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Leave poor BP alone

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets.

There are two troubling ruptures in the earth's crust at the moment. Because of one of them, petition writers are having a field day with poor BP. Hysteria is good for whipping up angry mobs, but bad for rational policy.

Like a fat kid who farted in class, BP is getting bullied by the kind of people who bully their successful but vulnerable peers. Granted, BP did fart, loudly, and in the front row to boot. But does that really merit all the invective that is hurled at it?

After all, oil spills happen. They don’t happen nearly as often as they used to, but expecting no accidents at all in any field of human endeavour is to expect the super-human. We should attempt no production, no progress, and no pleasure, if we are unwilling to risk accidents.

We continue flying, even though an occasional aircraft crashes. We continue driving, even though car accidents are relatively common. We live on fault lines and in the shadow of volcanoes, although we know a big one is due. We go shopping, even though we risk muggings or armed robberies. We go hiking and mountain climbing and cycling and rugby playing and sailing and diving, even though we know serious accidents can happen.

Without risk, there would be no reward, and no possibility of prosperity. This is true whether you’re a subsistence farmer risking injury, illness, drought and pests, or a corporate banker risking default or a market collapse.

This is not to make light of the Deepwater Horizon oil well blow-out in the Gulf of Mexico. Eleven people died in the disaster, and many more were seriously injured. BP’s shareholders have taken a massive knock, and the cost of a clean-up, regulatory fines and civil damages will put a serious dent in the company’s coffers.

Oh, wait, you didn’t expect to read about the human and economic costs of the accident? I know, the eleven dead workers don’t feature prominently in the headlines. Sorry. Let’s talk about the birds and the fish, then.

Already, petitions are doing the rounds to call on the US government to halt off-shore drilling and invest in “clean energy” instead.

Citizens are perfectly free to encourage private energy companies to make such investments by, say, actually buying their “clean energy” products, so one wonders why  an over-indebted government should spend taxpayers’ money on doing what taxpayers choose not to do themselves. But that’s a topic on its own.

The global economy is suffering greatly because of the collapse of credit-fuelled bubbles built on government guarantees, easy interest rates, and inflationary monetary policy. Don’t think we’ve seen the worst. The housing crash will likely be followed by a commercial debt crash, and that in turn will be trumped by a global sovereign debt crisis the likes of which we’ve never seen. Again, the solution – returning to the gold standard and abolishing central banking – is best left for another day.

However, in the teeth of such an economic gale, it is pure lunacy to reject cost-effective and relatively safe forms of energy in favour of expensive alternatives. Doing so will not make the poor any richer.

So, for the purposes of this column, let us accept that fossil fuels are an economic necessity, and will remain so until they become too expensive compared to alternative sources of energy.

Almost everyone I speak to appears to be taking for granted that drilling holes in the ocean floor to extract those necessary fuels is dangerous, irresponsible or undesirable. This notion is, quite frankly, wrong.

For a start, if Americans do not drill off-shore, someone else will. Those people are more likely to be contemptuous of the high-minded niceties demanded by comfortable elites who luxuriate in expensive idealism. Whether in terms of occupational health and safety or in environmental standards, they may not live up to the standards set by the Western oil majors.

That oil drilling is much safer than it used to be should also not be in dispute.

Since the infamous Santa Barbara well blow-out of 1969, which fouled the rich folks’ beaches and turned public opinion against offshore oil rigs, the US has drilled over 50 000 wells. Only 13 significant spills have occurred. Of those, only two could be called major, and both of them happened 40 years ago. None caused the kind of damage that the 1969 spill caused. While each spill is a problem, this record does not spell apocalypse.

Compared to drilling accidents, tanker losses account for several times more oil spilt in the oceans. As with production spills, the quantities spilt in the last decade or two are small and declining sharply. The best year of the 1970s was more than twice as bad as the worst year of the last decade. The trend in oil tanker spills is a ringing declaration of the success of prevention efforts and safety standards, contrary to the impression one might get from the dramatic media imagery that goes along with any accident.

Far more oil even than tankers spill ends up in the ocean as a result of routine maintenance. That, in turn, is dwarfed by the amount that reaches the ocean in sewerage and industrial run-off. The latter accounts for more than 20 times the spillage caused by drilling and production.

The Deepwater Horizon spill has a way to go to reach the scale of the biggest disasters. It might get there, in absolute terms, but its location fairly far offshore and the extensive coastal protection measures that have been installed means that a slick is less likely to wash ashore, and is more likely to undergo the dispersal and natural weathering that breaks down all oil in the ocean.

You see, the ocean is no stranger to oil. Natural processes have been breaking down oil long before our own negligence tested this capability. In fact, almost half of all the oil that enters the oceans is not our fault, but is accounted for by natural oil seeps.

One such seep, ironically just off the coast of Santa Barbara, has spewed many times the cargo of the Exxon Valdez into the ocean, where it rises, degrades by a variety of natural processes, and sinks back to the sediment. Such seeps exist all over the ocean floor. Entire mountains of crude oil residue deep underwater recently amazed scientists, who called them “asphalt volcanoes”.

Research shows that while disasters such as a major oil spill can cause serious damage in the short term, the recovery of disaster areas is usually swift, and the long-term consequences relatively modest. In fact, it is arguable that we tend to over-react to oil spills, as a report to Congress averred in the wake of the Exxon Valdez spill. Constance Holden, a respected writer for Science magazine from 1970 until she was tragically killed in a bicycle accident last month, wrote an article in 1990 in which she quoted several scientists to this effect. The article was entitled, “Spilled oil looks worse on TV”. The scientists she quoted were afraid to be named.

Meanwhile, other natural disasters are creating at least as much havoc. The other rupture in the crust of the earth, the Icelandic mountain better known as “that damned volcano”, did a lot more than ground airlines for fear of the all-engine stalls that hit BA Flight 9 near Jakarta, Indonesia in 1982 and KLM Flight 867 near Anchorage, Alaska in 1989.

It threatens to have a significant environmental impact. Like Mount Pinatubo in 1991 – which even had a noticeable effect on the climate – it could cause acid rain and damage the ozone layer.

Lucky that the boreal forests of the northern hemisphere were killed by acid rain in the 1980s to give Wendy Oldfield song material, and the ozone layer was destroyed to benefit the makers of factor 30+ suntan lotion.

Earthquakes, hurricanes, volcanoes, tsunamis, wildfires and floods all cause widespread human and environmental devastation. In Bangladesh, dear mother earth even put arsenic in the drinking water.

The reality is that the environment is often subjected to major upheavals, many of which are not of human origin. No matter the cause, nature recovers what it can recover, and adapts to what it cannot change, as do the people who suffer the consequences of the disasters.

In its proper perspective, the Deepwater Horizon oil spill is bad, but not as apocalyptic as the shrill environmentalists would have you believe.

BP is well aware of how bad it is. It promptly accepted responsibility for the disaster and its consequences. It has hundreds of vessels and tens of thousands of people on the case. No amount of public relations work can help its efforts to contain the spill and undo the damage, but no amount of hysterical anger will make things better either.

Is it guiltless? Not by a long shot. Evidence is already mounting that human negligence had a lot to do with the accident, and the accountability for such errors goes right to the top of BP’s management.

However, when humans err, as humans do, the proper response is not to put a stop to human activity. The proper response is to eliminate the errors.

Is the US government blameless? I’d wager it is equally guilty. Besides for the allegations of political corruption that will surface in the aftermath of this disaster, there is a curious “liability cap” in US law which may protect BP, but for which there is little basis in the principles of property law. A company that causes damage to someone else’s property should pay equivalent compensation, and BP is no exception.

But let us not go overboard. While it is proper for reporters and commentators to expose mistakes and wrongdoing whenever they happen, presuming evil intent on the part of BP because it is an easy target for popular prejudice is neither useful nor true. That throws the baby out with the bathwater.

Going further, by demanding that oil drilling be halted altogether in the hope of preserving a pristine environment, is worse. It’s like keeping the bathwater and throwing out only the baby. Such a step will reduce living standards, impoverish the poor, and ultimately, cost lives.

Deepwater Horizon is the sort of accident that nobody likes to see, but to which resourceful people respond with alacrity, with a desire to minimise the damage, and with a resolve to prevent similar disasters in future.

The record shows that the oil majors are for the most part succeeding in reducing both the number and scale of accidents, be they tanker spillages or oil well blow-outs. They are also getting better at remediation, as the ecological condition of previous spill sites testifies.

No doubt lessons will be learnt from this accident. If you’re that cynical, accept that it’s only to save oil worker lives in future, or even just to spare oil companies the costs of lost equipment, clean-up costs, criminal penalties and civil suits. There’s plenty self-interest right there in doing what customers, regulators and the public at large demand.

For my part, I sympathised with BP’s CEO, Tony Hayward, when he said: “What did we do to deserve this?”

Neither BP, nor the eleven workers who died, deserved this.

PS. Last week’s column elicited a prompt response from Tammy Evans in the office of Alan Winde, the Western Cape’s Minister of Finance, Economic Development and Tourism. Within the limits of the law, she promised that there would be no delay in issuing a new liquor licence in time for the World Cup. She also solicited suggestions on how the Provincial Legislature might consider changing the the law to help other companies in the same situation. The business owner in question was visibly moved at the intervention. This is how government is meant to work: for the people.


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