Would You Ever Ask Your Dentist to Drill, Baby, Drill?

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Most of the news about the blowout in the Gulf has turned to finger pointing. It’s taken only a few days to turn a technological and natural disaster into political fodder. Drilling for oil about a mile below the ocean’s surface is a technical tour de force and an accident waiting to happen at the same time. Although there have been many accidents associated with deep ocean drilling, blowouts this this one are very rare. The last one occurred in 1969 in the Santa Barbara channel. Most new wells are reaching deeper and deeper because the shallow reserves are largely already being tapped. The risk of failure increases with depth. As we have learned fail-safe is indeed an oxymoron under these circumstances.

The real wake-up call is not about off-shore oil production, but about the risk we are taking by putting our eggs almost exclusively in the fossil fuel basket and investing but a de minimis amount in renewable resources. The risk, measured in terms of the losses to one of the more productive and valuable habitats in North America, is huge. Not only is this area an invaluable wildlife habitat, but is the source of livelihood for a large part of the population living along the portions of the coast under threat. Reliance on oil is very risky in geopolitical terms, putting the US in a weak position as just another customer in the ever more competitive world oil market. The United States involvement in the Middle East is certainly driven to some extent by our interest in its oil riches. The cost of our involvement is approaching 3 trillion dollars, according to Joseph Stiglitz.

The opportunity cost of the Iraq and now Afghanistan wars can be measured in terms of the investment in alternative energy supplies and technology foregone. If this disaster is played out primarily as a partisan game, as it now seems to be the most likely course, it only distracts attention away from recognizing the risk of inaction. Perhaps President Obama might reconsider his support of more off-shore drilling. But not for the obvious avoidance of environmental damage. The more important reason is to turn away from “easy” technological fixes and take seriously the need to follow a course that does not subject the United States and much of the rest of the world and the environment to levels of risk that are imprudent and unsafe. The risks mentioned here are externalities, costs that are not recognized in private market transactions. Can we continue to rely on the private interests that control the energy supply to make the critical decisions that must be made now?