Trust But Verify

“Trust But Verify.” It was a phrase from the Cold War, but it is still good advice. The Deepwater Horizon disaster has shown that the federal government may have put too much trust in the oil companies and certainly had little or no ability to verify. The regulators are in a position of having to depend on the organizations they are regulating for the information needed to regulate.

The regulators apparently need a lot more in house information about best practices for deepwater drilling. If the government intends to effectively regulate deep ocean drilling, it needs the ability to go there and see for themselves. They need to be able to test equipment like blowout preventers in the actual environment where they are supposed to work. They need to have responses to equipment failure prepared and tested before there is an actual failure. They need a place where whistle blowers will be heard and their honest concerns addressed.

Whether the capability is invested in Coast Guard, MMS, or some other entity, the government needs the capability to take action, independent of the oil companies. The next question would be, who pays for it? The oil companies of course. They should pay to be policed.

7 thoughts on “Trust But Verify

  1. You said “The next question would be, who pays for it? The oil companies of course. They should pay to be policed.”

    Just for clarity’s sake, I suggest your post should note that the oil companies would pass the costs on to the consumer. There is no free ride. Oil company expenses go up.. so will their prices. The oil companies have no magic internal buffer pot of money to absorb extra costs. They’ll raise prices at the pump.

    I’m not saying there is anything wrong with oil companies paying. Just suggesting people need to know that the build of Federal capabilities will still be passed on to us tax payers in the end. Surprisingly, there are people out there who think if you tax corporations.. then all the sudden you got got a freebie. Rubes.

    • There is, however, a very real difference between paying for it directly, and having the oil companies pay for it. Oil is a globally traded commodity and increases in production cost are not attached to that particular barrel of oil. Rather it results in a much smaller rise in the cost of oil all over the world, so while it raises production costs of oil that threatens our environment, the cost is borne by oil consumers all over the world. Just as we don’t get to enjoy a discount because production costs may be less in the US; we don’t pay the full incremental price of production either.

      It’s not unlike the situation where Texas charges a tax on every barrel that comes out of the state. Texas consumers don’t bear the full cost, rather it raises the price of oil world wide and Texas’s treasury is effectively filled by oil consumers all over the world. (Every oil producing state does this except California which stupidly does not.)

  2. I don’t doubt that the regulators need a lot more in-house information, but it doesn’t appear that they made any use of what they did have. Had they read BP’s Response Plan paperwork, they should have noticed that it indicated that walruses would be threatened by a spill. That, in turn, should have caused them to take a look at the Plan’s adequacy, since it obviously wasn’t tailored to the site.

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  4. When the dust settles, and we have the time and ability to look back at this event with some candor, honesty, and insight, I hope someone questions the extent to which the Coast Guard emphasis on “partnering” with industry in the shared goal of regulatory compliance has allowed such compliance to slip between the cracks.

    I’m not suggesting that we create an “us vs. them” adversarial relationship with industry, but compliance ought to mean compliance, not a “wink and a nod.”

  5. As long as the oil company and the federal government share objectives and everyone is open an above board, partnership is fine, but (and this is a problem for all regulatory organizations, which tend to get captured by the industries they are supposed to regulate, see FDA, FCC, SCC) we can never forget, we are representing the American people, not the regulated companies. Mind set has to be, we have regulation for a reason, these companies have incentives to cut corners, and we need to watch them.

    And if we don’t have the facilities to do the watching, because they haven’t been funded, we have to scream like hell.

  6. One thing to remember is the Coast Guard did not have problems in enforcing the laws until it took over the old BMI.

    Perhaps it is not compliance but what is being regulated. If the Coast Guard took on the same moral indignation for non-compliance in the industrial areas as it does for drug smuggling the whole thing may have a different complexion.

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