the federally-required tests they were running on the
by seldo 16y ago
BP knew for weeks in advance of the explosion that the well was unsafe, and had deliberately dialled-down the federally-required tests they were running on the well, which strongly suggests they knew it wouldn't pass the real tests:
http://www.nytimes.com/2010/05/30/us/30rig.html http://www.nytimes.com/2010/05/30/us/30rig.html
This is not an engineering puzzle; good engineers in the oil industry have been drilling much deeper wells than this for years:
http://www.wired.com/cars/energy/magazine/15-09/mf_jackrig http://www.wired.com/cars/energy/magazine/15-09/mf_jackrig
http://factoidz.com/the-deepest-offshore-oil-rig-in-the-world-the-perdido-spar/ http://factoidz.com/the-deepest-offshore-oil-rig-in-the-worl...
http://en.wikipedia.org/wiki/Oil_platform#Deepest_oil_platforms http://en.wikipedia.org/wiki/Oil_platform#Deepest_oil_platfo...
This accident is the result of greed and a failure of regulation; an economic and political problem. Once we have found the engineering solution to shut down this well, the pressure to prevent it happening again must focus on politics, not technology.
- ojbyrne 16y agoBut I thought regulation was always bad? Isn't that the consensus here?
- seldo 16y agoI would love to hear the libertarian defence of a private enterprise's accident that is putting thousands of people out of work and destroying an entire coastline's worth of ecosystems.
- mynameishere 16y ago#1 On the whole these wells are net positive. #2 It's the government capping BP's liability. Not a libertarian, but please.
- anigbrowl 16y agoAgree with #1. but on #2, that $75m liability cap is a crock - it only applies in cases where there has no been gross negligence or willful misconduct. If it can be shown that BP lied to the MMS or created the situation by failure to comply with regulations (even if they started complying once they realized they had trouble), then the limit doesn't apply. See http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_00002704----000-.html http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_0... subsection c.
- andreyf 16y agoI'm not a libertarian, but I imagine a libertarian plan might include the privatization of parts of the ocean and shoreline. When an spill like this happens, BP can then be sued for violating the rights of the owners of the clean ocean surrounding the rig, and the damage they've done to the shoreline. As long as the shoreline is public property, they can get away with convincing senators and bureaucrats that they'll spend $x on cleanup, donate $y to their campaigns, and that's that. If the cleanliness of the ocean/shoreline were privatized (those private rights enforced by courts), the threat of a lawsuit would lead to both more responsible pre-accident risk assessment on behalf of BP and a more responsible cleanup strategy.
- ojbyrne 16y agoIsn't tort reform and an ending to "frivolous" lawsuits one of the clarion calls of those same libertarians?
- mrkurt 16y agoUsually corporatists, not libertarians.
- jbooth 16y agoSplitting the hairs pretty thin at that point.
- mrkurt 16y agoReally? I don't think so at all. Libertarians are generally proponents of a whole swatch of changes that would knock large corporations in the US down a few pegs. That's in addition to greatly limiting the power corps have to do business by legislation.
- jbooth 16y agoWell, I'd say my picture of "what libertarians are proponents of" boils down to 3 categories or "levels of advocacy": 1) The "if we could remake the world", fully libertarian state -- I can see some libertarians agreeing with you about knocking corporations down a peg here, but many other "libertarians" that are basically supply-siders or mainline republicans with affectations that wouldn't. 2) The things libertarians actually advocate for as far as real-world policy, as in people lobby for these things and vote for candidates that espouse them. 3) The subset of those things that actually get traction Out of those, 3) winds up being an unabashedly pro-corporate set of policies advanced by the republican party and 2) actually seems to lean more pro-corporate than anti. YMMV. But I can see your point in regards to 1).
- bh23ha 16y agoWell you could calculate the total damage of a spill and personally charge everybody from middle managed up for it. If that's not enough, go after the share holders, even grandma Millie. But we can't do that, the whole point of LLPs and Incs. is to limit the investor's liability. This is partly why we have agency risk. This is why while I consider myself a libertarian, I still think we need competent and aggressive regulators in all the places where the market is not self-corrective. But I'm not sure how we could avoid regulatory capture for ever.
- deleted 16y ago[deleted]
- ewanmcteagle 16y agoWhy would a libertarian viewpoint defend this? Are you suggesting that this is happening because it's an unregulated industry? Also, what is the success criterion for number and severity of accidents before whatever approach to regulation has been taken can be judged a success? If any time an accident happens it requires throwing away the whole system that might be too high of a standard to work with.
- jeffreyg 16y agoThe libertarian belief is that BP is responsible for all costs incurred by its neighbors because of its actions. Your use of the word 'defense' here just shows ignorance.
- anigbrowl 16y agoIn passing, this is an example of where libertarianism breaks down as a practical alternative. How will you determine what these costs are? It might be simple if I have a fishing business in Louisiana, but what if I'm a bar owner who depends on the dollars of hard-drinking oil workers when they're on shore? What if I'm just depressed by the whole thing and miss work? There are millions of people living in that area, and the gulf coast economy is about 2-2.5 trillion. You simply can't handle every individual case in court, it's going to be a series of class actions. And without some kind of judicial standards for how those should be handled, the result will be arbitrary at best. Additionally, BP will argue that oil drilling is fundamentally risky and the residents of the area liked it when the going was good. So there will be further arguments about the degree to which it is really their fault. Again, without agreed standards in place the outcome of such wrangling will be arbitrary. Finally, whatever a court orders BP to hand over as compensation for its poor drilling practices is purely hypothetical unless there is some way of enforcing it; BP might just sink the remains the of the rig, announce the failure of its 'gulf operations subsidiary' and just turn its attentions to operations elsewhere, where they have never had an accident. Perhaps they'll just blame the whole thing on inferior oil workers in that region. So without standards for judging claims and liability, or mechanisms for enforcement of judgments, the situation will not be properly resolved. Those standards and mechanisms are the basis of laws, and we elect governments to serve as our agents in establishing and promulgating them.
- deleted 16y ago[deleted]
- ArturSoler 16y agoIn a libertarian society, BP would just need to compensate the owners of the properties directly affected (ocean and shoreline). Fishing business would then not pay those owners to operate in their property and lose an opportunity, but they are not owed anything, since those owners have no obligation of letting the fishing business operate in their property.
- Encosia 16y agoA Libertarian would probably point out that regulation played a significant role in this mess. The $75m liability cap gave BP incentive to continually act as recklessly as they did over the years. $75m is a joke compared to getting a new, high-production well up and running months or years earlier than if they were more cautious. Obviously, it wasn't a good gamble this time, but it should be no surprise they've acted as our rules and regulations incented them to.
- anigbrowl 16y agoForget about the $75m cap - it doesn't apply in cases of negligence or misconduct. That was only newsworthy when BP's 'oh no, what a terrible surprise' posture seemed credible.
- Encosia 16y agoThat liability cap does apply to negligence. It applies to any civil suits. However, it does not apply to criminal charges, and the DoJ has intimated that it may pursue criminal charges against someone in this. Even if the liability cap is pierced during this particular incident, that's still orthogonal to the impact it has had on the behavior of exploration up until now.
- anigbrowl 16y ago(c) Exceptions (1) Acts of responsible party Subsection (a) [incl the $75m cap] of this section does not apply if the incident was proximately caused by— (A) gross negligence or willful misconduct of, or (B) the violation of an applicable Federal safety, construction, or operating regulation by, the responsible party, an agent or employee of the responsible party, or a person acting pursuant to a contractual relationship with the responsible party (except where the sole contractual arrangement arises in connection with carriage by a common carrier by rail). [...] sounds pretty cut and dried to me. http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_00002704----000-.html http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_0...
- 16y ago
- silentOpen 16y agoThe protection of rights overrides the spectre of regulation. It is illegal for one citizen to kill another or even endanger another. Similarly, it should be illegal for corporations to endanger thousands and wreck ecological destruction on a wide scale.
- ojbyrne 16y agoDoesn't this preclude the manufacture of automobiles?
- j_baker 16y agoNo, but it does require the manufacturers to build in safety features.
- silentOpen 16y agoIt seems that the citizenry of the United States, the carmakers, and the government have come to an agreement on the regulation of automobiles. In addition to safety regulation compliance before sale is allowed, most states have emissions standards and complex road laws. Yes, automobiles have many negative externalities but they are distributed and stochastic. Arguably, it is actually the petrol that is directly responsible for these externalities as simply owning a car endangers no one and only has a sunk environmental cost. In the case of automobiles, we have, as a society, agreed that this is a good trade-off. In the case of industrial accidents, we have, as a society, agreed that the scale of the potential failure should be matched with commensurate concern for safety. BP clearly has difficulty controlling their risk and they should be held liable for that just as you or I would be held liable for causing an auto accident.
- philwelch 16y agoIt's the government's own highway infrastructure that causes the problem. The problem there is that government, vis a vis its role as provider of infrastructure, has enabled, incentivized, and encouraged the use of large numbers of automobiles--not that the private automobile industry is at fault.
- ams6110 16y agoRegulations are generally the after-the-fact reaction to irresponsible, negligent, or ignorant behavior. The problem is, the folks who think that more regulation is the answer seem to think that the government regulators are benevolent gods who themselves never make mistakes, are not subject to greed, corruption, political influence, negligence, incompetence, etc.
- RyanMcGreal 16y ago>the folks who think that more regulation is the answer seem to think that the government regulators are benevolent gods who themselves never make mistakes, are not subject to greed, corruption, political influence, negligence, incompetence, etc. Give me a break. When you've finished tearing that straw man to pieces, maybe you can seek out what real people who support effective regulation are saying about it.
- deleted 16y ago[deleted]
- rms 16y agoThe corporate death penalty exists and it is a shame that it is never practiced. See the case of multiple time convicted felon and statistical mass murderer Pfizer, where the law mandated a corporate death penalty, but the government hacked around that requirement. http://www.cnn.com/2010/HEALTH/04/02/pfizer.bextra/index.html http://www.cnn.com/2010/HEALTH/04/02/pfizer.bextra/index.htm... http://en.wikipedia.org/wiki/Pfizer http://en.wikipedia.org/wiki/Pfizer
- anigbrowl 16y agoI agree. BP is not an American company but I think it would be entirely appropriate to rescind their US licenses and freeze any assets possible. On the basis of similar episodes elsewhere it could take several months to bring the spill under control. Economically speaking, this may become as expensive to the US as 9/11.
- rms 16y agoYes, preventing BP from doing business in the USA would be a corporate death penalty.
- barrkel 16y agoNo, I don't think it would. It would increase the supply of oil to the rest of the world, and decrease the supply to the US, which would depress prices in the rest of the world and raise them in the US, which in turn would encourage other oil suppliers - other than BP - to sell their oil to the US, rather than outside it. The only way it would really harm BP would be if BP's share of oil production approached the US's proportion of global oil consumption, and even then, its effect would be to raise US oil prices. For similar reasons, the notion of relieving the US from its dependence on foreign oil is similarly meaningless. Oil is fungible, and the price of oil for the man on a US street will still be affected by events in the Middle East, even if not a drop of oil he uses comes from outside his own country.
- arethuza 16y agoMaybe not a death penalty, but a pretty serious wound: BPs total revenues in 2009 were $239 billion - of which about $130 billion was from the USA.
- mattmcknight 16y agoThat's a bit of a stretch from the Times article. Yes, they were trying to get the well under control, that's what they were doing when it blew up. Yes, the MMS approved lower pressure tests so it would be less risky to run the tests. I love how people act as if it were in Transocean and BP's interest for the well to explode, people to die, and the ocean to be poisoned. They didn't want this to happen. BP shareholders have already lost $52B. Transocean shareholders are down $6B. "Politics" is not a great way to solve this and the engineers on the rig were not driven by greed. For wells this deep, it looks like the risks are higher than estimates, and a relief well needs to be prepared. Human progress requires us to try new things. We learn what works, and what doesn't. We learn to price the risk.
- seldo 16y agoIt is absolutely in BP's and Transocean's interests for this well to explode and people to die. That's my point. Avoiding accidents by drilling more safely and expensively is not in the interests of BP and Transocean; it makes more sense for them to be risky, gamble 50 times on other wells, make 10x more than they would if they were doing it more safely, and use those profits to cover this one unlucky time. Forcing them to do it safely even though this makes the well 2x, 5x or 10x less profitable is the purpose of government regulation. In the case of the US oil industry, the regulator is corrupt, completely in thrall to the industry with no accountability. Hence, the solution is not about pricing risk -- BP have already done that, and this is the logical result. The solution is a regulatory one, which means a political decision.
- msmith 16y agoCan you cite the source that leads you to believe that BP stands to make 10x more profit by running a risky drilling operation? I find it hard to believe.
- seldo 16y agoMy numbers were for illustration. It doesn't need to be 10x more profitable, it just needs to be any degree more profitable and the unlucky event sufficiently rare that the profit of the successful wells outweighs the costs of the failure (also keep in mind that oil companies drill many, many unsuccessful wells, so a marginal increase in the cost of drilling an exploratory well is significantly magnified). Despite the costs of cleanup, we're not anywhere near the point where it makes sense for them to change their practices. BP made $4bn in profit last year, and current cleanup costs have yet to hit $1bn. They can get a lot, lot higher before they outweigh the profits of years of risky drilling.
- seldo 16y agoUpdate (I can no longer edit parent): the Wall Street Journal has a longer and even more damaging report on what was going on inside BP prior to the blowout: http://online.wsj.com/article/SB10001424052748704026204575266560930780190.html http://online.wsj.com/article/SB1000142405274870402620457526... In summary: they were doing it cheaply, and in a hurry, and skipped standard safety precautions, and ignored several warning signs.