plucky tree

why is the BP oil rig there in the first place?

There’s blame being thrown around about the BP oil spill in the Gulf of Mexico, with the usual finger-pointing going on:

• It’s BP’s fault, the evil oil company
• It’s Transocean’s fault, the owner and operator of the rig
• It’s Halliburton’s fault, who did construction on the rig before the explosion
• It’s the government’s fault, for not regulating the safety of oil rigs enough

The question no one seems to be asking is:

WHY IS THE OIL RIG THERE IN THE FIRST PLACE?

The question we should be asking is:

How is it that a company can drill for oil a mile below the ocean’s surface, in a hurricane zone, pipe it up, haul it away, refine it, haul it somewhere else, load it into trucks, drive it to gas stations, and sell the end product for less per gallon than just about any liquid you can buy, even tap water?

The answer once again comes from the US government (and many state governments):

• Large tax breaks to oil companies, such that they pay an effective tax rate that is just over half that of the average corporation
• Funding research and development in the areas of oil exploration and other technologies
• Lower state sales tax on gasoline than the sales tax on other items (in some cases)
• Tons of money spent on regulation and inspections, which ironically are often promoted by the large companies in order to put pressure on competitors (these include clean energy companies!)
• Assuming the liability of oil companies when people or property is harmed when a huge oil spill happens
• Below-cost (and sometimes tax-free) loans for construction, exploration, and other activities
• Continued funding and expansion of the interstate highway system rather than alternatives that may be less fossil-fuel dependent

The big oil companies are all among the largest companies in the world who rarely have a year where they lose money. Hardly a group of companies that needs such a high level of government money (i.e. your money).

Wouldn’t it be nice to have a small business where the government gives you a cheap loan, pays for your R&D, and gives you a lower tax rate? And if something goes wrong, they step in and pay for any damages your company may have caused. Pretty sweet deal, eh?

So, the reality of the situation is, without all this massive government spending, this rig that is decimating an entire ecosystem wouldn’t exist in the first place, because no sane company would consider it a venture worth taking the risk.

Instead of vilifying BP as an evil corporation, remember that they had some help and this spill likely never would have happened without government cooperation and support.

Some interesting reading material:

Subsidizing Big Oil

Oil Industry Subsidies for Dummies

Note that the second link is a private company that has a vested interest in green technology, so while there may be bias there, their facts check out. Plus, I’d put more trust in a company that wants to make a buck creating technology that makes our lives better than one that can do nothing but harm our quality of life.