Wednesday, June 02, 2010
Deepwater Horizon, BP, and the Minerals Management Service: The legacy of "Capture Theory."
Am I the only one who simply can not fathom how a major oil company can be permitted to engage in potentially catastrophic activities, and not have back up and safety plans? Is it rational to believe that a break in an undersea oil pipe could go on for week after week and no one has a clue what to do about it?!
The events unfolding off of the Louisiana coast were not unimaginable or unpredictable. In fact, what happened on the ocean floor was very predictable – so much so, that in the industry it is routinely called a “blowout.”
Now, wouldn’t it makes sense that if a company is going to undertake an activity that could result in a known, predictable disaster, that they should have a contingency plan in place? And that the government agencies regulating them (in this case, the Minerals Management Service, or MMS) should require them to have such a contingency plan?
In fact, most offshore drilling operations are required to have such contingency plans. But two years ago, the MMS changed the rules of the drilling game mid-stream, and exempted deep-water drilling operations from the need to submit an emergency plan. The Deepwater Horizon Project – the very disaster unfolding in the gulf – was one of the projects that was suddenly exempted. Instead, BP was permitted to submit a “regional” plan for dealing with “general spills” anywhere in the Gulf.
Unfortunately, that ‘general plan’ didn't quite have enough detail to help BP stop THIS leak as a result of THIS blowout at THIS location.
According to one MMS official – speaking on the condition of anonymity – “the rules were changed because some elements were impractical for some deepwater drilling projects in the Gulf”
In other words, since a safe and effective contingency plan could not be established for the Deepwater Horizon Project – the MMS decided to eliminate the necessity of such a plan, rather than stopping the project form the beginning.
Such an action makes no sense...unless you are familiar with “Capture Theory,” a basic theory I cover in all of my introductory Economics classes. “Capture Theory” refers the fact that most citizens are too busy with survival and life to worry about every permit and hearing taking place before a government agency. A vested interest, however – such as BP before the MMS, or a pharmaceutical company before the Food & Drug Administration – has evry reason in the world to know exactly what is on the agency’s agenda, and who is making the decision on their application, and what the secretary’s name is and how the agency decision-makers like their steak cooked. Because the potential benefits of favorable treatment are so lucrative, it makes sense for corporations to hire lobbyists who wine and dine the agency officials. In the end, (to quote myself), “A vested interest will always capture the agency designed to regulate it, and then use that agency for its own advantage.”
Is this what happened here? Yes.
According to Fast Company,
“…[A] Department of Interior investigative report describes transportation to college football games on offshore oil company planes as well as offshore oil and gas sponsored golf outings, crawfish boils, skeet-shooting events, and hunting trips. A source also told investigators that MMS inspectors sometimes allowed oil and gas company employees onboard drilling platforms to fill out inspection forms [themselves].....many of the MMS inspectors had worked for the oil and gas industry and continued to be friends with industry representatives. “Obviously, we’re all oil industry...We’re all from the same part of the country. Almost all of our inspectors have worked for oil companies out on these same platforms. They grew up in the same towns. Some of these people, they’ve been friends with all their life. They’ve been with these people since they were kids. They’ve hunted together. They fish together. They skeet shoot together ....They do this all the time...”
So…the blowout occurred, 11 men lost their lives, and oil began pouring into the Gulf. Couldn’t something be done? (Of course, 24 hours into the spill, a US Coast Guard spokesperson assured ABC news correspondent George Stephanopoulos on “Good Morning America” that there was no oil spewing from the well..)
In 1994, the US Government developed its own plan (the “In Situ Burn Plan”) to contain spills through the use of devices called fire booms. Like so many government plans, this proved to be a thick document that at some point was much-heralded, and then put on a shelf to collect dust. The plan called for the immediate use of firebooms, as a first response, to contain a spill. These firebooms can burn off 75,000 gallons of oil per hour, enough to have probably contained the spill to its current location.
Unfortunately, 16 years after the recommendation was made, the federal government did not own a single fire boom.
Eight days later, they were able to locate one for sale in Illinois. Several were eventually ordered from South America.
Daily, we hear how this disaster continues to spread, and how livelihoods and ecosystems are both being ruined. And how BP is ‘hiring’ fishermen who are getting sick, and forcing them to sign non-disclosure statements. So the cover-ups and damage continue.
All because of an “accident?”
No, because of Corporate Fraud. And Corruption. And Government Inefficiency. And “Capture Theory.”
The result is, as far as I am concerned, has been a massive case of Criminally Negligent Trespass and Criminal Conspiracy between BP and the MMS.
Think about that the next time Vermont Yankee tells you that they are adequately regulated by the Nuclear Regulatory Commission, that contingency plans are in place, that every emergency situation has a well-thought out plan, that underground leaks are nothing to worry about, and that Strontium 90 in fish in the Connecticut River is no big deal