BP, Money, and Gross Negligence

Quote of the Day:

What did we do to deserve this?” BP CEO Tony Hayward

If you haven’t seen the CBS 60 Minutes report and you care about the Gulf of Mexico, take the time to watch now. I know this isn’t all the evidence that’s going to be collected on the debacle, and this eyewitness testimony nor the engineer’s observation are of themselves conclusive. But I’ll be damned if I haven’t heard the same story over and over from corporations that damage things and kill people. They screwed up not to make a profit. They already do that fine in the normal course. It’s just to make the profit greater and quicker.

We must choose. Regulations can be unwieldy, inefficient and expensive. The lack of regulations or the failure to enforce them results in even bigger problems, not the least of which include explosions, an oil volcano and death.

In my view, Mike Williams is a national hero for coming forward.

Bonus Quote of the Day:

What did we do to deserve this?” –virtually the entire population of the Gulf Coast

About travellinbaen

I'm a 40 year old lawyer living in Ridgeland, Mississippi. I'm several years and a couple hundred miles removed from most of my old running buddies so I started the blog to provide an outlet for many of the observations and ideas that used to be the subjects of our late night/happy hour/halftime conversations and arguments.
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16 Responses to BP, Money, and Gross Negligence

  1. Jessie Lou says:

    Good program, although I watched it Sunday, I just replayed it here at work. I wondered if they deposed those guys before they released them from their debriefing to their families after the explosion and their return to land. To me, this guy will makes a great witness.

  2. I think his version of events, if accepted by a jury, will blow the whole 75 million dollar liability cap issue out of the water.

  3. Jessie Lou says:

    I would like to see a jury that would not accept his version of events! Unless he waivers in the future, he was quite credible to me.

  4. TDW says:

    Given what I’ve gathered from the public domain — much less what we’re going to get in discovery — BP and Transocean personnel are going to be lucky if they don’t get criminally indicted.

    I’ll save everyone my thoughts on regulation, government, and the free market system.

  5. Madd Dawg says:

    Preface: I hate to see oil spilled in the Gulf and truly sympathize with the families of those who lost loved ones in the explosion. It is a terrible situation.

    My point in this post is not to argue with what was posted above by TB and others, but simply to play devil’s advocate and point out a few facts:

    1. BP will pay out billions of dollars in fines, clean up costs and judgments because of this incident—-along with a very damaged reputation, so it will suffer greatly;

    2. There have been hundreds of offshore oil rigs operating in the US for decades and, although I am sure that there are many small spills, this is the only major accident that I can recall, so it is overall a very safe endeavor. This very offshore rig recently won a major safety award from the Obama administration;

    3. Energy exploration and recovery is very dangerous work, and it always will be. Because of this, the guys that work on the offshore rigs are paid a lot more than the guys who work on land. Everyone understands and accepts that it is dangerous work and that accidents happen;

    4. Government regulation does not mean safety. The Soviet government controlled every aspect of life in the former USSR, but that did not stop the Chernobyl disaster. The current Chinese Communist government does not seem to be able to stop constant mining accidents over there. The US nuclear system was heavily regulated, but that did not stop the Three-Mile Island accident. Mining in the US is heavily regulated, but see info. on mining accidents in US: http://www.usmra.com/saxsewell/historical.htm

    5. If we performed all of these energy exploration and recovery activities in the most safe methods possible, then it would be a lot slower (most costly) process, so we would all be paying a lot more on our energy bills and at the pump—are you willing to do that?;

    6. What do you want to do about this? shut down all oil, gas and coal production?

    Offshore drilling in U.S. territorial waters accounted for 30.2 percent of U.S. oil production in 2009 (379 million barrels of oil), and 11.4 percent of U.S. natural gas production (1.6 trillion cubic feet or about 12 trillion gallons).
    Our fancy cars, flat-screen tv’s and computers need lots of energy—are you willing to sacrifice them?

    7. Thousands of people die in car accidents every year, but there is not a movement to ban automobiles. It is dangerous, but it is something that is accepted as an unfortunate part of modern day life.

  6. I want to see an independent engineer onboard every vessel who can veto decisions to continue drilling when a gasket breaks apart and thereby puts an entire ocean and coastline at risk. The cost of this for a decade on every rig would be less than the cost of cleanup for one “accident.”

    Regulation has to be based on a risk-utility analysis. The higher the risk, and the more people affected, the greater the regulation. I don’t think anyone postulates that regulation will eliminate mistakes or damage. But it will/does reduce it.

    I will say that there should be a system in place for this and other industries whereby an onerous oversight/regulation/rule can be challenged (or instituted) through the courts rather than just manipulated one way or the other in the overly political rulemaking system we have.

    As to your question and our oil needs, I have previously posted my opinion that drilling cannot and should not be terminated. However I do think the massive billions of profits the industry is making should be taxed much higher after, say a couple billion in profits are banked each quarter. And that money should go to immediately upgrading our alternative energy efforts. I’ll ask this question, are you so much in favor of oil that you are willing to see the Middle East continue to dictate our foreign policy indefinitely, force us to maintain a worldwide military complex to guard our supply, and cause our national debt to continue to skyrocket?

  7. Mac says:

    As usual, I agree with MD for the most part. More regulation does nothing. Its akin to hiring a pedophile to babysit your kids. Anytime govt gets involved in anything, the red tape meter jumps into overdrive. Which as MD pointed out, drives up costs. What liberals seem to have an incredibly hard time grasping is that anytime you tax, fine, add extra cost to a companies bottom line, that cost is going to get passed on to the consumer. Every time. They are gonna make their duckets.
    TB, I am in the boat with you though on alternative energy. We should be devoting a lot more money and efforts into weaning ourselves off the oit teet. But, as I have said before, that is never going to happen until gas prices go through the roof. Money talks and bullshit walks. Truest words ever spoken.

  8. What conservatives can never grasp is that “regulation” cannot be favored or opposed as a generic concept. Conservatives have a knee jerk response to the word and are incapable of seeing either nuance or their own inconsistency. When you say “anytime”, “anything”, etc, you are painting with a very broad brush, one you don’t even agree with, unless you truly advocate that we become the libertarian paradise of Somalia.

    Example, have fire codes, occupancy limits, and electrical regulations cost money? Of course. Have they saved lives and property? Of course. Would you advocate that these “regulations” be eliminated? Should any jackleg be able to come wire a hotel I’ll be staying in who is inadequately trained and uses insufficient procedures? If I know about it, and in such a case I won’t, I don’t want my little girl sleeping in that place. And neither do any conservatives.

    An old, true joke comes to mind when I hear conservatives talk about how “regulations” are always harmful……

    A man approaches a beautiful woman at a bar and says “if I gave you ten million dollars would you go home with me right now?” The woman brightens up and moves closer, “of course I will!” The man then reaches into his pocket and pulls out a ten dollar bill. “Will you do it for ten bucks?”

    The woman slaps him across the face and indignantly says “what do you think I am, a prostitute?”

    The man calmly replies, “Madam, we’ve established what you are. We’re simply haggling over the price.”

  9. irvine redd says:

    I’ll have to say agree with you TB, my problems with anti-regulation crowd is that they typically paint it with a broad brush. Or make non-sensical comparisons (at least they are to me), like saying regulation is like hiring a pedophile to watch your kid, or that regulation will suddenly turn us into the USSR. It’s like watching a basketball game and Hubie Brown or Dick Vitale is doing the color commentary, lots of over the top hyperbole.

    The truth is, like presbyterians say about just about everything, moderation is the key. There is a happy middle we can all find. There is a way to regulate to ensure that our toys aren’t filled with lead, that are spinach isn’t poison, and that we are walking into a building that won’t suddenly burst into flames. That’s worth the cost of admission for me.

    Also, yes putting more costs onto the bottom line of a company will push up the cost of products. As a person who runs a business and has to do lots of shipping, I’ve watched shipping prices go up as the cost of transporting the said product went up. I get that concept. The problem is, what happens when those elements subside? Does the free market start to drop the price? I think we all know the answer to the question is, for the most part, no. Companies just go, hey they were already happily paying for this product at this price, why drop it when we can now make our gross profit margin even larger. Unless the person in charge is willing to not be greedy, this will occur. I know because I have to make that sort of choice. For instance, my main two competitors, one a multi-national company and one a private local business, will be selling old editions of certain textbooks, that I know for a fact they only paid $5-$10 for, at the regular price. So they will be selling a book that is essentially worthless for over $100. Why would they do that? Does that not seem ridiculous? They do it because they know that the consumer is stupid. Now me, I’ve cut the price of mine in half. Mostly because it’s just plain wrong, in my viewpoint, to do that. I’m not saying making money is bad, I like money a great deal. And would like to make a ton of it. My point is greed, contrary to Gordon Gekko, won’t save America.

  10. Mac says:

    If my allusion is nonsensical to you, perhaps I should explain. Turning to the government when you have a problem always involves a much bigger pain in the ass than you had before. More paperwork. Four times as many people standing around with their thumbs up their rear ends trying to achieve a goal. So, imho, the problem is worse. Like having a pedophile watch your kids because you couldn’t find anyone else. Maybe a stretch, but not that wide of a gap. Why is it that after a disaster, all liberals scream for more regulation? Mining disaster-more regulation. Oil spill-more regulation. These are two highly, highly regulated industries already. Additional regulations are only going to slow the process, not provide more safety. Or if they do, it will be such a pain in the ass that the companies won’t be able to turn a profit. Your textbook example actually shows the beauty of the free market IR. Why in the world would anyone buy the more expensive texts when you are half price? They won’t and your sells should rise. Greed is not an evil word. Everyone is greedy, whether or not they will admit it. It’s the pot calling the kettle black to admit you like making a profit but call the others out for making too much. TB’s self promotion posts after the spill? Greed. Sure, he may want to make the world a better place but the driving motivator is the opportunity to make the cash. The free market is already punishing BP with many people boycotting their products. This country needs more free market and less regulation.

  11. I will concede that often “liberals”, to lump generally what talking heads on tv are saying, often scream “regulate!” after a disaster without necessarily taking time to see whether regulating would’ve helped. Similarly, “conservatives” on tv/radio scream “regulations suck!” without knowing which specific ones do or do not suck.

    I should further amplify my position on this–sometimes there are satisfactory regulations already in place, but they are not being enforced. When I generically say “regulate” here in the TBU, I mean to enforce what’s on the books as much as make new, appropriate rules.

    P.S. TB has zero oil spill clients and I don’t expect to get any. That being said, yes, I’d like to have some. But even if my financial interest is zero, I’m still outraged at the scope of the debacle and the purported disregard of BP for safety measures that even a simple/cynical/idealist/eternal optimist/bloggin/unfrozen caveman lawyer can understand.

  12. Mac says:

    I am glad that I did not ruffle your feathers too much TB. I agree with you (and I think most would agree) that the problems arise with the all or nothing arguements. Moderation is the key.

  13. irvine redd says:

    Mac, you’d be surprised how dumb some people are. I’ve had people come sell a book back to me, and have me say to them, “You know you could have saved about 30 bucks by coming to see me.” I’d say 60% of the time, they blankly stare at me, as if what I had just told them didn’t even register in their brain. So theoretically, yes, my sales should go up, but as one of my part time employees said to me last week, “I’ve noticed that a lot of people are a little bit stupid.” She’s told her roomate several times, that going to the behemoth company located directly behind me is a dumb move, and what does the roomate do, she goes to the behemoth, because she’s dumb.

    In the end, it’s not necessarily that I want more regulation, but that I’d like people who are supposed to regulate to actually do their jobs. I think there are a lot people who don’t know what regulations are out there, and therefore when they see something terrible happen they have the impression that there was nothing in place to stop it, when there was, just nobody did what they were supposed to do.

    Fortunately, most of the denizens of the TBU aren’t dumb. Anyone want to buy a book?

  14. Mac says:

    “I’ve noticed that a lot of people are a little bit stupid.”
    That is so awesome. She is overestimating the populace though. 🙂 A frightening number of people barely have walking around sense.

  15. irvine redd says:

    She’s young. We laughed heavily when she said it.

  16. Madd Dawg says:

    while I certainly agree that a lot of people are a little bit stupid, it could be that the girl shopping at big store doesn’t care about the price of the book because her parents are paying for it. One person paying the bills for another distorts the free market — Kind of like most people not caring what health care costs because the government or insurance companies pay for it (not realizing, of course, that we all pay for it through higher taxes, higher premiums and lower wages).

    Some would argue that your paying $5-$10 for a used book and then reselling it for $50 is greedy (while lower than the $100 the other store is selling it for, that is still a huge markup). Why not sell it for $20? who gets to decide how much profit is “too much”?

    Of course I am all for building and fire safety, but how about a system where, instead of a local city inspector, a licensed/bonded/insured company with qualified employees certifies that a building was wired properly and reamins as safe as possible from fires? That company would have a huge incentive (liability) to make sure that the building was indeed safe as built and stayed safe unlike the current fire code inspectors.
    As I am sure that you have read, the department in charge of regulating the oil rig that burned accepted lots of gifts from them, etc. We hear about things like that all of the time with government officials because they are generally not well paid. By contrast, the company providing the certification for the safety of a building would not likely be swayed to overlook safety violations by free lunches as it would be liable for any problems.

    Also, I dont love our almost total reliance on oil——I just recognize that it is necessary right now. I am all for conservation, energy efficiency, recycling and investment in alternative energy.

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