The BP Oil Rig Disaster

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The BP Deepwater Horizon Oil Rig Disaster

by Walter Block

Recently by Walter Block: Libertarianism Today

The BP Deepwater Horizon oil rig explosion of April 20, 2010 was a disaster for people located in or near the Gulf of Mexico. It outright killed 11 platform workers and seriously injured 17 others. It played havoc with the economic welfare of people in states stretching from Texas to Florida (none of which apart from Florida voted for Obama). But it was a great boon for socialists who like nothing more than to bash the free enterprise system.

For example, Thomas Frank in an utterly horrible and obscene Wall Street Journal article of June 2, 2010, entitled "Laissez Faire Meets the Oil Spill" stated: "And Galt only knows how many times u2018coziness’ of the MMS variety has been celebrated as part of the struggle for free markets and free people…. But things are different today. The catastrophe is too great to brush it off with the usual laissez-faire scholasticism. So the great debate must wait. We are all liberals for the duration."

Well, here comes some "laissez-faire scholasticism."

How did government socialism and state monopoly corporate capitalism together bring about this catastrophe before it occurred? Let me count the ways. It interfered with oil drilling in safer areas, for example, the Alaska Arctic National Wildlife Reserve and the National Petroleum Reserve-Alaska. An unholy alliance of dirigisme environmentalists, politicians and government bureaucrats have been attacking the Oil Sands in Alberta for lo these many years. This same cabal made it difficult to bring to market oil from shallow offshore in the Gulf of Mexico where it is safer, and pushed companies like BP out into deeper water, where harvesting is more difficult to control. Then, too, there were numerous restraints/prohibitions on exploration and delivery off of our east and west coasts.

The employees of the so-called government watchdog, the Minerals Management Service (MMS) were watching pornography on their computer screens instead of offering oversight. Their 582-page "Regional Oil Spill Response Plan — Gulf of Mexico" doesn’t even mention a deep-water oil spill; yet, this was imposed on BP by those porn fans. While the number of deep-water oil installations rose by 900% in the last 20 years, the number of MMS inspectors stayed the same. I do not suggest that we should have increased the size of government, only that even on its own grounds MMS has been a calamity. As well left-wing, environmental groups, along with the U.S. Army Corps of Engineers, and the Environmental Protection Agency have long regulated this industry in a myriad of nanny state ways.

What was the reaction of the Obama administration after the fact, apart from whining, holding meetings, and casting blame at business for greed and profit seeking? First, our president for a long time refused to abandon the nefarious Jones act, which mandates that coastal shipping and all goods transported by water be carried in U.S.-flag ships constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens. Since that industry is heavily under the control of organized labor, this constituted a pay off to Obama’s union-boss buddies. But the reality is that the expertise in dealing with oil spills can be found mainly in Europe, not the U.S., and, particularly, with the Dutch, Belgians, and Norwegians. They offered to help, but the present administration dragged its heels in accepting it. Then there was the "15 parts per million" issue. Our unholy alliance of socialists and anti-market environmentalists managed to get a law passed forbidding the dumping of water in the Gulf which is dirtier than that level. The Dutch ships have the ability to scoop up sea water heavily infused with oil (thousands of parts per million) at the site of the Deepwater Horizon, treat it on board, and dump out far cleaner water with only some 200 parts per million (a quick and vast improvement). Would Obama allow this? For a long time he would not, relying on far less efficient U.S. unionized boats which had to travel great distances to get the dirty water treated onshore. Then, infamously, President Obama installed a moratorium on drilling; but all industrial initiatives are dangerous, and sometimes boomerang. Accidents occur in mines and factories, but we don’t close them down. Happily, though, courageous and heroic New Orleans Federal Judge Martin Feldman soon after lifted this ban.

What is Obama’s solution? It would appear to be yet more bashing of what is left of our once great and glorious free enterprise system, a call for more stringent government regulation, and a change in name from MMS to Bureau of Ocean Energy. Thus, more of the same of what got us into the mess in the first place, plus a band aid name change.

What suggestion emanates from market fundamentalists such as me? Why, to privatize the entire Gulf of Mexico, of course. Why? Because with private ownership, external costs would be internalized. Any owner of the Gulf would have been much more careful than the MMS, because he would have lost, wait for it, profits! Had the Mississippi river been in private hands, the corporate owner would have gone broke, and this property turned over to more capable hands in the advent of the Katrina tragedy. Instead, those responsible for killing some 1500 of our neighbors, FEMA and the Army Corps of Engineers, are still in existence. This is in sharp contrast to BP, which of course, is (partially) responsible for this disaster. But, happily, based on free enterprise principles, that firm will suffer losses and even risk bankruptcy, unlike these statist institutions.

Ideally, users of the Gulf, its homesteaders, would become its owners. As a second best policy all those living within say, five miles of its coast, plus intensive users of its waters, would become stockholders in a new Gulf of Mexico Corporation. Take that, pinkos. If we learn anything from the study of economics, it is that private property rights systems, while far from perfect, function markedly better than their alternative, nonownership or government ownership.

Dr. Block [send him mail] is a professor of economics at Loyola University New Orleans, and a senior fellow of the Ludwig von Mises Institute. He is the author of Defending the Undefendable and Labor Economics From A Free Market Perspective. His latest book is The Privatization of Roads and Highways.

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