economics

May 8, 2010

The oil spill in the Gulf of Mexico Deep trouble America’s distorted energy markets, not just its coastline, need cleaning up

Filed under: Uncategorized — ktetaichinh @ 7:54 am
Tags: , ,

Slick salesmen

Because that is where the oil is, oilmen retort. The Gulf of Mexico accounts for almost a third of America’s oil production and the lion’s share of new discoveries. Most dry land has been picked over, and better technology allows exploration in ever deeper waters. Elsewhere too, Western oil firms are being forced offshore as nationalist governments curtail their involvement in big, easily tapped fields on land. The Gulf of Mexico and the waters off Africa and Brazil are among the most enticing prospects to which they still have access. If Americans do not want to hand even more money and clout to the likes of Iran, Russia and Venezuela, the argument runs, they should not curb offshore drilling. Even if they do, rising oil powers such as Angola and Brazil are not going to follow suit.

Moreover, in America at least, oil firms have been reasonable stewards of the seas. Before Deepwater Horizon foundered there had not been a big leak from an offshore oil well for 40 years. Average annual spills from underwater pipelines declined from 2.5m gallons in 1980-84 to just 12,000 gallons in 2000-04, according to the Congressional Research Service. America’s National Research Council reckons that offshore drilling accounts for 1% of the oil floating in the country’s waters, and tankers and pipelines only a further 4%, compared with 33% from other shipping and 62% from natural seepage (though the industry’s spills are more concentrated, and so more harmful). As the fleet of 200 ships battling the slick shows, oil firms have elaborate plans to mop up leaks.

In this instance the oil spilled is quite volatile, so much of it should disperse or evaporate before reaching the coast, where it will do the most damage. The warmth of the air and water in the Gulf should also help. Since the well is 40 miles offshore and the weather has been relatively clement, there has been time to test dispersal techniques and prepare coastal defences.

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