Tag Archives: Oil Spill

Libertarians and the Gulf

What would a libertarian propose as a Gulf solution, asks Edward Glaeser, via Andrew Sullivan:

Consider the purely hypothetical case of a massive oil spill in the Gulf of Mexico. The traditional libertarian would argue that regulation is unnecessary because the tort system will hold the driller liable for any damage. But what if the leak is so vast that the driller doesn’t have the resources to pay? The libertarian would respond that the driller should have been forced to post a bond or pay for sufficient insurance to cover any conceivable spill. Perhaps, but then the government needs to regulate the insurance contract and the resources of the insurer.

Government is a contract among a group of people who want to centralize certain powers.  Nearly every governmental experiment in history suggests that the fewer powers get centralized, the better off the community.

Control is not a public good.  Whatever control powers individuals relinquish to the centralized entity are powers they no longer have — and, the experiments teach us, powers individuals are unlikely to regain.

Yet individuals do give up certain powers.  There are certain areas where we simply cannot look out for ourselves.  The common theme across powers likely to get centralized when a group of people get together is that we give up control over public goods.

When it comes to the oil spill, we are not dealing with a series of private violations commensurable with a class action torts suit.  BP spilled enough oil to affect many states’ domestic product, to eliminate species of wildlife, to affect coastlines for decades to come.

Libertarians might suggest insurance as one solution.  Yet insurance companies will teeter under the strain of compensating even one livelihood prospect.

Even with private indemnification from BP, insurance companies will not collect funds in time to weather the imminent hurricane season.  Indeed, many Gulf insurance companies remain mired in the mud after Katrina claims — so much risk has been realized in this region that pooling has become impossible, premiums are not enough, and private insurance no longer offers a libertarian solution.

The oil spill has catapulted into the realm of public problems, demanding a public solution.  Regulation may well have prevented such a disaster.  Indeed the dearth of enforceable oil regulations is just one more example of how cozy big business remains with big government.

The Obama Administration should give careful consideration to its goals in this matter.  It makes little sense for Big Government to capitalize on such a disaster in an attempt to squeeze blood from the crude, or an energy reform agenda from the pits of despair.

Searching for a private “libertarian” solution to the problem is a worthy mental callisthenic, but it does not exculpate Big Government from failing to create the right incentives when we still might have avoided the accident.

Professor Richard Epstein wrote for today’s Wall Street Journal:

Legal reform should not just be limited to oil spills. Environmental priorities also need to be straightened out. To take just one example, in virtually every coastal location today, acerbic green lobbies parade about as if new luxury beachfront homes are the moral equivalent of oil pollution. Those histrionic outbursts create civic discord and stunt our economic base. They can be stopped by insisting that private developers be compensated for the full costs of any new-fangled land use restrictions, at which point popular support for such lobbying will collapse.

Government should limit its response to removing the centralized policies that encourage bad behavior, like incentive for special interest lobbying or liability caps.  BP should have to pay an amount suitable to its crime, but that money should be channeled through the public system to BP’s victims – the government should not be in this mess hoping to collect.


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Letter re:”Laissez-Faire Meets the Oil Spill”

Dear Editor:

Thomas Frank ended his list of questions regarding the oil spill by stating that, absent answers from the right, “for now, we are all liberals” (“Laissez-Faire Meets the Oil Spill,” The Tilting Yard, June 2). This conception defines “liberal” as the presumption that government is separate from citizenry, and citizenry separate from leadership.

Frank is correct in noting that when disaster strikes sheep tend to look towards their shepherd. It is tempting to solicit government apologies and centrally-organized hair donations to sop up the spill. It was not so long ago that we sheep voted for change. This disastrous spill presents an opportunity for a new kind of shepherd.

Just this week the Obama Administration presented conflicting messages as slippery as oil itself, a contradiction that permits BP the chance to exploit government dollars rather than bear the responsibility for its actions. It makes no sense for a shepherd to “assume full responsibility” for the incentives that caused a disaster even while the shepherd’s administration serves oil execs with subpoenas.

Indeed, Frank characterizes “liberalism” as the urge to find somebody to blame. Finger-pointing does not lead to solutions. The urge to panic will not absorb thousands of tons of spilled oil. Blame has not catapulted Detroit to economic rebound. No shepherd can protect children from being left behind.

Perhaps in moments of uncertainty we all are indeed temporarily “liberals.” These are the moments that separate the sheep from the shepherds. It is in these moments that those shepherds among us must stand up and focus on the solution. No amount of blame can substitute for true responsibility and leadership, as “illiberal” as those concepts may be.

Kathryn Ciano

Arlington, VA

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Oil Spill Touches Louisiana Shores

These 39 oil spill pics evoke nothing more than Noah’s Ark.  See volunteers attempting to save as many species as possible as this fragile ecosystem falls to one of the worst environmental disasters in history:

Over one month after the initial explosion and sinking of the Deepwater Horizon oil rig, crude oil continues to flow into the Gulf of Mexico, and oil slicks have slowly reached as far as 12 miles into Louisiana’s marshes. According to Louisiana Governor Bobby Jindal, more than 65 miles of Louisiana’s shoreline has now been oiled. BP said it will be at least Wednesday before they will try using heavy mud and cement to plug the leak, a maneuver called a “top kill” that represents their best hope of stopping the oil after several failed attempts. Based on low estimates, at least 6 million gallons of crude have spewed into the Gulf so far – though some scientists have said they believe the spill already surpasses the 11 million-gallon 1989 Exxon Valdez oil spill off Alaska as the worst in U.S. history.

A dead Northern Gannet covered in oil lies along Grand Isle Beach in Grand Isle, Louisiana May 21, 2010. A member of Tri-State Bird Rescue and Research tagged the spot of the location of the incident. (REUTERS/Sean Gardner)

Collected oil burns on the water in this aerial view seven miles northeast the Deepwater Horizon site over the Gulf of Mexico, May 18, 2010. (REUTERS/Daniel Beltra/Greenpeace) 

A shrimp boat is used to collect oil from the Deepwater Horizon oil rig explosion in the Gulf of Mexico in the waters of Chandeleur Sound, Louisiana on May 5, 2010. (AP Photo/Eric Gay)

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Gulf Coast Shrimping Insurance

Re Q’s insurance situation for shrimp farmers in the Gulf: Is the shrimping livelihood insurable against foreseeable manmade disasters?

There’s a market for what’s called aquaculture insurance, and I’m sure there will be some significant claims on those policies (most of which are held through the Lloyds of London market.) It’s not quite as significant as the claims BP and other refiners will put in on their energy insurance policies (I’ve seen estimates of about $1.5 billion in energy insurance claims) but that’s largely because most shrimpers probably don’t have much in the way of insurance on their stocks of shrimp.

Instead, they’re more likely to take out general business interruption policies, which would pay off in the case of any prolonged cessation in income. So, yeah, the spill would be covered, but they’d have been thinking more of hurricanes and such when they took out their policies.

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