Posted by: bmeverett | May 28, 2010

The Gulf Spill – Part II


The BP oil spill in the Gulf continues to make a huge mess with oil now fouling beaches along the Gulf Coast and disrupting the fishing business, the tourist industry and everything else in the area. It’s pretty horrible. As BP and the Coast Guard try to stop the leak and clean up the gunk, we need to make some sensible decisions on how to move forward. President Obama’s news conference yesterday was not encouraging.

The President clearly sees the problem as inadequate government oversight of BP. He implied that if someone in a responsible position in the Minerals Management Service (MMS) had been paying attention, this would never have happened. The political left in the US has always seen private corporations as amoral, deceitful, short-sighted, reckless, selfish, manipulative and exploitative. They see the federal government, on the other hand, as ethical, thoughtful, honest, knowledgeable, objective, far-sighted and public-spirited. In other words, the government is the parent, and corporations are the children. It’s the parent’s job to keep the child from beating up his sister, running out into the street or setting fire to the curtains. This view is wrong about both institutions.

It is true that corporations are profit-driven and lobby hard for what they want. That’s not the same as being powerful. Unlike the government, corporations can’t extract money from the citizenry by force; they have to persuade people to give it to them. The only way they can do that is by offering quality products and services at competitive prices. People do need to buy gasoline, but they don’t need to buy it from BP. ExxonMobil, Shell, ChevronTexaco or any one of a hundred other oil companies would be delighted to take BP’s market away, if given half a chance.

We can be absolutely sure that BP did not want this spill to happen. Did they make technical or procedural mistakes? Maybe. We’ll probably find out after a while. They knew, however, that a major incident of this kind would not only cost them a ton of money, but would severely damage their brand.

Our elected officials, of course, are posturing like mad. Raging at BP, yelling at the President, demanding answers, threatening, sympathizing with victims, accepting responsibility (but not really) and generally getting in front of the camera as much as possible with carefully calibrated emotions. Substantively, all the President could come up with yesterday was suspending drilling (the wrong answer) and firing Elizabeth Birnbaum, the head of the MMS. Today’s politicians are not serious about problem-solving. Getting elected is all they really care about.

So what do we do to deal with this important public issue? In my previous post on this topic, I offered what I believe is the right model for this problem: the airline industry, one of the great successes of government-industry partnerships. Fifty years ago, very few people, mostly the wealthy, could travel by air. Today, airplanes are “buses with wings.” Everyone wants the system to work. The system has three participants: the aircraft manufacturers, the airlines and the federal government. Each has a critical role to play. Boeing, United Airlines and everyone else involved really, really wants to avoid airplane crashes, which not only kill people and destroy property, but cost a lot of money and undermine public confidence in the system. They are willing (if perhaps not happy) to work with the federal government toward that end.

The government recognizes that it doesn’t know how to build airplanes or to operate an airline efficiently, so it leaves those functions to the private sector and sticks with what it can do. In addition to operating airports and the air traffic control system, the federal government also plays a role in supporting public trust in the system. The feds certify the airworthiness of airplanes and operating and maintenance procedures for the airlines. Perhaps most importantly, the National Transportation Safety Board, one of the most highly respected agencies in the US Government, investigates accidents to determine causes and recommend solutions.

Everyone involved understands that humans and their technology are imperfect. Although we don’t like to say it, there will be air crashes in the future – some of them horrific. The federal government cannot guarantee us 100% safety unless they shut the system down, something the public would never accept. Instead, we work to make the system safer over time, and the results have been exceptionally good. Currently, according to Planecrashinfo.com, the odds of being killed on any particular commercial flight are about 8 million to one. Stated another way, if you took a random commercial flight once a day, every day, you would be involved in a fatal crash on average once every 21,000 years. These odds are extremely low, but they are not zero. Adults, unlike elected officials, understand this point.

Air safety is the result of a partnership. Sometimes the partners disagree, but they do work together. By and large, politicians leave them alone since the public really wants the air traffic system to run effectively. You don’t hear the Secretary of Transportation talk about “keeping our boot on the neck” of Boeing. That would be an utterly unhelpful statement, and the public wouldn’t like it. Yet precisely that comment was made recently about BP by Interior Secretary Ken Salazar and repeated by the President’s press secretary Robert Gibbs. Air travel’s extraordinary safety record does not result from the federal government making all safety decisions or from grounding the fleet every time there is an accident or from threatening to bankrupt the airlines if there is a fatal accident. There will be crashes. We just work hard to minimize them.

We all need to recognize that our oil supply system is every bit as necessary to our economy as the air travel system. If we don’t develop domestic resources, we will import oil at higher cost and higher risk of spillage. We should not tolerate this unseemly posturing by politicians on both sides of the aisle, nor should we accept the glib solution of no more drilling until we’re sure it’s safe. There will be spills in the future, and we need a government-industry partnership to minimize the frequency and severity of accidents. We need to drill, and we need to do it right.

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