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Wednesday, June 23, 2010

The BP Oil Spill: Beyond Populism

Environmental disasters certainly draw their share of populist drivel, and the media on both the left and the right did not disappoint regarding what could be the worst environmental disaster in history. Fortunately, we here at Generation Patriot are interested in the truths that those who possess the power to inform people are not interested in reporting. The focus will be to gloss some reality over the useless populist nonsense that is circulating all over the airwaves, newspapers and blogospheres.

Populist Rant No. 1: BP makes billions of dollars, therefore, this greedy oil giant must pay for all cleanup and then some!

This is the Bill O’Reilly special. Not a night goes by where he doesn’t inform his viewers on just how much money BP makes, and how glad he is that the company will have to pony up billions of dollars. Before we delve into the heart of this ill informed statement, let me begin by saying that I am not suggesting that BP should not be liable, nor am I an apologist for Tony Hayward or BP. BP, under the leadership of Tony Hayward, has been a horribly run company. According to Occupational Safety and Health Administration (OSHA) records, BP has one of the worst U.S. safety records of any oil company. Over the past five years, BP has admitted to breaking several U.S. environmental and safety laws and has paid $373 million in fines to avoid prosecution. Therefore, I have no sympathy for Mr. Hayward nor the incompetent managers and leadership below him. BP must compensate all who were victimized by the oil spill. In addition, I fully support a criminal investigation and individual prosecution if gross negligence can be proven.

The problem with this statement is the failure to realize who really pays for this disaster. Does Mr. O’Reilly really believe that someone will turn Tony Hayward and other BP execs upside down until all of the coins fall out of their pockets? Does he really think Tony Hayward will have to sell his yacht to compensate the victims? Is he concerned at all about the rule of law – an essential element to a free society? If one has a modicum of knowledge of who, or should I say what, really owns a corporation, the gross ignorance is glaring. Among BP’s top ten shareholders are the following institutions: Bank of America, State Farm Insurance, T. Rowe Price, Wells Fargo and Vanguard. (1) What do all of these institutions have in common? They play a role in YOUR retirement, and the performance of these companies heavily impacts the world economy. Therefore, YOU pay for the mess…you who had nothing to do with the decisions made…you, who were most likely just driving to work the day the well exploded, are going to pay. It is tragic enough to see the environmental impact of this spill; to see people lose their livelihood as well as seeing the economic impact the spill will have on states for years to come – some that just finally recovered from all of the damage caused by Hurricane Katrina. However, the innocent people who ultimately pay for this disaster are the tragedy that has gone unaddressed. While President Obama is looking for someone’s ass to kick, and people are urging the government to shakedown BP with no regard for rule of law; do keep in mind just who they are shaking down. Got that Mr. O’Reilly?

Populist Rant No. 2: Unfettered capitalism is to blame and self-policing simply does not work.

This one is my favorite. My friends at the Guardian and many other left-wing progressive publications out there have people coming out in droves railing against a system that has given them their living (notwithstanding the fact that unfettered capitalism does not exist anywhere in the world).

If “unfettered capitalism” or economic liberalism existed, there would not be hundreds of pages of government regulations that govern deepwater drilling alone. There would be no restrictions on drilling apart from safety hazards; and the government would not be involved or, at the very least, MINIMALLY involved in the facets of business.

The major mistake my progressive friends always make is that they confuse statism with capitalism. The BP oil spill was not self-policing gone bad. BP simply drilled where the government told them to drill…where the government gave them the most ECONOMIC INCENTIVE to drill. Unfettered capitalism? I think not. Much like every other economic disaster (the housing debacle being the most recent), the government is always at the root, and the oil spill is no exception.

Has anyone seen the mainstream media report on the Deep Water Royalty Relief Act (DWRRA) of 2005? This was a government program signed into law by President Clinton that actually INCENTIVIZED risky deep water (minimum depth of 200 meters) drilling by implementing a royalty-relief program that relieves eligible leases from paying royalties on defined amounts of deep-water petroleum production over Federal Outer Continental Shelf lands. In addition, a law was passed to cap liability at $75 million. (2) (What a blow to lefties who were hoping I would have mentioned George H.W. Bush’s name, but do not despair. I will get to him momentarily.) Although the DWRRA expired in 2000, it was merely expanded to promote further interest in deep water drilling. We have the government incentivizing risk on THEIR continental shelves and capping liability if damage occurs. If anyone is interested in just how much royalty incentive there was, page 14 of the Department of Energy Report has an outline.

President Obama’s moratorium on offshore drilling is not the first, unfortunately. Moratoriums have a long history of preventing drilling in far less risky areas where accidents can be quickly contained and keep damage to a minimum. Going back 20 years, President Bush (I said I would get to him), imposed a moratorium that banned offshore drilling in the eastern part of the Gulf of Mexico. President Clinton then extended this moratorium until, ironically, 2012. In retrospect, can we say that government involvement and regulation caused the oil spill? Sure we can!

If economic liberalism existed, laws such as the DWRRA would not exist. Oil companies would be free assess their own risk, assume ALL costs and be fully liable for any damage. It is absolutely comical to see members of Congress humiliating Tony Hayward and the media tearing into BP, when it was these very same lawmakers who had absolutely no problem taking money from oil lobbyists and enacting into law the very policies that caused this disaster. It never ceases to amaze me how government always gets a “get out of jail free card;” but hopefully, this has cleared up the difference between statism and capitalism. More regulation anyone?

Populist Rant No. 3: This is President Obama’s Katrina.

I would like to see Obama suck it up with a straw, but people on the right need to stop this absurdity because it contradicts their ideology – that is if they truly believe that the federal government’s powers should be limited in scope. It should be no surprise, whatsoever, that the federal government would demonstrate gross incompetence. The federal government shouldn’t have the power to act. The silly rants from the left after Hurricane Katrina were to be expected, as these people believe that the government is all knowing and can solve any problem better than the shoddy private sector.

There is plenty of criticism to go around. From the fact that Obama’s team of experts is comprised of lawyers (rather than experts who possess the expertise in dealing with a problem of this magnitude) to his delay in meeting with BP executives, to his failure to repeal the Jones Act (which would allow private firms and foreign nations to assist) to his overall poor leadership skills – all are legit criticisms, but let’s look at the bigger picture. Do we really want centralized planning to handle a disaster of this magnitude? Come on people – THINK! I would like to see him on the golf course and basketball court for the rest of his term.

The oil spill is no more President Obama’s problem than Hurricane Katrina was George Bush’s problem. Due to these types of inane political blame games, Americans have become more and more reliant on federal assistance. We have people standing around waiting for the government to act. Conversely, we have people who want to take action, but cannot due to the bureaucratic red tape that coincides with centralized planning. Worst of all, local officials such as New Orleans mayor, Ray Nagin, were completely let off the hook for their incompetence; and the same will be true for the current disaster.

The issue of the federal government trampling all over constitutional rights is the matter in which the right should be actively engaged. Nowhere in the constitution does it say that the federal government has the power to oversee an oil spill, and no one should be advocating for Obama to act apart from enabling private companies and LOCAL governments to do whatever is necessary to contain the damage. Instead, many are caught up in silly partisan politics.

Populist Rant No. 4: We need to stop our unquenchable thirst for oil and move to alternative energy now!

To all of my environmentally conscious friends whose love for Mother Earth is admirable, but horribly misguided, this one’s for you!

Let’s begin by addressing why it seems our thirst for oil is unquenchable. While I’m not going to list the hundreds of products that are made from crude oil (but you can look some of them up here), I will attempt to direct a little humor at our misguided friends. Oil consumption goes far beyond energy use. This is the most commonly overlooked fact by “green” conscious people. Calls for solar energy, wind turbines, natural gas (which still requires drilling) and hybrid cars not only have their own drawbacks, but do not provide a replacement for the hundreds of products that are made from crude oil. Let’s use a very staunch green advocate as an example – someone who really goes the distance. He lives in a house that draws on solar panels for heating. Little does he know that producing polysilicon, which is necessary for building solar panels, results in the dumping of a byproduct of polysilicon called silicon tetrachloride. Silicon tetrachloride is a highly toxic substance that poses many environmental hazards. He refuses to own a car, not even a hybrid, so he chooses to bike to work. If I told him he was sitting on and peddling crude oil, (from the tires, to the pedals, to the seat) and the oil he saves amounts to a mere couple of drops in a tank, he might just walk. The trouble there is the shoes he’s wearing are made from crude oil as well, and look out for any clothing with polyester including those nice little green bags he uses to carry his groceries (if made from polypropylene)! I hope he knows how to iron, but then again, that consumes electricity. We cannot discard that dirty coal, but then again, if the wind is not blowing in the right direction… So rather than walking to work barefoot in wrinkly cotton clothing, then coming home from the grocery store balancing the groceries on his head; let’s just acknowledge the reasons for crude oil consumption.

In all seriousness, do I believe there should be investment in alternative energy? Yes. Should we drive cars that maximize gas mileage and cut down on consumption? Yes, but market should ultimately dictate demand. All of the incentive in the world exists to find viable alternative solutions to crude oil since he or she will be our next billionaire. The government does not need to be involved, as the government has already proven that impending disaster looms when it does get involved. Legislation such as cap and trade will do absolutely nothing to speed along innovation, but it will do plenty to harm the economy and contribute to unemployment. One must understand the economic chain of events that high energy prices will trigger – higher costs of all goods being one of them.

To sum up a very lengthy article, I’m more than annoyed that so many people all over the political spectrum have missed the bigger picture on a very serious disaster. The focus needs to be on the consequences of knee-jerk, politically charged reactions and an educated awareness of the role crude oil plays in not only a vibrant economy, but the vast majority of people’s livelihoods. It is my hope that the spill will be cleaned up as soon as possible and our readers would consider donating to the many charities that help the victims, wildlife and cleanup efforts.


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