Friday, May 28, 2010

Crying over spilled oil

All of the media attention the last few days has been on the oil spill from the BP deep-sea well in the Gulf of Mexico, which exploded over a month ago. While it is impossible to protect the environment from every accident, it is evident that in the case of Deepsea Horizon, due diligence was not done. Why not?

Capitalism is based on opportunity, therefore the executives or owners of a company will try to identify and exploit opportunities that will result in profits for themselves and their shareholders. As far as the capitalist is concerned, this is their only obligation.

However, in assessing an opportunity, risk must be taken into consideration. The federal government, some years ago, mitigated that risk for BP in the Oil Pollution Act of 1990 by limiting its liability to $75 million "unless gross negligence is proven." While BP has agreed to pay the full cost of cleaning up the spill (currently estimated at $12 billion) and Congress wants to up the limit to $10 billion, the discussion of the cap misses the point.

There should be no limit on liability. If a future oil spill is so costly that it bankrupts BP, then let BP go bankrupt. Not because I'm an extreme environmentalist or anti-capitalist; but because the lack of a liability limit will force management to factor in that risk, when they make the decision to invest in a deep-sea oil well. It will also force management to factor in safety precautions that could be made to prevent oil spills. Failure to do so will be considered gross negligence by the company's own stockholders.

There is another party to this gross negligence -- the federal government. It has responded very slowly to this problem. Its reluctance to act reminds me of its response to Hurricane Katrina.

This space is frequently critical of federal interventions where the federal government has no business intervening; for example, with health care and education; but the federal government does have defined powers within the Constitution. Regulating this oil well is one of them, since this well was drilled 40 miles out to sea, well within the 200 miles of territorial waters of the United States. One can reasonably deduce from Article I, Section 8, of the Constitution, that this oil well deals with interstate, even international, commerce.

So what is the take-home? The feds are so busy trying to take over health care, the auto industry, Wall Street, and other businesses "too big to fail;" so busy robbing American taxpayers to pay their friends, that they are neglecting their core responsibilities in immigration and environmental cleanup outside state lines.

To cover up their failures, they are criticizing Arizona for trying to carry out what should be a federal responsibility; and are expecting Louisiana to somehow scrounge for resources to protect its own wetlands.

If Donald Trump were emperor, you know what he would say to the feds...


Maybe the time has come for the states, as the feds' employer, to say the same thing. If the feds can't even carry out their Constitutional responsibilities, they are incompetent, and deserve to be fired. The method for states to back out of a broken contract is known as secession.

1 comment:

PhreedomPhan said...

Pardon my paranoia. My first thought when I heard of the explosion was 2 to 1 it was sabotage. Moreover, sabotage to justify shutting down offshore drilling to further exasperate the phoney "energy crisis." The last thing the gangsters want is an energy efficient America.