Articles

The Real Dangers of the BP Oil Spill

In Politics on June 16, 2010 by Filmosaur Tagged: ,

The oil spill in the Gulf of Mexico caused by the sinking of the BP offshore drilling platform Deepwater Horizon has proven to be a very difficult problem to address. The short- and medium-term effects of the spill are likely to encompass not only the environmental issues associated with the clean-up, but the changed regulatory climate is likely to impose new limitations on drilling, backed by a very vocal public. Corporate costs will rise due to increased risk exposure, not only because of new equipment and procedures, but also the need to prepare funds to deal with potential contingencies.

The immediate consequences notwithstanding, the situation in the Gulf points up the extreme vulnerability of the United States in the energy sector. With widespread calls for increased regulation and oversight, it is very likely that offshore drilling, especially in deep water, will be slowed well beyond the six-month moratorium recently imposed. Opponents of drilling in areas like the Arctic National Wildlife Refuge, long a controversial proposal, will certainly receive a boost, as will alternative energy advocates. Without a doubt, there are risks involved in oil drilling, particularly as the reserves become more remote and difficult to tap, and their locations increasingly coincide with both sensitive ecological areas and human habitation.

What remains unmentioned here is the strategic vulnerability of the U.S. economy to interruptions in oil supplies, and the longer term problem of dependency on petroleum imports. While a case can certainly be made for reducing dependency on oil, potential implementation of any such solution is so far in the future as to render any shift in the strategic situation so distant as to be almost irrelevant. In March of 2010 (the latest figures available), the U.S. imported 288 million barrels of crude oil while producing 150 million barrels (U.S. Energy Information Administration, U.S. Crude Oil Supply & Disposition), with a significant proportion arriving from countries whose governments have rather unfavorable views of America; Hugo Chavez’s Venezuela, for example, was responsible for delivering almost one million barrels per day. Other locations are beset by domestic volatility; Mexico, Nigeria, Angola, and Iraq all ranked within the top ten exporters of crude to the U.S. in that month (US EIA, Crude Oil and Total Petroleum Imports Top 15 Countries). The disruption of supply from any of these sources would create significant problems for the U.S., with price spikes and uncertainty fed by disproportionate public fear as well as real reduction in supply. With domestic supplies of just over one billion barrels (of which two-thirds is held in the Strategic Petroleum Reserve and the remainder in commercial storage) representing almost four months worth of imports, the time available to resolve a worst-case supply crisis is frighteningly brief, and even lesser crises pose a real challenge.

The oil business is extremely complicated, and the above figures represent a single very simplified measure of U.S. dependence on foreign petroleum. Once the problems of refining, shipping, storage, as well as ongoing research and exploration costs and market fluctuations are considered, it quickly becomes clear that American vulnerability is extremely high, higher even that these numbers suggest. Alternative energy sources will be developed, and as they become economically viable they will eventually supplant petroleum, much as petroleum replaced coal; government subsidies cannot sustainably offset the currently increased cost of these options. Simply put, however, for now and the foreseeable future, the United States will continue to be utterly dependent on importation of foreign petroleum for its survival. This means that American foreign policy must continue to focus of securing these supplies, and that it is very much in the strategic interest of the nation to develop such domestic resources as are available to at least provide a hedge against turbulence in markets and foreign supplies. Leadership in this instance must recognize that, public outcry notwithstanding, it is in the interest of the country’s security to minimize its exposure to disruptions in supply of oil, which remains the single most vital commodity to its economic and strategic well-being.

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