The BS arguments for offshore drilling

[Christopher]

Reading through the Horizon oil spill on Wikipedia, eventually we come down to the political argument allowing for offshore drilling:

The chief argument in the U.S. offshore drilling debate has been to make the United States less dependent on imported oil.

Now I don't know about you, but my understanding is pretty much that all oil production goes into a general pot that is distributed internationally. I mean, that's basic economics. Oil is an international commodity, and companies tapping oil in the USA (regardless if it's Chevron or British Petroleum) don't seem silly enough to restrict trade of the product to a single market. Maybe if the whole world goes to war, then we might need to depend on ourselves... but at that point, there are bigger problems.

And I am very damn glad that California has remained steadfast in banning offshore drilling. It was a catastrophe off the coast of California, just like Horizon, that led to the original banning. Some say that loosening drilling restrictions will prevent disasters, but clearly this is not the case.

And just to be clear on pricing, speculation drives the price, not hard-commodity supply/demand. Besides, given recent events in Silicon Valley over the past few years, when oil prices go up, innovation skyrockets in the energy industry. And when the oil finally does reach low supply, innovation is the only thing that will make transition to a new energy source more smooth.

[algernonsidney]

It will be a wonderful day when people stop buying oil. When that happens, people in Saudi Arabia, Iran, and Iraq will go back to crawling on their stomachs, eating worms and bugs to survive.

[Bryce]

Blind regulation is never the answer. This afternoon, Judge Napolitano explained how federal regulation pushed the limits of offshore drilling out far enough so that BP had to drill in 5,000 ft of water as opposed to 500 ft. And neither BP nor the federal government know how to contain a spill at that depth. But the government won't be held liable for contributing to the disaster, just for muscling the big corporation to "pay" for it's transgresses. Once this disaster is passed, the company, it's industry, and people will be in for some (more) regulatory punishment. But in the hope of this never happening again, it's justified... right?

Edited June 17, 2010 by Bryce

[merjet]

And just to be clear on pricing, speculation drives the price, not hard-commodity supply/demand.

This is drivel. Most forward, futures, and option contracts are acquired by hedgers, not speculators. Also, there is much supply and demand for future delivery, not simply in the spot market (for immediate delivery).

Edited June 17, 2010 by Merlin Jetton

[Michael Stuart Kelly]

It's an old 3-part game the government plays that Yaron Brook explained really well on his recent interview on Glenn Beck.

1. You tie an industry hand and foot with regulation, so much so that the risk of something going wrong is drastically increased.

2. A disaster or failure occurs.

3. You denounce capitalism, big business, etc., saying that these have failed, and push for more political power.

Michael

[dan2100]

And just to be clear on pricing, speculation drives the price, not hard-commodity supply/demand.

This is drivel. Most forward, futures, and option contracts are acquired by hedgers, not speculators. Also, there is much supply and demand for future delivery, not simply in the spot market (for immediate delivery).

Speculators are usually attacked. I recall when I was in college a friend of mine who seemed to be a free market type and like to buy silver coins railing about speculators driving wild swings in the silver market. He was verging on calling for banning speculation outright -- as if that were somehow compatible with free markets and could practically be done anyhow.

[dan2100]

Blind regulation is never the answer. This afternoon, Judge Napolitano explained how federal regulation pushed the limits of offshore drilling out far enough so that BP had to drill in 5,000 ft of water as opposed to 500 ft. And neither BP nor the federal government know how to contain a spill at that depth. But the government won't be held liable for contributing to the disaster, just for muscling the big corporation to "pay" for it's transgresses. Once this disaster is passed, the company, it's industry, and people will be in for some (more) regulatory punishment. But in the hope of this never happening again, it's justified... right?

I believe you're mostly right here, but I don't think this is good regulation vs. bad or blind regulation -- as if there were a such thing as good regulation.

[dan2100]

It will be a wonderful day when people stop buying oil. When that happens, people in Saudi Arabia, Iran, and Iraq will go back to crawling on their stomachs, eating worms and bugs to survive.

They weren't "crawling on their stomachs, eating worms and bugs to survive" just before oil was discovered there, so why would they now? Add to this, these nations seem to suffer from a resource curse. Yeah, sure some have gotten fantastically wealthy from mineral wealth, but most of the money from this goes to a small class and at best only trickles down to the rest in the form of buying their passivity when it's not paying for secret police to watch over them. (Of course, with Iraq now, this isn't exactly the case. But for now, it's basically a puppet state of the US. I'm thinking of before the invasion took place. Saddam wasn't handing out cash to the poor. He was building presidential palaces, buying weapons, and paying for an elaborate secret police force.)

Also, this disaster wasn't caused by "people in Saudi Arabia, Iran, and Iraq" -- as far as I know.

[Bryce]

Blind regulation is never the answer. This afternoon, Judge Napolitano explained how federal regulation pushed the limits of offshore drilling out far enough so that BP had to drill in 5,000 ft of water as opposed to 500 ft. And neither BP nor the federal government know how to contain a spill at that depth. But the government won't be held liable for contributing to the disaster, just for muscling the big corporation to "pay" for it's transgresses. Once this disaster is passed, the company, it's industry, and people will be in for some (more) regulatory punishment. But in the hope of this never happening again, it's justified... right?

I believe you're mostly right here, but I don't think this is good regulation vs. bad or blind regulation -- as if there were a such thing as good regulation.

I realize now what I did. I didn't mean to imply that there was a distinction: all regulation is blind.

Edited June 17, 2010 by Bryce

[Michael Stuart Kelly]

... all regulation is blind.

Bryce,

I disagree with this. I am more in line with someone like Stossel, who says he doesn't think heavy ordinance like tanks should be sold to civilians. He would feel very uncomfortable living next door to a person who bought a fully functioning tank and kept it in his backyard.

There are rational standards that can be used for regulating really dangerous things.

Michael

[Michael Stuart Kelly]

Christopher,

This "no offshore drilling whatsoever" approach is throwing the baby out with the bath water.

According to what I heard Judge Napolitano say, the BP mess was primarily the result of government meddling. After the Exxon Valdez oil spill in Alaska, and all the litigation and all the money Exxon paid out--and then all the lobbying and all the politicians lining their pockets and filling their "favor chests," the following 2 things should be kept in mind.

1. The Congress enacted--and President Bush the elder signed--the Oil Pollution Act of 1990, limiting liability of the oil companies to 75 million dollars for disasters. Without this cap, I seriously doubt BP's board of directors would have allowed such deep-water drilling without much more profound risk studies. With unlimited liability on damages, I don't even thing BP would have been drilling where it was. Don't forget, the way corporations are structured, senior management responds to the demands for profits from the Board. When the financial risk is limited to only 75 million dollars, it's easy to be reckless and everybody gets on board.

2. The State of Louisiana had authorized drilling much closer to shore, where any accident would have been far, far, easier to contain, but the Federal Government stepped in and prohibited it for "environmental reasons." Thus drilling was moved to farther out--to a place the Federal Government approved of--and the game was "play there or don't play at all." This is a recipe for a disaster waiting to happen.

And it did.

The problem is not corporate irresponsibility, nor even government irresponsibility. It's what happens when large corporations get in bed with government.

Get the government out of the picture and the danger basically goes away.

As to the trading, it's the same crap--large corporations in bed with government (or "governments," I should say). All those middle front companies exist to circumvent laws from different countries. And the oil companies love these laws because it keeps them with a cartel monopoly on supply and keeps smaller companies from competing.

It's actually a good time right now to found an offshore bank on a tax haven island somewhere. There's no lack of clients...

Michael

[Bryce]

... all regulation is blind.

Bryce,

I disagree with this. I am more in line with someone like Stossel, who says he doesn't think heavy ordinance like tanks should be sold to civilians. He would feel very uncomfortable living next door to a person who bought a fully functioning tank and kept it in his backyard.

There are rational standards that can be used for regulating really dangerous things.

Michael

That reminds me of the up-armored bulldozer that a man drove through the town of Granby several years ago. Or the stolen tank that drove through San Diego:

But those incidents are exceptions. The motives of someone who would want a fully functioning tank could range from that of a hobbyist to self defense. And if he had the private wherewithal to buy and maintain such a machine, what incentive would he have to go on a public rampage? What worries me are the people who don't want anyone to own weapons (of any grade). It's about absolutes. By taking your form of reasoning you're not arguing that some extreme forms of weaponization are dangerous, you're arguing that (all) men are incapable of wielding weapons. There is no distinction. At some point a gun, for example, does not become magically safer or less dangerous than a tank. So the problem is that we divest most of our personal safety to the government who, in turn, passes arbitrary and sweeping regulation to try to protect us. If I didn't have an authority to appeal to, I would be able to immediately and preemptively defend myself against my neighbor if I knew that his owning a tank was bad for my health. And so would everybody else.

Edited June 17, 2010 by Bryce

[Michael Stuart Kelly]

It's about absolutes. By taking your form of reasoning you're not arguing that some extreme forms of weaponization are dangerous, you're arguing that (all) men are incapable of wielding weapons. There is no distinction.

Bryce,

That's easy to turn around. If you believe that this is my "form of reasoning," then your "form of reasoning" would make it OK for any person to buy a tank.

Even a raving lunatic.

Sorry. I don't agree with that and I am all in favor of prohibiting it.

And I don't agree with applying absolutes to issues where they don't fit, either.

I derive my principles from reality. I do not try to make reality fit a principle, and simply ignore what doesn't fit it.

The only real absolutes I have found are fundamental axioms. All other knowledge is contextual. Especially inductive things like principles.

(And even the fundamental axioms are contextual in that they need a mind to think them. But presupposing normal healthy minds, I am convinced they are absolute.)

That's my "form of reasoning."

Michael

[Brant Gaede]

All that tank did, fortunately, was destroy some property. 15 years ago. Has it happened since? Guns are much more deadly so, Michael, are you against the right of people to own, possess and use firearms?

--Brant

loves tanks but can't afford one, yet

[Bryce]

It's about absolutes. By taking your form of reasoning you're not arguing that some extreme forms of weaponization are dangerous, you're arguing that (all) men are incapable of wielding weapons. There is no distinction.

Bryce,

That's easy to turn around. If you believe that this is my "form of reasoning," then your "form of reasoning" would make it OK for any person to buy a tank.

Even a raving lunatic.

Sorry. I don't agree with that and I am all in favor of prohibiting it.

And I don't agree with applying absolutes to issues where they don't fit, either.

I derive my principles from reality. I do not try to make reality fit a principle, and simply ignore what doesn't fit it.

The only real absolutes I have found are fundamental axioms. All other knowledge is contextual. Especially inductive things like principles.

(And even the fundamental axioms are contextual in that they need a mind to think them. But presupposing normal healthy minds, I am convinced they are absolute.)

That's my "form of reasoning."

Michael

My life is exclusively my prerogative. No one will stand between me and my business, even if it is to buy a tank. And if I become aware of a lunatic who threatens my life, I won't wait to take care of him myself. ...But that's not reality. And I certainly didn't derive those beliefs from reality. Reality is where laws are made by men unwilling to take their lives into their own hands, where others have made my life and my business their prerogative. You may only be interested in heavy ordinance, but this principle that you believe in is based upon whatever false premise is behind every act and regulation like it, including rules as simple as disallowing metal spoons in school cafeterias.

Edited June 18, 2010 by Bryce

[Michael Stuart Kelly]

Guns are much more deadly...

Brant,

A gun is more deadly than a tank?

Gimme a break.

...so, Michael, are you against the right of people to own, possess and use firearms?

No.

Just heavy ordinance--things like tanks and bazookas and bombs and, I don't know, biological and chemical weapons of mass destruction. Stuff like that.

(Before the crap starts, I remind you I am far from being alone in the Objectivist-libertarian orbit with this thinking.)

Michael

btw - I left my own gun in Brazil, but I own one. I need to get another, but Kat is not crazy about the idea, seeing as we have a special-needs child who might find a way to get his hands on it one day and want to play with it.

[Christopher]

The problem is not corporate irresponsibility, nor even government irresponsibility. It's what happens when large corporations get in bed with government.

This is an interesting proposition, and I could agree with it. This government-corporate bedding is, as I understand it, why regulations were so lax as to allow the spill and lack of backup safety measures to occur in the first place. But basically sifting through the posts, there are only two arguments that seem to be contradicting the above points:

1. the price is not driven by speculators, the price is driven by hedgers. Well the point here is that price is not driven by hard supply, it is driven by factors that are relatively irrelevant to the amount we drill in the United States.

2. the spill would have been less worse if it had happened in more shallow waters. Well this is just a silly argument. Basically it's not about the spill occurring, it's about containing the spill after a catastrophe. If a spill occurs in 500ft depth and took 10 days to contain, I wonder whether the damage would be environmentally worse than a spill that occurs far out but takes months to contain. Look at Ixtoc, it was one of the worst spills and occurred at 160ft depth!! Bla to the depth argument then! However, such a consideration is irrelevant anyway. When it's a matter of the lesser evil, we're ignoring the source of evil occurring in the first place. Perhaps the nail on the head is lack of appropriate government oversight and regulations that limit liability.

[Brant Gaede]

Yes, Michael, guns are more deadly than a tank. I was not referring to a tank's guns, just the tank. Audie Murphy, btw, won the CMH by firing a .50 cal machine gun mounted on a burning armored vehicle at tanks and infantry, which both then retreated. The tanks would not advance without infantry support because they could not prevail against infantry without infantry. Tanks are also at a disadvantage in urban settings. You can blow off a track or Molotov cocktail it to death. Now you take your tank and fill it up with crew, ammo and a destructive urban mission and you'll likely do a lot of damage and kill some people until you run out of fuel or are otherwise stopped. I can take two 9mm semi-automatics into a crowded place and kill twenty people, like a restaurant, walk out the door and kill 10-20 more before somebody finally kills me or I kill me. I can take a sniper rifle into the rural American West and kill people for years. Say two a month. Go to another state, repeat. You won't find me living in rural Nevada when the shit hits the anarchical fan; an expert can take you down at 1000 yards, a tyro at 300.

--Brant

sheesh!

Edited June 18, 2010 by Brant Gaede

[Brant Gaede]

My views on gun ownership are not primarily Second Amendment, but if I have a right to defend myself I have the right to defend myself with something. So I said in a published letter to Reason magazine maybe 30 years ago. In this formulation rifles, handguns and shotguns are perfectly acceptable to me since I don't plan on starting a revolution, just blasting away any home-invaders or anyone who wants to mug me for my dog.

--Brant

I love Arizona!

[Brant Gaede]

I cannot comment on households with special needs children except to say consider a safe room in which a cell phone* is permanently installed.

Otherwise saturate the child with the firearms in your home. The more curious the more saturation until all the curiosity is burnt out. Take him to the range and fire off your guns until he's sick and tired of them. Repeat, repeat, repeat. Get rid of all the mystery. (This advice is far from complete.)

Years ago, in Texas I think, a 12 yo boy found his father fighting with a home invader who had a knife. They were rolling around on the floor. The boy went and got his father's rifle and killed the bad guy.

--Brant

know how to use it; don't abuse it

*buy a cheap phone at WalMart for 15-20 bucks, but don't buy any minutes of use--just keep it charged; it'll work for 911 regardless--carry one in your glove compartment

Edited June 18, 2010 by Brant Gaede

[Michael Stuart Kelly]

2. the spill would have been less worse if it had happened in more shallow waters. Well this is just a silly argument. Basically it's not about the spill occurring, it's about containing the spill after a catastrophe. If a spill occurs in 500ft depth and took 10 days to contain, I wonder whether the damage would be environmentally worse than a spill that occurs far out but takes months to contain. Look at Ixtoc, it was one of the worst spills and occurred at 160ft depth!! Bla to the depth argument then! However, such a consideration is irrelevant anyway. When it's a matter of the lesser evil, we're ignoring the source of evil occurring in the first place. Perhaps the nail on the head is lack of appropriate government oversight and regulations that limit liability.

Christopher,

This is not a matter of evil. It's a matter of what happens in an accident. You cannot ban accidents and no industry on earth wants to create industry-related disasters on purpose. If you want to say silly, I think that presumption, which underlies many of the emotional reactions I have seen, is silly.

(Ixtoc happened in the 70's and 80's. I need to read more on it to see if the technology has improved. I presume it has, since it always does.)

Anyway, Beck had a very interesting take on the offshore drilling ban Obama just set up. It goes like this.

Oil rigs are extremely expensive pieces of equipment and they need highly specialized people to run them. So you just don't say, "Let's take 6 months off," and then expect the rig owners and the skilled workers to sit by and not do anything while some government bureaucrat makes a decision. They will go elsewhere. Unused equipment of that size degrades with lack of use and employees cannot put a 6 month moratorium on eating.

Now interestingly enough, George Soros is embedded like a termite in a tree in Obama's think tanks and finances. Soros is a HUGE environmentalism fan. He puts his money where his mouth is and actively lobbies for constraints on things like offshore drilling. His influence in Obama's administration is incalculable. He is definitely behind the 6 month moratorium on offshore drilling. I think he hates pictures of oil-covered birds.

More interestingly enough, Soros owns considerable interest in Brazil's Petrobras, which has HUGE plans for offshore drilling--in waters even deeper than where the BP accident occurred. The only problem they had down there was getting oil rigs and specialized labor to meet those plans.

Guess they don't have that problem anymore...

As we write, all that stuff is being reallocated to down there.

Ya think the Brazilians are going to be more competent at it than the English were?

Let's hope so.

We know for a fact that Soros hates pictures of oil-covered birds...

Obama, too...

Michael

[merjet]

What goes? Obama uses U.S. taxpayer money for offshore oil exploration by a firm that is majority-owned by a foreign government!

Obama Underwrites Offshore Drilling

You read that headline correctly. Unfortunately, the Obama Administration is financing oil exploration off Brazil.

The U.S. is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro.

Edited June 18, 2010 by Merlin Jetton

[Christopher]

This is not a matter of evil. It's a matter of what happens in an accident. You cannot ban accidents and no industry on earth wants to create industry-related disasters on purpose. If you want to say silly, I think that presumption, which underlies many of the emotional reactions I have seen, is silly.

Forget the evil bit, what I'm saying is that accidents occur, and so we must be wary of the consequences for allowing offshore drilling. Whether that accident occurs in shallow water or not, the accident is unpredictable and therefore it must be accepted as a possibility. An accident off the coast of California is a cost that citizens are not willing to risk (myself strongly included), and I think that the California citizens have the final vote. Is there a cost? Sure, a little bit of oil will not come from this part of the world. Perhaps the cost of oil will rise a slight slight fraction above current prices (but even that is doubtful). Finally, there is no "big bad" government preventing offshore drilling near California, this is the voice of the citizens. If the citizens of Louisiana and Florida voted to ban drilling in U.S. waters off their coasts, that is their right. In fact, I'm surprised that Louisiana state legislators want to continue drilling to support the engineers. That's a very very small population percentage-wise, and I wonder whether the total population of Louisiana agrees with these legislators. But here in California, these beaches are our living environment. Liberty allows us the right to protect that environment, liberty does not give a green card to producers.

You've been very defensive lately I've noticed. The Beck bit seems to have heated you up. Don't let it

[dan2100]

This is not a matter of evil. It's a matter of what happens in an accident. You cannot ban accidents and no industry on earth wants to create industry-related disasters on purpose. If you want to say silly, I think that presumption, which underlies many of the emotional reactions I have seen, is silly.

Forget the evil bit, what I'm saying is that accidents occur, and so we must be wary of the consequences for allowing offshore drilling. Whether that accident occurs in shallow water or not, the accident is unpredictable and therefore it must be accepted as a possibility. An accident off the coast of California is a cost that citizens are not willing to risk (myself strongly included), and I think that the California citizens have the final vote.

Is there a cost? Sure, a little bit of oil will not come from this part of the world. Perhaps the cost of oil will rise a slight slight fraction above current prices (but even that is doubtful). Finally, there is no "big bad" government preventing offshore drilling near California, this is the voice of the citizens. If the citizens of Louisiana and Florida voted to ban drilling in U.S. waters off their coasts, that is their right. In fact, I'm surprised that Louisiana state legislators want to continue drilling to support the engineers. That's a very very small population percentage-wise, and I wonder whether the total population of Louisiana agrees with these legislators. But here in California, these beaches are our living environment. Liberty allows us the right to protect that environment, liberty does not give a green card to producers.

Actually, my view is property rights would be the best way to handle this -- not using the state or federal government or a tally of the voters in a given area. In this case, it'd likely be the owners of coastline or of water resources that should have the say. This should in principle be no different than decided whether I can trek through your backyard. We don't decide this by asking all the voters in California or America or the planet. We decide it by you and I coming to an arrangement (or not). And should I decide to trek across your yard, trampling your flowerbed, it should be me and not the taxpayers paying for the damages.

You've been very defensive lately I've noticed. The Beck bit seems to have heated you up. Don't let it

I've noticed the same too, though I'm perhaps partly to blame for this. I'll try to refrain from criticizing Beck in this forum.

[Michael Stuart Kelly]

You've been very defensive lately...

Christopher,

Defensive?

Nah.

How about having a different opinion?

The opposite of agreeing is not being defensive. It is, er... disagreeing.

Michael