Oil Spill In Gulf of Mexico: An Economic and Environmental Disaster
The oil spill in Gulf of Mexico raises the question why do we take this risk to explore offshore oil? Transportation is the backbone of the economy, and we need oil for transporting goods and services and to keep the economy growing. Oil is a natural resource and a scarce commodity. History shows that whenever there is a scarcity of resources, business seizes the opportunity by taking higher risk to make higher profits from scarce resources. Also, political conflicts occur among the nations to access or control the scarce natural resources. In a high-risk industry such as oil and coal the chances of disaster are always higher than any other industry. The question is whether the government should allow the business to take such risk to generate profits for the shareholders. The answer is businesses have the right to make their own business decisions because we are a free society and believe in free market concept.
In the oil exploration and production industry, the business decision has the significant impact on both the economy and the environment surrounding the oil exploration facility. The government must require businesses to prepare a disaster management plan before oil exploration, and it should be reviewed and approved by an independent agency. The oil spill of Valdez, and hurricane Katrina suggest that we have not learned the lessons from the past. The problem in all the disasters was the communication, coordination, evaluation, and response. In the Gulf of Mexico’s oil spill, we have experienced the same problems of communication, coordination, evaluation of degree of severity of oil spill, and the response.
Our country is divided on the issue of offshore drilling. The fact is we cannot survive without oil because it is the backbone of our economy. The government and the oil industry need to work together to develop a plan that includes a risk analysis, and disaster management plan. The disaster management plan must include how the communication channels will be established after the disaster, how information will be shared, the coordinating structure of the disaster management parties, how the problem will be evaluated, and who will be involved in formulating and implementing the solution to manage the disaster.
Oil spill disasters are different than a hurricane and earth quakes. In a hurricane, the impact of the hurricane on the areas can be determined and recovery and relief may start right after the hurricane. In oil spills the disaster continues until the source of disaster is brought under control. In this situation, a dual disaster management approach is required. One team should be focused on the source of the disaster, and another team should be focused on controlling the spreading disaster oil spill. The response to the oil spill in Gulf of Mexico suggests that there was no risk analysis done and no disaster management plan was in place to protect the environment and the economy surrounding the oil exploration and production facility. As a result of lack of planning, the oil spill has severely impacted both the environment and the economy of Louisiana, Mississippi, Alabama, Florida, and more.
To protect our environment and economic well being of the business surrounding the offshore oil exploration facilities, the government must require oil companies to prepare a disaster management plan before the drilling permit is issued. Oil companies must be required to maintain a disaster reserve in a trustee account, bond, or any other instrument that can be used immediately after the disaster to manage disaster and provide economic relief to the affected areas. This reserve account or bond is similar to a common practice used by local governments that requires businesses to post a bond before they receive license to operate. The goal of the disaster reserve, bond, or any other financial instrument is to protect the environment and the community. Finally, the oil spill disaster cannot be managed by a business; there must a partnership between government and the business to manage oil spill disaster.
bloger@sunlona.com
