Defending the Undefendable II: Freedom in All Realms

3.

BRITISH PETROLEUM

British Petroleum (BP) is on everyone’s list of bad guys. This makes them grist for our mill, as heroes. Heroes? How can we even begin to say that? On April 20, 2010, their Deepwater Horizon installation blew up, killing eleven employees, and unleashed more than 200 million gallons of oil into the Gulf of Mexico. This threatened the jobs, welfare and livelihoods of probably thousands of people living in Texas, Louisiana, Mississippi, Alabama, and Florida. Oil exploration is only the tip of the iceberg. There is also employment servicing this industry, plus tourism, food supply, fishing, etc. Not only does BP fail to deserve the honorific “heroic,” but there is a serious question in the minds of many people as to whether or not the officers of this corporation should be considered outright criminals. Such, at least, is the case against BP.

Is there another side to this story? Yes, there is, although you will not hear it in the major media. Part of it consists of the realization that heavy industry (drilling, building, mining, exploring, dynamiting) is sometimes, heck, often dangerous. If you can’t stand the heat, get out of these lines of work and become a librarian, teacher or shoe-shiner. For that reason alone, if for no other, the BP team ought to be congratulated. They take their lives and their property and put it on the line, every day.

But there is more. Why did BP place its Deepwater Horizon rig so far offshore (about 60 miles from the nearest land), and in such deep water (about 5,000 feet down)? Didn’t they realize that drilling closer to, or over the continental shelf would have been safer? After all, it is easier to deal with calamities 50 feet below the water, than almost a mile straight down. Then, too, help is more readily available inshore. Of course, they did. But they were prevented from doing so by an unholy alliance of left-wing environmentalists and government regulators. As for the latter, the Minerals Management Service (MMS), they do not at all emerge unscathed from this imbroglio. They were involved in bribe taking, watching pornography on “company” time and on government computers, and taking drugs while on the job. This ought to give pause to all those who think that the solution for any problem at all, even one initially caused by government, is more regulation.

Nor does this even begin to acknowledge the full contribution of MMS to this imbroglio. According to The Wall Street Journal: “BP has come under heavy fire from Congress and environmental groups for its lack of readiness to handle a worst-case spill. But that criticism has overlooked a key fact: BP was required by federal regulators to base its preparations on Interior Department models that were last updated in 2004.” These governmentally perpetrated models focused mostly on oil released onto the surface of the body of water, ignoring the effect of a deepwater spill.

We have not yet plumbed the depths of U.S. government responsibility for this mess. The Obama administration’s thrall to the unions is so deep and so pervasive that several days after the oil spill, it declined the help of the Spill Response Group Holland, even though the capacity to deal with the problem by any one of their several ships offered was greater than all of ours together. The Dutch, leading experts in massive water problems, water management, and dike building, also offered to protect Gulf Coast marshlands with berms and sand barriers. This offer, too, was spurned. It was made on a no-cost basis, but, it would appear, the U.S. stuck to its principles for this sort of thing, and applied them as well to a dozen other offers of fleets of oil spill response vessels vastly superior to American alternatives.

Why is U.S. technology so behind? This is due to harmful environmental rules emanating from Washington, D.C. In the land of the free, home of the brave, salvage vessels are forbidden by law to put back into the sea oily water they have sucked up, if it is not at least 99.9985% pure. The technology of other nations is not so stringent as to require a standard of 15 parts per million. So, when U.S. ships gobble up contaminated water, they are forced to store it in onshore facilities. The long trips back to shore with each intake of water were time consuming, given the massive amounts of spewing oil. In contrast, Dutch vessels and those of other nations may have let more oil back into the Gulf, but would have been far more efficient.

Eventually, the U.S. government changed its tune (what happened to principles?) and accepted foreign help, but with a proviso. The Dutch couldn’t use their superior methods, directly. Instead, they transferred their oil skimming equipment to U.S. boats. Why? As a sop to the unions; needless to say, this postponed cleanup efforts. As on the water, it was the same with the berm and sand-barrier efforts. Rather than allow the more efficient foreigners to have at it, their role was limited to the time-wasting training of U.S. organized labor.

Further, the “1990 Oil Protection Act” capped BP’s financial responsibility for damages at $75 million. This cannot be squared with the tenets of laissez faire capitalism. (If and to the extent that this company was involved in creating this implicit subsidy for itself, it cannot be defended as a member in good standing of the free enterprise system. Rather, if true, it joins the ranks of the monopoly state of corporate capitalists, or fascists. But evidence to support this contention has not been brought forth, and the burden of proof rests with those who make such claims.) On the other hand, at the time of this writing the Obama administration is attempting to force this oil company to pay for the salaries lost due to the down time of all idled oil workers in the Gulf of Mexico. This would be bad enough. For, surely, to the extent this disaster was the responsibility of BP, the company should be held responsible for all direct damages to persons and property, with no cap at all. However, what makes this worse, far worse, is that the U.S. government wants to compel BP to pay for the lost salary of workers laid off due to the government’s own moratorium on deepwater drilling.

The families of the workers killed in this tragedy are suing BP. Should they be able to collect? Not under libertarian law, at least. For these unfortunate people took it upon themselves to accept the responsibilities for their jobs. Presumably, they were paid an extra amount of salary in the form of hazardous duty pay to bear the additional risks that go with that type of employment. Should the heirs of those pilots who test new airplanes be allowed to sue for wrongful death? Not any more than in the BP case. Unless, that is, it can be proven that the officers of this oil company purposely blew up this installation, which is certainly not even alleged in this case.

Then, there is the Deep Water Royalty Relief Act of 1995 and the Outer Continental Shelf Lands Act, as amended in 1978. These are further governmental enactments that serve as a subsidy to the oil industry. They provide for relief from lease expenditures. The goal of the 1995 Act was, supposedly, to encourage the exploration for oil and natural gas production in the deep water areas of the Gulf of Mexico. Why was this needed? This is because oil production in this area was deemed by our central planners as too risky and expensive for private concerns to take on this challenge. If government policy makers are so intent upon promoting this activity, why don’t they “man up” when something goes wrong with the results of their own decision-making, instead of “looking for some butt to kick,” as Obama announced recently. Were there any justice in the world, the President of the U.S. would look in the mirror for a suitable target for his boot.

No account of this human and environmental tragedy would be complete without a consideration of the evil Jones Act of 1920. Like the British Navigation Acts which were a part of the motivation for the secession of the U.S. from that country in 1776, these laws reserve for the domestic country the monopoly of shipping. Under Jones, only U.S. vessels can engage in commerce in U.S. waters such as the Gulf of Mexico, and they must be manned by U.S. crews. Yet, there were boats from other nations that were more than ready to help us in our hour of need, but they were turned back by the Coast Guard. Evidently, kowtowing to local unions—one of the main beneficiaries of the Jones Act—is more important to Obama than environmental considerations. One cannot help but remember that under Bush II, the Federal Emergency Management Agency (FEMA) also refused aid offered to New Orleans in the aftermath of Katrina. What is it with Washington, D.C., and the Gulf states?

There is also the Passenger Vessel Services Act (PVSA) of 1886 (46 U.S.C. 289) which provides that “no foreign vessel shall transport passengers between ports or places in the United States.” Similar legislation in the airline industry prohibits foreign air carriers from transporting passengers from one U.S. city to another. The point is, it is all too easy to blame BP for the oil spill. With laws of this sort on the books, the U.S. government is at least partially responsible for this tragedy.

Another difficulty with this entire episode is that the Gulf of Mexico is either entirely unowned, and/or owned and controlled by the U.S. government. The former case gives rise to the tragedy of the commons, where the usual incentives to preserve and safeguard property are greatly if not entirely attenuated. The latter corresponds to the Soviet economic system, where the government plans the whole economy. In contrast, were this body of water owned privately, say, by the Gulf of Mexico Corporation, it would then likely manage matters in a far superior manner. If they didn’t, they would be subject to the usual market tests of profit and loss. In contrast, does Obama, personally, lose any money when oil is wasted, and/or comes to shore and ruins commerce there? Of course not.

Let us consider one objection to the foregoing. The Gulf of Mexico is (unlikely) owned by hundreds of corporations. One of them is particularly irresponsible: it allows a mining company to drill on its watery property, but imposes no strict safety regulations contractually (it can raise profits in that way). In the case of accident, it does not have anything like the necessary wherewithal to defray the costs to its neighboring aqueous owners. No insurance company will touch this fly-by-night operator with the proverbial ten-foot pole. What is the solution offered by the libertarian legal code to this disaster in the making? Why, an injunction would be granted against this ne’er do well in a split second, as it constitutes a clear and present danger, a threat. In order to safeguard itself from such legal suits, every owner of the Gulf would have an incentive to register his safety precautions with a court, or an association of owners.

So, the next time you hear someone blaming BP for this disaster, realize that the major, if not the entire culpability for this sad event belongs to the U.S. government, not to that oil company.