A failure of prevention, not response

Some situations are irretrievable.  If you fall out of an airplane without a parachute, there’s not much you can do before you hit the ground.  This is the case with the BP oil spill off the Louisiana coast.  The Obama administration’s failure is not a failure of response, because there is no obvious action that the administration is overlooking. It is a failure of foresight and prevention.

Business corporations respond to financial incentives. Corporation executives respond to short-term financial incentives rather than long-term risks because, after all, it’s not their money.

BP executives had no financial incentive to say, “Well, actually, we aren’t sure we know how to drill for oil a mile beneath the ocean’s surface, and maybe we had better hold off until we figure it out.”  It had no financial incentive to prepare for the worst case situation.  Its financial incentive was to extract the maximum of oil at the minimum of cost.

Now it is too late.  We are looking at what is shaping up as the worst environmental catastrophe in U.S. history, with both BP and the government unable to stop it from running its course.

One way of holding corporations accountable is through legal liability.  Judges and juries can order them to pay for the damage they do.  But BP had nothing to fear on this side. The Oil Pollution Act of 1990 limits corporate liability for damage from oil spills to $75 million for vessels and $350 million for offshore facilities. This is pocket change for BP.

The ceiling does not apply in cases of negligence, criminal conduct or violation of regulations, but if such is ever proven, it will be many years from now. Corporations have the deep pockets and legal expertise to drag out court proceedings for decades, which most claimants do not.

Notice that President Obama is fond of saying the government will make BP pay the cleanup costs, not compensate for damages.

The other way is to subject corporations to rules and regulations that require them to follow best practices. This was the responsibility of the Mineral Management Service, a government agency responsible for regulating offshore drilling. It was well-known when President Obama took office that the MMS was a captive of the oil industry and and it was not doing its job.  But nothing was done.

It is true that a great deal of the Republican criticism is foolish and irresponsible; at the same time, they oppose government restrictions on oil drilling and criticize Obama for not taking control. It is true that the problems with the MMS go back to the Bush administration. It is true that President Obama has had more urgent problems than a (seemingly) minor government agency. But he appointed Interior Secretary Ken Salazar, who was responsible for MMS. President Harry Truman had a sign on his desk, “The buck stops here,” and that is still true.

All the government can do now is to mitigate the damage as best it can, and to make sure such problems don’t recur.

Click on this for an excellent report on President Obama’s failure to prevent.

Click on this for a report on BP’s potential liability.

Click on this for a report on what could happen to Deepwater Horizon during Hurricane season.

Click on this for a report on how the oil spill could spread to the Atlantic.

Click on this for a comment by Robert Reich, secretary of labor under the Clinton administration, to put BP under receivership. I don’t see how the government has the legal authority to do this, or what good it would do.

Click on this for a commentary criticizing President Obama for failure to express emotion in the desired way. This is all-too-typical of the Washington press corps, which views politics as a spectacle, elected officials as performers, and themselves as drama critics.

P.S. (6/25/10).  Actually the response has left a lot to be desired.

Click on this for a Christian Science Monitor report on Katrina-like confusion in coordinating efforts to stop the spread of the oil.

P.P.S. (6/26/10)

Click on this for an indication that Louisiana Gov. Bobby Jindal’s administration also is in disarray in anti-spill efforts.

Update (10/21/10)

The BP / Obama compensation plan seems to be working better than I thought it would.  Click on this for a Washington Post report.

Update (10/28/10)

Disregard the previous update.  Click on this and this instead.

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