There is understandable distress about the oil spill in the Gulf on the BP well and lots of heated rhetoric about “doing something” to BP to punish them for their perceived negligence. We truthfully don’t know the facts yet about the cause of the mishap. Sometimes things just go wrong and no one is at fault. One would suspect that the old bug-a-boo, human error, is the culprit. That is because the odds would favor such a conclusion when dealing with complex machinery and man. Most airline crashes are caused because some person made a mistake along the way. On a few occasions we find that equipment failed but that is normally the exception.
Some pundits have already called for the demise of BP. Maybe you have heard them saying that BP should be put in bankruptcy or “nationalized” by the government. Of course many politicians have already called for BP to suspend its dividend including the gang that can’t shoot straight in the White House. That same gang has already imposed a moratorium on new drilling in the Gulf for deep wells and suspended drilling even in the shallow waters until they complete a review. Lord only knows how soon that review will take. They first have to wake up the bureaucrats and get them off their porn watching habit and actually do some work.
That moratorium will cost us thousands of jobs, good jobs for Americans at a really bad time. The loss from income and the unemployment benefits that will have to be paid will badly exacerbate the financial condition of the US and dramatically impact the local economies of the Gulf States. The six month moratorium will not be for just six months. The companies that own those rigs will have to put them to work somewhere and they will be moving them out of the Gulf at lighting speed. Those rigs will move to Africa, Indonesia, Thailand, The South China Sea, the Middle East and any other place that Japan, China or India what to explore and develop their own independent source of oil. Those rigs are huge and cost hundreds of millions of dollars. It isn’t like picking up a tinker toy set and moving it from the den to the kitchen. Once moved they will go to work and remain there for the duration of the contract to drill. The moratorium means in reality an interruption of drilling for a year or much more. There is no assurance those rigs would ever return to the Gulf. What company would want to face the potential wrath of Congress and the White House and the blizzard of new regulations coming down the pike? Meanwhile back at the ranch as they old westerns used to say, we will still be using oil, lots of oil ever day and it will have to come from somewhere.
The demands that BP cancel its dividend raises very difficult economic and diplomatic issues we need to face. The fact is that about 14% of all dividends last year in Britain came from BP. Literally the widows and orphans and the retirees depend on that cash stream for their living. The news indicates that one in six of those receiving a dividend in Britain got it from BP. The British government is already dealing with pretty severe economic problems with their own debt and deficit. You think they will notice the loss of billions annually in those dividend payments? You can just imagine the conversation between the Chancellor of the Exchequer with our tax cheat in chief, Geithner. “I say old boy, that dividend restriction is a bit of unpleasantness for us. I fear if that were to occur we would have to eliminate our capital gains tax entirely and all transaction taxes on securities of any stripe. We’ve always rather wanted Wall Street to move to the City in any event.” London could change its laws in a heart beat and virtually all the investment firms, hedge funds and large banks would move there. They don’t have to be on Wall Street in the modern era. Do we really want to lose that business and income stream. New York, both city and state, would become a ghost town overnight. What if the British were to tell us they couldn’t supply our military bases in Britain with fuel any more if BP were destroyed? The payback scenarios are too numerous to count and none of them would end well for us.
We need some grown ups running things, not a bunch of kids on the school yard yelling taunts and epithets. Let’s see what BP can pay first and how much damage has resulted. We don’t need to be pouring gasoline on the roaring fire. They already face lawsuits out the wazoo and have all the incentive in the world to move fast and efficiently. That moratorium should be one month; we should make those bureaucrats work around the clock if they have to see if there is a system wide problem or regulatory issues. I think there won’t be anything of significance found. It was probably someone not following proper procedure in the first place. We should not compound the problem with the loss of thousands of jobs, billions of lost revenue and even more dependence on foreign oil. Like a good physician, let’s first do no harm.
It is not on the front pages any longer because we have such a short attention span, but that Icelandic volcano is still erupting and spewing ash in the atmosphere. It has been three months now. Now why haven’t the regulators and bureaucrats figured out how to stop that thing. It is going to have a much bigger influence on our climate than anything we are doing if it keeps this up much longer. http://www.olcranky.wordpress.com