The libertarian's guide to externality costing. What do we do about the oil spill?

[quote name='speedracer']BP has set aside $10 billion for its portion of expected liabilities. I think they're in for like 65% or 75% of the well. That would put it closer to $13.5 billion, plus the oil service providers and their liability, like Halliburton's now questionable cementing job. I think when all said and done, something on the order of $15 bil per would capture most of the reasonably projectable worst case scenario cost.

That would bump the price of gas like $5 extra?[/QUOTE]

http://whatitslikeontheinside.com/uploaded_images/Make-It-So-776665.jpg

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A confidential government report, obtained by the Press-Register Friday, suggested that kinks in the pipe may be the primary factor slowing the flow from the well.

The report warned that "if the riser pipe deteriorates further, the flow could become unchecked." That could release millions of gallons of oil per day instead of the 210,000-gallon current estimate.
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Holy shit dude.
 
This sucks so fucking bad. Ocean harvests are a way of life on the Gulf. Moving to the gulf has really taught me what a rad little slice of Americana it is. The only places I know of in America that are so tied to their ocean harvest cultures are Washington with the salmon and Hawaii.

Adios crawfish festivals. And gulf turtles. And shrimp. And red fish. And gulf dolphins.

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Moar fun numbers:
The worst-case scenario for the broken and leaking well gushing oil into the Gulf of Mexico would be the loss of the wellhead currently restricting the flow to 5,000 barrels -- or 210,000 gallons per day.

If the wellhead is lost, oil could leave the well at a much greater rate, perhaps up to 150,000 barrels -- or more than 6 million gallons per day -- based on government data showing daily production at another deepwater Gulf well.

By comparison, the Exxon Valdez spill was 11 million gallons total. The Gulf spill could end up dumping the equivalent of 4 Exxon Valdez spills per week.
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This is fucking terrible, especially if you live in the areas effected.

I couldn't imagine something like this happening to the Long Island Sound or the South Shore.
 
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Precisely why big business doesn't need "regulatory oversight," they need a full-on criminal justice system.

Not installing remote shutoff valves is criminally negligent.
 
I know we shouldn't execute people for stupidity but we should definitely make this clown drink a nice cup of that chocolate milk.
 
[quote name='redline']What do Palin and Libertarians have to do with the oil spill? (I know there's a joke in there somewhere)[/QUOTE]

This incident is due to BP's negligence and is yet another example of how the Republican/Libertarian battle cry of "deregulated free market" as a solution to all our woes is positively fucking preposterous.

But if you didn't believe that by now, given the mountain of evidence to support it and complete dearth of contrary evidence, millions of gallons or oil being spilled won't convince you now.
 
Obama's mistake was that he trusted BP when they said 'we got this shit brah.'

I'm not against capitalism, but don't trust these sharks. He should've sent dudes there to do their own estimations. He did that too late, and for that I think he should be criticized.
 
I hope this is the end of "drill baby drill." This should prove just why Palin and people that follow her are batshit crazy. It's simple math, the more offshore oil rigs we have, the greater the chance that there could be an accident like this.
 
[quote name='redline']What do Palin and Libertarians have to do with the oil spill? (I know there's a joke in there somewhere)[/QUOTE]
This is an incident that cannot rationally be covered by libertarian free market economic theory.
 
[quote name='mykevermin']This incident is due to BP's negligence and is yet another example of how the Republican/Libertarian battle cry of "deregulated free market" as a solution to all our woes is positively fucking preposterous..[/QUOTE]

So myke do you think the GOVERNMENT could have done a better job?
 
that's a ridiculous question.

the industry needs to be regulated - that's not governent *doing it*, it's government making sure that BP doesn't...well, do exactly what they did. This kind of damage can be monetized, but that's the least of our concerns. Any corporation so negligent so as to do what BP has done here should be found criminally negligent and summarily executed.
 
Liberal d00ds, I done told yous. Take the total cost of the accident and pass it onto the consumer.

When gas is $20 per gallon, dmaul will knock my ass down to get that hydrogen/electric hybrid.
 
[quote name='perdition(troy']my only question is wtf they aren't burning anything yet.[/QUOTE]

Last I checked they didn't even stop the flow yet.
 
[quote name='IRHari']Obama's mistake was that he trusted BP when they said 'we got this shit brah.'

I'm not against capitalism, but don't trust these sharks. He should've sent dudes there to do their own estimations. He did that too late, and for that I think he should be criticized.[/QUOTE]

Agreed. And I also agree with myke that they are criminally negligent for not having a remote shutoff. An accident happens and there is no alternate way to stop millions of gallons of oil escaping into the Gulf? Really? What idiot designed that system?
 
[quote name='fatherofcaitlyn']Liberal d00ds, I done told yous. Take the total cost of the accident and pass it onto the consumer.

When gas is $20 per gallon, dmaul will knock my ass down to get that hydrogen/electric hybrid.[/QUOTE]

I don't think they could push that gas to $20 all by themselves. It would have to be a federal bump to all companies. Sure BP own's 1/3 of the nations refinery but not all of them.

Though I would agree to bumping up gas to just push for alternates.

We do that with smoking and alcohol. Maybe not alcohol so much, but definately 6.50 for a pack of smokes we do.


Last I heard, they are coming up with a Cement Cap to try to do a underwater bell to slow it down and regulate it. Only other option is to drill side wells and take off the pressure, which will take a few months.


What I don't get is why haven't they decided to run water pumps to syphon the oil off, and the only reason I could think of is too much, and we don't have the technology.


Oh the other thing I heard on NPR, Nigeria has over 2000 spills a year... minor, not as grand as this, but 2000.
 
[quote name='Papa Neorev']do you think the GOVERNMENT could have done a better job?[/QUOTE]
Creating massive environmental damage? Hell no. No one can compete in that space with the private sector.

Or do you mean the clean up that has been 0% efficient? Could it have been done worse?
 
I dont see how the bond system prevents this kind of thing. It just sets up a system to pay for it. After they do the cost benefit analysis, given the rarity of this kind of thing, they could very well just continue to do things without safeguards. Lets say that a company has to post an X million bond and if there is no disaster, there is no money used. Why should they spend X million on top of that for safeguards given the odds of a failure? Thats guaranteed money lost, while if they post the bond and have no safeguards, they can potentially get away with no money expended.

Also, the cost of the cleanup by itself doesnt include other costs that are harder to value. There is damage to people's livehoods and health, and I dont even know how you can price the value of the marine life lost.

Look, if there were the political will to do something that would permanently drive up the cost of gasoline, $5, $10, $15, $20 or whathaveyou, that would be fine. But I dont think thats going to happen.
 
[quote name='speedracer']Creating massive environmental damage? Hell no. No one can compete in that space with the private sector.[/QUOTE]

Really? How's life in Hiroshima and Nagasaki?
 
http://blog.al.com/live/2010/05/fire_boom_oil_spill_raines.html


If U.S. officials had followed up on a 1994 response plan for a major Gulf oil spill, it is possible that the spill could have been kept under control and far from land. The problem: The federal government did not have a single fire boom on hand. The "In-Situ Burn" plan produced by federal agencies in 1994 calls for responding to a major oil spill in the Gulf with the immediate use of fire booms
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etc etc.


BP fails and the Government fails
 
Your choice of responses:

1) I didn't have you pegged as someone who demands the government bail big businesses out of their fuckups.

2) You don't seem to understand what the word "regulation" means.
 
The bond system isn't meant to stop the problem from happening. It is meant pay for the problem when it does happen and force the real cost of gasoline or plastic products onto the consumer. Considering how much worse this one disaster is, it would be adequate to make the system pay as you go.

Now, do we make this a "you're killing the Gulf of Mexico" tax so Big Oil doesn't have to bother cutting a check or a chance to skip out on the debt?

If we make it a tax, Sarah Palin or her ilk will decry big gubmint. Given the attention span of the average American, it'll be highly effective.

If we make it a loan against services rendered, somebody at Big Oil will make a mint off of the interest from the account "holding" the government's loan payments in addition to payments being perpetually late.

Just like all government work, its work in Hiroshima was half-assed.
http://www.fahthaimagazine.com/images/2006/jan/p060HipHiroshima0003.jpg
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I do have a proposal without any touch of seriousness. It is called The Gulf of Mexico. So, let's have make Mexico fix the problem or declare war on them for not taking care of their property.
 
[quote name='UncleBob']Really? How's life in Hiroshima and Nagasaki?[/QUOTE]
Right. The scale of this thing is so off the charts we're comparing it to nuclear detonations during the world war.

[quote name='Papa Neorev']http://blog.al.com/live/2010/05/fir...s the floor at a bar that fisherman frequent?
 
[quote name='speedracer']Agree 100%. How do you cost the guy who sweeps the floor at a bar that fisherman frequent?[/QUOTE]

I would argue he owes BP because he is no longer cleaning up after seamen.

EDIT: I think we'll need a bigger chart.
 
So BP goes out and hires a shit ton of fishermen to help lay booms and shit like that. Apparently the contract they signed had language that not only insulated BP against liability in the event of injury to workers or damage to boats, but could have been interpreted to mean that the fishermen are entirely waving their rights to sue BP over any aspect of the spill.

BP says they're tearing up the contracts and are genuinely sorry. The BP spill liaison: "It was just a standard waiver, something the lawyers like."

I bet.
 
[quote name='speedracer']So BP goes out and hires a shit ton of fishermen to help lay booms and shit like that. Apparently the contract they signed had language that not only insulated BP against liability in the event of injury to workers or damage to boats, but could have been interpreted to mean that the fishermen are entirely waving their rights to sue BP over any aspect of the spill.

BP says they're tearing up the contracts and are genuinely sorry. The BP spill liaison: "It was just a standard waiver, something the lawyers like."

I bet.[/QUOTE]

http://www.theind.com/news/6161-bp-backs-off-overbroad-language-in-agreements-with-fishermen

Just in case nobody believes you.
 
well are we debating that BP won't be able to cover the cost?

It would be nice and all if they had a "Oh fuck" fund, but really, why not enforce better safety measures?

If this happens again, and again, the rarity that it will, and the fund runs out, what would happen then? A government bailout? Gas going to 11($20/gal)?
 
A Chairman from BP was going around telling everyone how hard it is to cap the spill, "like performing open heart surgery under water" or something. Well if it was too fucking hard to fix then don't start the fucking project, you know sure as shit they didn't mention such contingencies when selling the idea.

BP makes so much money they probably could cover a lot of the costs, but they won't.

The government will end up paying most of the costs and it will be considered harsh that BP paid as much as a dime.

There is an entire industry devoted to running interference on this kind of garbage and our media is too corrupt to matter.
 
[quote name='speedracer']Right. The scale of this thing is so off the charts we're comparing it to nuclear detonations during the world war. [/quote]

I compare *everything* to Hiroshima and Nagasaki. It helps keep the evil we do in perspective.
 
[quote name='UncleBob']I compare *everything* to Hiroshima and Nagasaki. It helps keep the evil we do in perspective.[/QUOTE]
Thanks for the measured, rational input. We'll take it under advisement.
[quote name='xycury']well are we debating that BP won't be able to cover the cost?[/quote]
I would be willing to debate that. They'll cost the turtles and a couple of marshes and estuaries and sign a check over to the Gulf states and some fishermen that litigate. But the cost accounting student in me just can't find a way to cost out the entire aftermath. Calculating every single instance of negative repercussion would be monstrous and simply isn't done. Shit, my whole basis for hating on capitalism can be distilled down to that one fact. They can't and they won't cost their externalities. And everyone pretends that's cool.

I don't get it.
It would be nice and all if they had a "Oh fuck" fund
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Allegedly BP's primary insurer is a wholly owned subsidiary, which means they'll be charging themselves.
but really, why not enforce better safety measures?
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Because tight regulation costs money, which hurts the bottom line, which is inherently anti-capitalist.
If this happens again, and again, the rarity that it will, and the fund runs out, what would happen then? A government bailout?
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We're already bailing them out. The National Guard, Coast Guard, FEMA, etc. are already bringing resources to bear. But how can you really cost the price of the National Guard? Ok, so you've got the obvious costs: paychecks for the soldiers and the cost of fuel incurred and crap like that. But what about the cost the government bore to train and maintain these soldiers? Or the cost of the equipment being used in the field? Or the cost to the businesses because their employees are reporting for duty instead of producing? Or the cost to the individual soldier because they aren't getting paid at their normal job? Or the cost of vacationers who are being deprived of public resources? Or the cost of tax yields to local governments from commerce lost?

As I stated in the title, I would love a libertarian to take on these very obvious issues with laissez faire. They seem to have disappeared. I was once the most fire breathing economic libertarian on the planet. This exact issue is why I am economically liberal now.
 
[quote name='speedracer']Thanks for the measured, rational input. We'll take it under advisement.

I would be willing to debate that. They'll cost the turtles and a couple of marshes and estuaries and sign a check over to the Gulf states and some fishermen that litigate. But the cost accounting student in me just can't find a way to cost out the entire aftermath. Calculating every single instance of negative repercussion would be monstrous and simply isn't done. Shit, my whole basis for hating on capitalism can be distilled down to that one fact. They can't and they won't cost their externalities. And everyone pretends that's cool.[/QUOTE]

Yeah I'm in the camp that BP will pay the damage cost to the coast but that's it. This won't go deep enough.


[quote name='speedracer']
I don't get it.

Allegedly BP's primary insurer is a wholly owned subsidiary, which means they'll be charging themselves.[/QUOTE]

Was listening to NPR and they interviewed a couple fishermen companies, since Katrinna, they have insurance for shit that happens, but it won't cover oil spills.

[quote name='speedracer']
Because tight regulation costs money, which hurts the bottom line, which is inherently anti-capitalist.[/QUOTE]

And there really isn't any choice, if the private sector can't do it, then someone will have to force it.

One would have thought with Valdez that they might have learned something... but it appears not.
 
Well, you have 1 of 2 political parties that refuses to do anything but worship the free market. That's probably the most contributory factor to the problem.

And Clusterstock just put up a post where they do a "dirty" cost accounting. Some highlights:

Six of America's top 10 shipping ports are on the Gulf Coast
six-of-americas-top-10-shipping-ports-are-on-the-gulf-coast.jpg


The Gulf's commercial seafood industry is $21 billion

83 percent of US shrimp landings are in the Gulf

56 percent of US oyster landings are in the Gulf

14 percent of US commercial fishery landings are in the Gulf

There were 25 million recreational fishing trips in the Gulf in 2006

The Gulf accounts for over 40% of all U.S. marine recreational fishing catch

Gulf tourism provides 620,000 jobs and $9 billion in wages
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So it looks like JUST THE FISHING PORTION of the bill comes to roughly $30 billion a year. Reasonably expecting it to be 80% fouled for 5 years minimum, that's $120 billion. The entire value of BP as of yesterday was $157 billion.
 
Your negativism is getting on my nerves, speed.

Poor people can finally afford property on the coast. When a hurricane blows in, there should be no disruption in oil supplies because the oil will be several hundred miles inland.

Win, Win!
 
BP had a permit to drill to 18,000 feet, they were drilling at 25,000.

They are going to try and deflect this all on to their sub-contractors, I don't think it is going to fly.
 
I haven't read... all the posts but... how much does this hurt our "total" oil available and how many years do we lose now that fucked up once again?
 
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