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Sunday, June 06, 2010

Clean Up the Oil Industry

Clean Up the Oil Industry
Image © Austin Cline
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The understandable focus on cleaning up the BP oil disaster in the Gulf of Mexico must not distract us from the need to also clean up the oil industry itself. Indeed, we should get used to thinking that no matter how successful the efforts to clean up the Gulf of Mexico ultimately are, it won't matter much in the long term if we ignore the terrible mess of the oil industry.

It will be difficult for this to really sink in for most of us, though, because practically everything we see about the BP oil disaster tends to reinforce the perception that it's an isolated accident. When was the last time anyone in the mainstream news media did a report trying to connect aspects of this disaster to larger problems in the oil industry? How often do we instead just see a focus on the accident and BP alone? We must actively resist this narrow focus and push back against what is essentially pro-oil propaganda.

Instead, we must learn how to see the deeper connections which link individual disasters with broader problems. We must learn to see the patterns of abuse and negligence across the industry — and we must communicate this to others so that they can see the same. This is critical because no fundamental changes will occur unless there is popular demand for it. That's why industry and even government are actively depicting the problems as existing merely with one oil platform or, at most, with BP alone.

The less of the spilled oil that sticks to the industry as a whole, the more likely the oil industry will be able to preserve the status quo — and it is precisely the status quo which we need to overturn.

Top Hat

The top hat is a fitting symbol for wealthy oil executives who are disconnected from the average citizen who has to live paycheck to paycheck, but it's a symbol that I think goes much deeper. The top hat should also speak to us about how the wealthy oil industry is disconnected from the impact it has on the environment. The extraction of oil from the earth provides massive wealth but also comes with massive costs — and I don't just mean the costs that occur because the process is risky and accidents happen, but the costs to people and the environment even when everything goes reasonably well.

BP, like other oil companies, accumulates billions of dollars in profits on a yearly basis, but the cost of their business model is being borne by everyone else: destroyed wetlands, destroyed fisheries, destroyed beaches, destroyed tourism, etc. People may sue for damages, but BP will tie up the court cases for decades and ultimately pay pennies on the dollar for the costs which others will end up paying. The government may pursue criminal and civil penalties, but those will also be tied up in the courts — and possibly dropped entirely by a future administration, if BP and other oil companies are able to buy one.

Junk Shot

This extreme separation of profit and costs, where a small minority are allowed to acquire all the profits while everyone else is forced to bear the costs, is an important part of why the system as a whole needs to be cleaned up. Unfortunately, past reform efforts have focused too narrowly on this issue and as a result were little more than junk shots — tossing garbage at the problem in the hope that it miraculously solve things.

It's true, for example, that the Clean Water Act allows the government to impose massive fines on oil companies which pollute — up to $4300 per barrel in cases of gross negligence. This could add up to over $10 billion in fines for BP before they can stop the leak in the Gulf of Mexico, and that would help spread the costs of BP's business model to BP itself; but just how likely is it that even the Obama administration will pursue the maximum fines, let alone a future administration?

When was the last time maximum penalties were aggressively and successfully pursued against an oil company which wrecked the environment? In fact, when was the last time the American government aggressively and successfully pursued maximum criminal penalties against any corporation that had been engaged in clear wrongdoing, no matter what industry? When was the last time any industry was forced to bear the full costs of the activities they relied upon for their profits — profits which they insist they have a "right" to?

I don't want to go so far as to say that the Clean Water Act is junk, but providing for massive fines without actually imposing them isn't much better than junk because in the end the oil companies are insulated from the costs of their activities.

Top Kill

We need to identify the most fundamental causes of these problems if we're going to have any hope of achieving significant changes and improvements. In the case of this separation between profits and costs, we have to face the fact that oil companies are behaving exactly as they should be expected to. Indeed, they are legally obligated to pursue every legal means to maximize profits. This makes sense: how many corporate boards do you think can be trusted not to waste other people's money needlessly unless forced to by law?

Unfortunately for the rest of us, the laws which require the maximization of profits don't also require the absorption of all associated costs. Thus oil companies naturally seek to separate profits and costs because the fewer costs they have to pay, the greater their profits — and if they can influence laws or regulations to increase the separation more, they will. That too is allowed by the laws which govern corporations, because the laws are written to protect the investments of corporate shareholders, not to protect the lives of all the people affected by the activities of those corporations (never mind the employees).

This is what we need to start changing. We need to force the oil companies to make significant changes in how they do business, but merely writing more laws which create more theoretical fines will be insufficient. Perhaps we need to kill off a couple of corporations and make examples of them. The separation of profits from costs means that all of the incentives are on the side of maximizing profits for the corporation; none on minimizing costs for others. Killing off a few corporations and imprisoning the corporate officers could reorient people's perspectives.

But we also need to change the background culture. We currently live in a society where no one seems to find it strange that shareholders' capital investment might receive stronger legal protections than employees' health and safety, nearby residents' lives and livelihoods, or the environment upon which we all depend. We need a culture where it's inconceivable that the law would require corporations to maximize profits, but not maximize employees' well-being or minimize the costs paid by others for a corporation's activities.


  1. Thank you for your well-thought-out and well written piece on the oil industry. I'm passing it along to friends. I feel badly for folks who are losing their jobs & wetlands, & for everything else that's dying. We are a weird people.


  2. Cline, even an oily, slippery liberal like you must have heard the conservative explanation for the oil mishap. No, not that it was an "act of God." That was uttered by Helley Barbour or some similarly stupid politician. God is offended by the insult, and will deal with him later.

    No, as has been voiced by futurePresident Pallin' and others, it's all the fault of you libboenrivowackofascists. Either you sabotaged it with a suicidomole on the derrick, or hired a North Korean midget submarine to torpedo the rig, or God knows what. (God will not be offended that I said that.) KKKonservatives know that you tree-huggers are HAPPY this happened, because killing all life in the entire Gulf of Mexico gives you a talking point about how offshore drilling is harmful.

    If you Greenieweenies would just let oil companies do whatever they want up near the North Pole, where Sarah would get plenty of royalties to spread around and make conservatively chosen beneficiaries rich, there would be no need to drill offshore! And if something bad happened, imagine how few negative pictures would leak out. It would be much easier to enforce a no-fly, no-photo zone thousands of miles from nowhere compared to how BP controls the air space off Louisiana.

    Frankly, I'm surprised you wrote an entire drivelling without mentioning "peak oil." Don't you commie socialists like to opine that the world has extracted half the oil that exists on the planet -- and that was the EASY half, too? You say that's why countries have to fight wars for control of the remaining fields in places like Iraq and go to unheard-of extremes like sucking it from pipes that dip a mile through straight water? Doesn't it make you kumbaya-singers happy that scared little blonde women won't be able to drive big honking SUVs down to the corner store in less than a generation?

    Of course, you doomsters are all wrong. God will provide. Somebody will come up with a solution. Meanwhile, I think I'm gonna sneak out tonight and pour some used crankcase oil all over my disgusting liberal neighbor's Prius, the one with the new anti-BP bumper sticker. Why do liberals have to display their hatred like that?

  3. Amen. Great thinking.

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We'll try dumping haloscan and see how it works.