Well, at least we now know who was responsible for the explosion on the Deepwater Horizon rig in the Gulf of Mexico. An opinion piece in The New Republic tells us we can blame former Vice President Dick Cheney for pushing the federal Minerals Management Service (MMS) to let those oil companies drill, baby, drill.
Or maybe the guilty party was the MMS itself, which could have imposed stricter rules governing back-up safety systems on offshore wells. Or it could have been Halliburton, which performed a procedure known as cementing on the well shortly before its blowout. The company had also just cemented a well in the Timor Sea off Australia when it suffered a severe blowout last August.
The list of suspects goes on and on. The truth is no one yet knows exactly how or why this disaster happened, and it will likely be a long time before there are any solid answers.
But even if the cause is identified and the specific problems that led to the blowout are fixed, this will by no means be the last oil spill. Already, as a result of previous catastrophes, the oil industry has improved its operating procedures greatly, and, overall, it has managed to maintain a pretty good record over several decades. However, just as with commercial aviation, having a good safety record does not mean disastrous accidents will not happen occasionally.
These incidents are rare. Each time you board a plane, it is highly improbable that you’ll end up in a crash. But it is equally improbable, if not impossible, for a highly complex and inherently dangerous system to operate for years or decades without resulting in at least one calamity.
The spill in the Timor Sea last August was caused by an explosion similar to the event at the Deepwater Horizon rig. Last year’s incident resulted in the release of 17,000 to 85,000 gallons of oil per day. The historic 1969 oil spill off the coast of California near Santa Barbara created an 800-square-mile slick that affected 35 miles of coastline. Since the Santa Barbara disaster, miles of oil rigs have been abandoned, left as sleeping giants visible from the highway that runs along the coast.
The environmental damage caused by these events is long-lasting, but, over time, ecosystems recover. In Channel Islands National Park, near where those leftover oil rigs now slumber, a small population of bald eagles has been reintroduced. The reintroduction effort has been so successful that University of Wyoming zoologist and physiologist Seth D. Newsome has expressed fears that the eagles may exhaust their current food sources and begin preying on the already endangered island foxes.
The political consequences of the Gulf of Mexico spill may be just as dramatic and perhaps even longer-lasting than the environmental ones. After the accident, Calif. Gov. Arnold Schwarzenegger announced that he is reversing his earlier support for increased drilling off the shoreline of his state. A preliminary drilling deal struck in 2008 would have raised $100 million for California, which is struggling to close a $20 billion budget deficit. But Schwarzenegger said that after watching TV news coverage of the Gulf of Mexico spill, he rethought his position. “If I have a choice to make up $100 million and what I see in Gulf of Mexico, I'd rather find a way to make up that $100 million,” the governor said.
President Obama, who proposed opening up certain Atlantic coastal waters to new drilling just over a month ago, has rapidly backed away from that position. The administration now says that it will wait until investigations of the accident are complete before reevaluating its position. White House press secretary Robert Gibbs said, “I believe that what [the review] finds will determine our next steps as it relates to offshore-oil policy.” Those next steps are likely to lead far away from any terrain that is politically, as well as environmentally, dangerous.
The main beneficiaries in this political fallout will be promoters of renewable energy sources, including wind and solar power. While these power sources also have their environmental drawbacks, their downsides tend to be more fixed and predictable. A wind farm may be an eyesore for local residents, but it is unlikely to burst into flames and contaminate miles of ocean habitat. Even in cases where the overall impact is the same, the promise of security from disaster is likely to pull us toward renewable energy production.
It will take some time before we know what caused the latest accident and what its full environmental and political consequences will be. In the meantime, if you must blame someone, blame Cheney. He ought to be used to it by now.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book
The High Achiever’s Guide To Wealth.
Posted by Larry M. Elkin, CPA, CFP®
Well, at least we now know who was responsible for the explosion on the Deepwater Horizon rig in the Gulf of Mexico. An opinion piece in The New Republic tells us we can blame former Vice President Dick Cheney for pushing the federal Minerals Management Service (MMS) to let those oil companies drill, baby, drill.
Or maybe the guilty party was the MMS itself, which could have imposed stricter rules governing back-up safety systems on offshore wells. Or it could have been Halliburton, which performed a procedure known as cementing on the well shortly before its blowout. The company had also just cemented a well in the Timor Sea off Australia when it suffered a severe blowout last August.
The list of suspects goes on and on. The truth is no one yet knows exactly how or why this disaster happened, and it will likely be a long time before there are any solid answers.
But even if the cause is identified and the specific problems that led to the blowout are fixed, this will by no means be the last oil spill. Already, as a result of previous catastrophes, the oil industry has improved its operating procedures greatly, and, overall, it has managed to maintain a pretty good record over several decades. However, just as with commercial aviation, having a good safety record does not mean disastrous accidents will not happen occasionally.
These incidents are rare. Each time you board a plane, it is highly improbable that you’ll end up in a crash. But it is equally improbable, if not impossible, for a highly complex and inherently dangerous system to operate for years or decades without resulting in at least one calamity.
The spill in the Timor Sea last August was caused by an explosion similar to the event at the Deepwater Horizon rig. Last year’s incident resulted in the release of 17,000 to 85,000 gallons of oil per day. The historic 1969 oil spill off the coast of California near Santa Barbara created an 800-square-mile slick that affected 35 miles of coastline. Since the Santa Barbara disaster, miles of oil rigs have been abandoned, left as sleeping giants visible from the highway that runs along the coast.
The environmental damage caused by these events is long-lasting, but, over time, ecosystems recover. In Channel Islands National Park, near where those leftover oil rigs now slumber, a small population of bald eagles has been reintroduced. The reintroduction effort has been so successful that University of Wyoming zoologist and physiologist Seth D. Newsome has expressed fears that the eagles may exhaust their current food sources and begin preying on the already endangered island foxes.
The political consequences of the Gulf of Mexico spill may be just as dramatic and perhaps even longer-lasting than the environmental ones. After the accident, Calif. Gov. Arnold Schwarzenegger announced that he is reversing his earlier support for increased drilling off the shoreline of his state. A preliminary drilling deal struck in 2008 would have raised $100 million for California, which is struggling to close a $20 billion budget deficit. But Schwarzenegger said that after watching TV news coverage of the Gulf of Mexico spill, he rethought his position. “If I have a choice to make up $100 million and what I see in Gulf of Mexico, I'd rather find a way to make up that $100 million,” the governor said.
President Obama, who proposed opening up certain Atlantic coastal waters to new drilling just over a month ago, has rapidly backed away from that position. The administration now says that it will wait until investigations of the accident are complete before reevaluating its position. White House press secretary Robert Gibbs said, “I believe that what [the review] finds will determine our next steps as it relates to offshore-oil policy.” Those next steps are likely to lead far away from any terrain that is politically, as well as environmentally, dangerous.
The main beneficiaries in this political fallout will be promoters of renewable energy sources, including wind and solar power. While these power sources also have their environmental drawbacks, their downsides tend to be more fixed and predictable. A wind farm may be an eyesore for local residents, but it is unlikely to burst into flames and contaminate miles of ocean habitat. Even in cases where the overall impact is the same, the promise of security from disaster is likely to pull us toward renewable energy production.
It will take some time before we know what caused the latest accident and what its full environmental and political consequences will be. In the meantime, if you must blame someone, blame Cheney. He ought to be used to it by now.
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