20,000,000: That’s how many barrels of oil we consume in the U.S. every day.
In light of the massive BP oil spill in the Gulf of Mexico, there will be a lot of political pressure in the coming months to take a hard look at the future of offshore drilling. Is it viable, efficient, and safe for the long-run?
Well, clearly it’s not as safe as we thought. But we’ve decided as a society, through our consumption, that the occasional catastrophic ecological disaster is worth the risk.
And we’ll make the same decision again tomorrow. Here’s why.
Prohibiting, limiting, or creating more red tape for offshore drilling decreases supply in the near term. With demand remaining constant and less supply, prices go up sharply. In the long-run, this would be good because it would probably make our planet cleaner and spur innovation in new technologies and alternative fuels. But in the short-term, the price increase would be painful for customers to swallow, especially as we struggle through this recession.
And for policy-makers, there’s no such thing as the long-run. There’s only the next election. If a politician sponsors some proposal that ultimately sends gas to $5 a gallon, it’s a one-way ticket out of office.
So despite the terrible disaster, I don’t expect to see any major changes to offshore drilling in the near future. Hopefully we can learn from it though to prevent a similar spill from happening again. After all, oil isn’t worth anything in the ground (as far as I know… geologists, a little help?), but it’s pretty valuable above ground, so you can be fairly sure some company will find a way to get it up. And I think that’s a good thing. Until the pipe breaks.
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Tags: economics
