Gulf Oil Spill
Grand Canyon University: Economics for Public Administrators ADM-614
September 10, 2014
Gulf Oil Spill
The National Oceanic and Atmospheric Administration (NOAA) estimated that 4.9 million barrels of oil spilled into the Gulf of Mexico over a span of 87 days. This catastrophic environmental disaster is known as the Gulf Oil Spill occurred on April 20, 2010 about 50 miles off the coast of Louisiana. An oil drilling rig (Deepwater Horizon) leased by British Petroleum (BP) ignited and exploded spewing 42,000 gallons of oil a day into the Gulf. Two days later the rig sank increasing the spill rate to 210,000 gallons of oil a day.
Analysis – Government intervention
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An article by Tom Eley (2011), reported that a “categorical exemption” was permitted by Obama administration that released BP from producing a legally required environmental impact study. Within a matter of days of this “categorical exemption,” Deepwater Horizon oil rig exploded.
Government intervention first failed with the Obama Administration defending BP as a responsible party; however, BP would be eventually named as the responsible party in the Gulf Oil Spill. BP was ultimately found negligent and held accountable for all cleanup costs resulting from the oil spill. As a result of government intervention, individuals and businesses were able to submit claims for cleanup costs, property damages, loss of earnings or profits, and for physical injuries or death.
The aftermath of Nation’s worst environmental disaster in history, the Gulf Oil Spill, stimulated analysts, researchers, officials and policymakers to investigate the events in relation to this disaster. Also, review of federally regulated offshore oil activities was initiated to determine government oversights. Due to these investigations and reviews, regulatory issues uncovered included the following: safety-case, relief well drilling and risk-informed structure.
The safety case is a set of documents that outlines the potential hazards that oil companies have identified for each of their oil rigs. The oil companies have to identify safety protocols, analysis of risks and processes in case an accident occurs (Jacobs, 2011). Oil companies must re-evaluate the safety case and make adjustments, updates and changes as necessary and required. The current system in the U. S. only covers minimum requirements. The U.S. Chemical and Hazard Investigation Board (CSB) found through its investigation into the BP oil spill, that the lack of the usage of safety case in the U.S. is worrisome (Jacobs, 2011).
There are both positive and negative externalities that arise from the U.S. adopting the safety case. Positive externalities include more education among staff members in the oil companies and aboard the oil rigs. Oil companies that have regular report requirements maintain a safe and productive work environment. Negative externalities will include increases in product pricing to support accomplishing the new requirements under safety case. Also some potential employees may not be hired because of the time that will be necessary for new staff to be trained on the new safety case requirements.
As a result of the BP Oil Spill, Congress has heavily discussed drilling relief wells while at the same time maintaining oil production. Relief wells...