Gulf Oil Spill: Same Old Arguments | Peter Van Doren and Jerry Taylor | Cato Institute: Commentary

Gulf Oil Spill: Same Old Arguments | Peter Van Doren and Jerry Taylor | Cato Institute: Commentary: "First, we don't know for sure exactly how this happened or exactly who was at fault and why. Until we do, it's impossible to say exactly what public regulators could do to reduce risk.

Second, how much to spend to reduce risk is unclear. There are obviously diminishing returns on expenditures, and those expenditures will increase production costs and, thus, consumer prices. Nevertheless, producers have every incentive to spend whatever makes economic sense. BP has lost 19% of its market value in the stock market — a bit more than $36 billion — from the April 20 explosion until May 11, so BP shareholders are taking a big hit financially. Oil companies do themselves no economic favors by underinvesting in safety.

Third, the implicit political demand for zero environmental risk is unrealistic. As long as human beings are involved in drilling (or coal mining or petrochemical refining or nuclear power operations or oil transport or natural gas delivery), accidents will happen."