In fact, a ban on new drilling makes little sense if most of the danger is coming from existing, badly maintained platforms. I imagine BP themselves are quite interested in building new platforms better than the one that malfunctioned.
A ban on new drilling would have the effect of locking out newcomers from the business, consolidating the power of existing companies like BP who control the aforementioned existing, badly maintained platforms. It’s possible that BP bribed Washington to impose the ban, in some sort of last-ditch effort to salvage some benefit from the whole situation.
Even if most of the present danger comes from existing, badly maintained platforms, it might still make sense to ban new drilling if one expected new drilling to eventually overtake current drilling in dangerousness.
Given the political power wielded by companies interested in drilling (not just BP), I don’t believe Congress would either want or be able to institute a permanent ban. They are far more likely to spend their efforts on legislating and enforcing stricter security standards on both old and new platforms.
That statement sounds underdetermined. I would support it if it were modified to this:
Halting drilling pending further research would only seem to make sense if the expectation of loss from another disaster exceeded the profits accruing from further drilling without extra research, which seems unlikely.
Of course, that’s from the company’s view. To ask whether the government should ban drilling, pending further research, we have a stronger standard to meet: Does the expectation of externalized costs from another disaster exceed the benefits to society of continuing drilling without further research?
Also, oil companies may well not be interested in building new platforms better than the one that malfunctioned: Their expected loss is limited by their market capitalization; once they go into receivership the rest is externalized. So for extremely infrequent instances of loss much greater than the value of the company, the rational company will accept the risk.
There is weak evidence to support this: Hayworth was appointed CEO after a deadly refinery explosion; one would expect a chief executive brought onboard specifically to promote a new image of safety to take all cost-effective safety measures.
Thanks, yes.
A ban on drilling pending further research would only seem to make sense if there was imminent danger of another disaster, which seems unlikely.
In fact, a ban on new drilling makes little sense if most of the danger is coming from existing, badly maintained platforms. I imagine BP themselves are quite interested in building new platforms better than the one that malfunctioned.
A ban on new drilling would have the effect of locking out newcomers from the business, consolidating the power of existing companies like BP who control the aforementioned existing, badly maintained platforms. It’s possible that BP bribed Washington to impose the ban, in some sort of last-ditch effort to salvage some benefit from the whole situation.
Even if most of the present danger comes from existing, badly maintained platforms, it might still make sense to ban new drilling if one expected new drilling to eventually overtake current drilling in dangerousness.
But they say it’s a temporary ban...
Ah. I didn’t know how long the ban was.
Given the political power wielded by companies interested in drilling (not just BP), I don’t believe Congress would either want or be able to institute a permanent ban. They are far more likely to spend their efforts on legislating and enforcing stricter security standards on both old and new platforms.
That statement sounds underdetermined. I would support it if it were modified to this:
Of course, that’s from the company’s view. To ask whether the government should ban drilling, pending further research, we have a stronger standard to meet: Does the expectation of externalized costs from another disaster exceed the benefits to society of continuing drilling without further research?
Also, oil companies may well not be interested in building new platforms better than the one that malfunctioned: Their expected loss is limited by their market capitalization; once they go into receivership the rest is externalized. So for extremely infrequent instances of loss much greater than the value of the company, the rational company will accept the risk.
There is weak evidence to support this: Hayworth was appointed CEO after a deadly refinery explosion; one would expect a chief executive brought onboard specifically to promote a new image of safety to take all cost-effective safety measures.