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SENTRY JOURNAL » BP, gas prices, Haliburton, MMS, Obama, offshore drilling, oil spill, Regulations » Knee Jerk is a Mule Kick

Knee Jerk is a Mule Kick

by RightHandMan

It may have taken the President over a week to react to the oil spill in the gulf, but the left’s knee jerk reaction may turn into a painful kick from the democratic mule.  Obama’s administration purposefully downplayed the oil spill because it came just weeks after his released policy that seemed to support a minor escalation in offshore drilling.  The environmentalists in this country weren’t too happy with his decision and this recent spill has become leverage for them to put an end to offshore drilling.

Of course, we’re not going to end off short drilling any time soon with a conservative estimate of 100 billion barrels of untapped oil sitting just off the coast, but we may slow it down.  With America consuming a quarter of the world’s oil but only producing around 10% we will be faced with alternative means of getting oil.  The only other ways to get oil are to move inland, which in spite of being safer is unlikely due to environmentalists groups, and to import more – which means more tankers.  The irony is that tankers have the worst record regarding spills not to mention that the oil is foreign.

Another knee jerk reaction is typical of bureaucracy.  The administration announced last week that he has launched an investigation on the Interior’s Mineral Management Service (MMS), which regulates energy development in federal waters.  According to the President there has been “a cozy relationship between the oil companies and the federal agency that permits them to drill”.  What does that mean politically?  I will interpret.

The President is leaving room for more regulation on oil companies.  In fact, the White House announced it will have stricter controls just six weeks after announcing the expansion of offshore leasing.  This appears to be an about face that will hurt the American economy and energy markets further.  There is no doubt that the White House’s answer to this current crisis will be nothing more than more federal interference.

This raises the question; what did and what could the federal government do to stop this?  First, there already are many federal regulations that were put in place on offshore drilling.  There are federal agencies that exist to do nothing but regulate the oil companies, agencies which the President has casted some of the blame on himself.  Obviously they did little to stop the initial catastrophe that led to the sink or the continuing spill.  This leads us to our next question; what could they have done?

We still don’t know with certainty what the reason for the blast on the BP rig was.  The most prevalent theory rests on a methane bubble busting through seals and eventually exploding.  At the time Haliburton employees were cementing and had conducted seal tests.  Apparently they weren’t doing a more strict test that are normally done by other companies.  To imply that the more expansive test would have prevented the explosion is extremely speculative.  To further imply that more government regulation would have prevented this speculative cause is fantasy.

The height of absurdity is being displayed on the notion that this accident is the fault of self-regulation when partial blame is being put on a federal regulating agency.  The federal government isn’t even good at regulating and now it is being forced to regulate itself.  Now we have other federal agencies, the White House Council on Environmental Quality and Interior that will jointly review how the MMS conducts environmental reviews and the President also has set up at least 5 congressional committees to review the BP oil spill.

This whole thing is proof that the fed has become too big.  The government regulates so much that it can only be reactive in order to protect its reputation in regards to regulation.  The President couldn’t possibly have been on top of the MMS relationship with oil companies that allowed them to bypass regulation because every regulating agency the feds have is dealing with similar issues – businesses that find loopholes in the law.  The federal government has made it the business of businesses to find ways to neutralize regulation.

So the mule kick here is twofold.  We may end up buying more foreign oil that is transported on more environmentally dangerous tankers and we will also end up with more regulation on the oil companies.  In the end, both mean higher gas prices.


Filed under: BP, gas prices, Haliburton, MMS, Obama, offshore drilling, oil spill, Regulations

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