Oil Cassandras

[steuard]

I've followed most of the news about the oil leak in the Gulf, but I haven't read much commentary or analysis about it lately (too many guests and travel). So perhaps those of you who have been following the discussion can answer a question that's come to my mind:

Is there any reason at all that the hard-core environmental activists don't have every right to say "I told you so" to the rest of us after this? (Not that they should...) After all, given the likely enormous economic impact of the disaster (let alone the environmental consequences) this seems like exactly the sort of scenario they've been warning about for years (and in very much the way they might have predicted, with the government complacently believing the oil industry's rosy assurances that nothing could go wrong).

Comments

[jon-leonard.livejournal.com]

It depends on the context of the rest of their warnings: Someone who correctly reports risk factors is worth listening to, but someone who predicts disaster all the time isn't all that useful (though they may sound good just when the disaster occurs).

If you take hard-core environmentalist prescriptions at face value, you wind up shutting down a lot of industry, which is probably a bad thing. (You can't support the current human population without it, and I find occasional oil spills better than mass starvation, but that is a value judgment... If you have to pick one.)

There's also the question of why the oil rig was in such a difficult & dangerous spot: Is it because more manageable coastal (or even land) sites are off limits due to environmentalist political activity?

So no, the hard-core environmentalists don't have any more right than usual to say "I told you so." It's in the news now, but there are always trade-offs, and they always need careful thought.

[steuard.livejournal.com]

Good answer. :)

[akjdg.livejournal.com]

I imagine they do. They will (they have...) considered the political implications of such a response WRT their political aims, and act accordingly.

In my view, this is a foreseeable consequence of our perfectly rational addiction to oil. Unless one is prepared to shift to an oil-free lifestyle (I mean really), one should be willing to accept these events as foreseeable and inevitable.

That said, we should always strive for institutional reforms that quell the apparent risk taking that led to this event, but we need to recognize and accept that within the socio-economic realities of our culture, there is a certain incentive for this sort of thing to occur.

[beth_leonard]

The wall street journal has had some amazingly in-depth analysis lately. I've found it fascinating reading, especially today's minute-by-minute article.

The here-is-what-likely-happened technically article is here from yesterday:
http://online.wsj.com/article/SB10001424052748704026204575266560930780190.html

The article with minute-by-minute decision making is here from today:
http://online.wsj.com/article/SB10001424052748704113504575264721101985024.html?mod=WSJ_hpp_RIGHTInDepthCarousel

These usually expire after 7 days.

"I told you so" -- they certainly will say that. I'd really rather we used more nuclear energy and less oil, but the environmentalists are typically down on that too. It also has the potential to go very wrong, although less wrong than people think. Solar and wind energy feel nice from a naive perspective, but they have their issues as well, wind energy frequently sparks fires and kills birds, in addition to being unreliable on those hot, dry, stagnant days when you need the most air conditioning. I remember hearing that solar cells take quite a lot of energy to produce, transport, and clean relative to their lifetime output. They require lots of energy storage for getting through the night.

--Beth

[pmb.livejournal.com]

Environmentalists - most famously Stewart Brand - are now warming up to nuclear power.

And to answer Steuard, if one does not crow when, after decades of mocking, one turns out to be right after all, then one would be a better man than almost everyone. Oil's hidden costs turn out to be terrifyingly high, and we have been underestimating these costs for decades. These spills are high-variance events with tremendous costs that are born by the public and not the company. This means that the act of drilling for deepwater oil is a martingale, where after a certain point any losses are covered by the government.

[steuard.livejournal.com]

I guess perhaps the enormous (but often overlooked) externalities involved in oil production are the place where we should have been listening to the hard core environmentalists. Yes, our society requires oil to function, and yes, disasters more or less like this will inevitably happen. So what the environmentalists ought to be arguing is that oil should cost more (with the excess being kept in reserve to pay for compensation after this sort of event). And that's got to be organized by the government (since there's no reason to expect any single company to be able to pay the full cost of a rare disaster it creates), so it's got to be a tax (on drilling and probably on importing oil as well).

Somehow, I don't think that the environmental lobby will win many points with the public by clamoring to raise gas prices due to increased oil production taxes, though.

[patrissimo.livejournal.com]

http://patrissimo.livejournal.com/1345344.html

[patrissimo.livejournal.com]

These spills are high-variance events with tremendous costs that are born by the public and not the company.

Which, as I understand it, is due to laws that limit the liability of oil companies for these disasters. The companies are actually big enough to pay the real damages, but they are also big enough to manipulate the system so they don't have to.

[pmb.livejournal.com]

They are also big enough to avoid paying anything ever. e.g. Bhopal in India.

[steuard.livejournal.com]

I thought about touching on those laws in my comment, but I cut that bit for the sake of brevity. I did touch on it there: while the existing massive corporations in this market may be able to afford to pay the costs out of pocket, one should not expect smaller, newer entrants to that market to have such deep pockets. So for a free market to function, there must be systems in place to counter that issue. I'd overlooked the idea of mandatory insurance (foolishly); I'll say a bit about that in a response to your post.

The other reason those laws exist, of course, is that corporations argued that without some sort of guarantee along those lines the costs of doing business would be too unpredictable and investors would not back them at all. So (to oversimplify a complex situation) the corporations agreed to submit to government oversight of their operations in exchange for the government "insurance" that they viewed as necessary in order for their business to be viable in the first place.

[patrissimo.livejournal.com]

Well, the hard-core environmentalists have been telling us that we should stop emitting greenhouse gasses otherwise the planet is going to heat up. So I'm not quite sure where the "I told you so" comes from.

I don't follow environmentalism closely, but I haven't heard "don't drill otherwise you might have a leak" as any kind of major or frequent claim.

If you're saying that the general claim: "If we mess with the earth and use technology, every now and then there will be a disaster" is true, well, duh, of course it is true, but it is such a broad statement that you don't get any credit for having said it.

If you're saying that this demonstrates that the net balance is against using oil & gas at all, well that's ridiculous. Oil & gas produce something like trillions of dollars of value a year. This disaster has so far done billions of dollars of damage. It may eventually do tens of billions of dollars of damage, or more. But that damage pales in comparison to the enormous benefits of cheap energy.

[pmb.livejournal.com]

It's old-school environmentalist stuff. Save the whales and stpo offshore drilling

[steuard.livejournal.com]

I'm not an expert on this history, but I'm pretty sure that the campaigns against offshore drilling far predate anything about greenhouse gasses. As I recall, there was at least one significant spill off the coast of California that helped prompt large portions of the environmental movement. I believe that led to a temporary(?) ban and strong lasting restrictions on offshore drilling along the California coast.

Clearly the broader (and more recent) environmental push against all fossil fuels (and just about every other practical source of cheap energy) is a different beast. But the offshore drilling opposition has much deeper roots.

[akjdg.livejournal.com]

Santa Barbara, 1969. This spill was to the domestic offshore oil industry what "Three Mile Island, 1979" was to the domestic nuclear power industry, or "Exxon Valdez, 1989" was to... to... prompt resolution of civil litigation relating to oil spill damages?

The ban on west coast drilling (sans parts of Alaska) remains in effect. It is as permanent as the will of the U.S. Congress to sustain it.