During the ongoing environmental disaster caused by BP plc (BP) that is spewing thousands of barrels of oil a day into the Gulf of Mexico (only now reducing the spill rate), there have been many calls to have the federal government take over the cap and recapture effort. This is a very lame idea.First of all, nobody has more incentive in bringing this disaster to an end then BP because no entity has suffered more financially or seen its reputation eroded faster.
Second, no government, here or anywhere, has demonstrated with any consistency that it's more adept than private enterprise at solving problems when the stakes were so high.
Finally, it would not be the government that would be doing anything! They would have to hire a private firm just like they hired Halliburton (HAL) and Blackwater (now Xe) in Iraq because the government has no expertise in this area. Oh-oh, I think Halliburton is already on the job and has been implicated in this fiasco by virtue of its service contract on the now sunk rig. Nevertheless, do not put it past the government to miss this detail.
It is better to let BP fix the problem, pay for it directly and suffer the future consequences, than to have the government muck things up some more (there is too much muck now), have to send BP an invoice and end up in court disputing the cost because they could claim the government contributed to the problem.
Actually the government is somewhat complicit for having lackluster inspections, poorly enforced safety standards, no back-up plan and looking like a deer in the headlights now. The government is already doing what it is best at -- blaming others and finding a safe place to hide.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: He own shares and options of BP and RIG.
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Reader Comments (Page 1 of 1)
6-06-2010 @ 6:18PM
Gary E. Sattler said...
You're right, Sheldon (as is often the case). However, the government could have, and possibly should have, undertaken an immediate program of environmental damage mitigation as soon as BP made it clear that this thing was out of control.
Obama, for all his carefully chosen words and baseless threats, has accomplished nothing in healing this fiasco. He is not responsible for the recovery of one fluid ounce of oil. He is not responsible for the protection of one inch of shoreline. He claims that his think tank has been a clearing house for ideas, yet nothing has been added to the cleanup efforts via an Obama initiative.
Yes, the government may be ill suited to dealing with an industrial accident of this magnitude, but with words like "executive" and "administration" in his job description, we should expect that Obama could have accomplished something beyond casting blame and dodging responsibility.
But then, those are the things he does best, aren't they.
6-06-2010 @ 8:32PM
JCH said...
I would disagree. BP does not have a navy. The Coast Guard and US Navy, just as they were in the Valdez and all other ocean spills off the USA, have done things that BP simply cannot do.
In the Valdez spill, Exxon reimbursed the US and Alaskan governments around 1.2 billion dollars for their assistance in cleaning up the spill, and the vast majority of that was for the Coast Guard and the US Navy.
I'm in the oil biz, and I would rate Obama's performance to date far far above that of President Bush in 1989. I expect this will be the most comprehensive clean up ever, and that would be absolutely impossible to achieve if left solely to BP, which is why it isn't left to them.
And watch John Wayne's portrayal of Red Adair. When things go incredibly wrong there is only one real solution, and that is a very time consuming relief well. Nothing has changed.
6-06-2010 @ 9:36PM
JUDESTEWART1 said...
.... if you could get these bastards to do a better job selling stamps that all we need from the federal goverment. Hell, the only thing these guys know is that they are getting the Lions share of the oil revenues in this country. Do you think they can cap off an oil flow. REALLY!!!! Let BP do their thing.
6-07-2010 @ 12:55AM
Sheldon L said...
JCH,
Not opposed to all the help you can get on the clean-up; but remain opposed to messing around with the well cap/repair.
6-07-2010 @ 3:50PM
randy said...
They claim that they know nothing about oil clean up or protecting our enviromental safety,but that they know everything about redistribution of wealth & everything there is to know about universal health care. Thank God we are not being attacked by terroist along our coast lines i guess that to would be up to the terroist to clean up. Is the suit in washington half full or half empty i guess is the real question