May 16, 2010

Everyone has heard by now of the big oil spill in the Gulf of Mexico. The huge oil spill, which has been spewing for about three weeks now has yet to be cut off. The Environmental damage will be catastrophic when the oil reaches land. The really unfortunate thing about this spill was under regulations in practice during the nineties, it would have been completely avoidable. The technology that should have been in place is called an acoustic switch; basically if the oil platform explodes, the switch triggers a gate on the actual well, shutting off the flow of oil. It was almost universally used in wells built in the late 1980's and 90's. But Halliburton, the contractor for most of these wells in the Gulf, began building wells without them in order to save costs under its former CEO, former vice president Cheney. Halliburton continued this cost cutting measure throughout the last decade, enjoying a dramatic reduction in restrictions under the Bush/Cheney administration. This isn't the only strike against Halliburton; the exact same thing happened in Australia in August of last year, in a well also made by Halliburton. The cement at the opening of the well was not strong enough, and cracked in both cases. British Petroleum, the leaser of the platform is in a lot of trouble. Under the Oil Pollution Act of 1990, BP would be subject to pay up to only $75million in liability + cleanup charges. Lawyers are currently running around the area offering people $5000 to sign away their legal right to sue.

The situation speaks to the safety of industry deregulation. The extensive ties to the dual Bush administrations really makes things messy as well. BP could get away easy from this event, even though it has caused an environmental catastrophe. I think there should be no limitation on liability for this disaster. BP, as a huge corporation making huge profits even as we speak, should have to pay for its shortcomings, as even though failed well casings and broken cutoff valves were not directly its fault, it did contract to have them built by companies with a less than stellar record. The subcontractors can pay up too, but BP needs to pay. This kind of a disaster should take down the corporation, my guess is that it won't. It has invested in politics and politics will deliver a rescue.

The Senate is seeking to raise the cap of the Oil Pollution Act of 1990 to $10 billion. The White House won't endorse a specific dollar limit but Gibbs said Wednesday that the administration "would be in favor of significantly lifting" the current $75 million cap.-