Oil Spill: Thinking the Unthinkable

News that the co-chair of the Presidential commission investigating the Macondo disaster has called safety measures onsite ‘inept’ prompted me to think how much can we ever guarantee that a tragedy like Macondo will ever happen again.

Of course there are safety measures that can be taken, lessons learned, cultures improved. But there will always be risk. All we can do is to manage it.

In this case, though, is there such a thing is an acceptable risk? Can risk ever be managed to such a level that it is eliminated? in theory, possibly. in practice, probably not.

For all that Macondo was a conflagration of unfortunate coincidences (or ‘stupefyingly inept’ to use investigator William Reilly’s exact words), who is to say that, even after a thousand health an safety seminars, a hundred new safety positions created and a dozen investigations, a similar set of circumstances won’t occur again, causing a similarly catastrophic impact?

The reality which no regulator wants to face is that we need oil, and we will need it more in the future than ever before. And it’s not getting any easier to access.

In light of this, are the politicians who have failed to incentivise the generation of alternative fuels or wean the US off its dependence on ‘foreign oil’ as much to blame as the oil companies who have been fuelling the world’s recent economic growth?

Ultimately, the oil and gas business – just like investment banking or property speculation is defined by the relationship between risk and reward. but just as it is possible that another Soc Gen or sub prime crisis could occur (despite regulators’ and politicians’ knee jerk attempts to ensure it ’never happens again’, so it remains possible that another Macondo could happen.

And if – as Reilly states – the response of the government of the day will be ‘disproportionately severe’, what hope for the future of the company unfortunate enough to be responsible? what future for the industry as a whole? and what implication for the global economy?

– Gareth Pearce

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