The White House was more successful Wednesday forcing a private company to set up a $20 billion fund to pay for damage from the oil spill than it has been in stemming the flow of crude fouling the Gulf of Mexico.
Chances are that BP stood to be held accountable through legal avenues even without the agreement reached with the Obama administration. The government, motivated by politics and public emotion, isn’t the best arbiter of liability, particularly after the fact. If existing tort provisions prove inadequate, they should be adjusted to provide proportionate incentives before, and appropriate liability after, disasters. But this should be done legislatively, not by administrative fiat in the heat of crisis. We suspect the administration may hike its $20 billion requirement as tolls mount, and new constituencies are heard from.
Clearly, government is good at coercing money from companies needing government approval to operate. Government’s not so adept at dealing with catastrophes such as an unprecedented two-month oil leak 5,000 feet underwater.
Despite insisting it is in control, the Obama administration can do little to stem the flow of oil and, apparently, little to clean it up. But government can wield power elsewhere and pretend that addresses the problem.
Republicans say President Barack Obama is exploiting the Gulf crisis to push an unwanted energy policy capping greenhouse gas emissions and forcing companies to buy and trade emissions credits. That will have no effect on the spill or on the reality of America continuing to largely rely on oil for decades. But cap and trade can be very profitable for the government, which will take its cut in fees and taxes while controlling the faux carbon market.
Democrats in Congress, including Ohio’s Sen. Sherrod Brown, have sent mixed signals about their willingness to sign on to cap and trade. Those from states like Ohio rightly worry about the effect the bill would have on those states’ industries. At the same time, claiming they have the cure-all for the environment is standard Democratic operating procedure. Obama isn’t going to miss a chance to exploit a crisis like the oil spill.
The administration also is inflicting unintended consequences by imposing a six-month moratorium on deep-water drilling, resulting in the loss of tens of thousands of jobs. Unintended consequences go hand in hand with clumsy government “solutions.” Hazardous deep-sea drilling is conducted largely because governmental prohibits much safer, easier to manage shallow-water drilling closer to shore.
The federal government has no particular oil-well-capping expertise of its own, and its bureaucratic maze is notoriously lethargic when quick responses are needed, such as after Hurricane Katrina and the Gulf oil spill. For example, after eight weeks of waiting on BP and federal authorities, Louisiana Gov. Bobby Jindal has ordered the National Guard to drop sand bags by helicopter to keep oil from reaching shore.
BP and other culpable parties will, and should, face considerable expense as a consequence of this disaster. (Bank of America Merrill Lynch this week ordered its traders not to enter into oil trades with BP that extend beyond June 2011, Reuters reported Wednesday). What the Gulf oil spill should not be is another excuse to swell even further the Obama administration’s ever-expanding administrative authority. And it’s certainly not an excuse for a contrived, economically punitive cap-and-trade system ripe for abuse.
Firms participating in a worldwide carbon scheme already abuse it by artificially inflating their greenhouse gas emissions, which allows rich nations to boost emissions, Reuters reports. For example, chemical plants maximize production of a potent gas because of a financial incentive — getting paid via the offset scheme to destroy the same gas.
The U.S. needs cap and trade like it needs another oil spill.