Rebuttal --To OPED "GOM Oil Supply Disruption and National Job Losses"

“Drill, Baby, drill” – Really? By Jurgen W Schulze, M.A. (Law), MBA, of Jurgen Schulze & Co LLC, Independent Adjusters and Surveyors Click Here to view the original article In his article “The Gulf of Mexico Oil Supply Disruption and National Job Losses” (The Maritime Executive – Friday, June 10th, 2010), Dr. Michael Economides has presented an interesting premise in that he argues that neither the American public nor the Obama Administration should panic over the current Gulf of Mexico oil spill and instead seriously reconsider the offshore drilling moratorium because of a demonstrated negative impact on the US job market. Somewhat callously, Dr. Economides accuses a “penchant of a public”, and journalists that “have stopped math education in grade school” when he embarks to explain that if we were dealing with a quantity of oil in the one million barrel range, this would amount to no more than a concentration of 0.02 parts of oil per million, and hardly be worth having sleepless nights over. Dr. Economides’ excursions into Euclidean geometry help visualize the quantity of oil spilled are fascinating for illustration purposes, but unfortunately, his approach ignores some fundamental elements of physics, nature, and the economy. The Specific Gravity Issue Oil extracted from the Gulf of Mexico (measured at 60° F) has an average specific gravity of 0.873, compared with that of sea water, which is 1.021. Even allowing for some adjustment factors (such as temperature and viscosity), a simple comparison of the two values leads invariably to the conclusion that oil has a lesser density than (sea) water, which means: it floats. Hence, the concentration of 0.02 parts of oil per million (parts of sea water) is a purely theoretical and meaningless value, only achievable in a laboratory after mixing the corresponding amounts of oil and water in a glass jar for a given period of time so as to achieve an even distribution of the oil in water (but don’t let the mixture stand for too long afterwards as it will start to separate again). Alas, in reality, the result is different: most of the oil spilled in the Gulf of Mexico will eventually come to the water surface, minus such quantities that are naturally broken down or dispersed or have already been chemically treated. There is also the issue that the estimates of the actual quantity of oil that escaped from the well, wildly vary. Accepting that we may never be able to quantify the extent of the leak with scientific accuracy, belittling the approach of environmentalists who may regard “even one part per million of oil anywhere” as unacceptable (by the way: anything wrong with that thought?), is reminiscent of the debates amongst Holocaust historians over the actual number of victims. Should 6 million make us feel better, or less guilty, than 6.5 million? It is anybody’s guess what ultimate effect waves, winds, currents, and possible tropical storms (since the hurricane season has just started) will have on the oil spill, but one can probably safely assume that in spite of ongoing cleaning up operations, at least some of the states on the Gulf of Mexico will end up with larger quantities of oil washed up on their shores. Barrels vs. Gallons Dr. Economides also suggests that the entire issue of the Gulf of Mexico oil spill has been artificially inflated in the press by providing estimates of the oil quantities in gallons rather than barrels, arguing that when you divide “thousands, millions of gallons” by a factor of 42 (there being 42 gallons to the barrel), the magnitude of the disaster can be contained. This is a classic example of “spinning” – stick with the truth, but make it more palatable to the public by moving the goal posts. In reality, it makes little difference if thousands of gallons of oil, or thousands of barrels of oil, pollute estuaries, rivers, and beaches, eliminate marine life, kill wildlife, and upset the ecological balance in the Gulf of Mexico for a period likely to extend many years, if not decades. Improving Drilling Safety Dr. Economides goes into overdrive when he decides to ridicule the quest for improving the safety of offshore drilling, calling it a “space-age technology demanding exercise”. He suggests that unless we accept the drilling methods used to date and carry on with what we have, drilling operators and contractors will move on internationally, and may not want to come back to a “hostile business environment”. Apart from the fact that we are living in a space age (it started in the last century already), and that the school of thought that opposed concerns about environmental impacts is largely responsible for the climate changes we are experiencing at present, the economic (not to mention environmental) consequences of an oil spill alone justify holding our breath for a moment, grab the opportunity to learn from whatever mistakes were made, and seek to find better and safer ways. As part of this period of reflection, we have already experienced the beginnings of a shake-up of the government oversight and drilling permit control system, which appears to have been in considerable disarray. Just as much as any aircraft manufacturer tries to remedy defects that contributed to, or caused, the crash of an airliner, we need to have an incentive in place for oil drilling operators to improve drilling methods and implement changes going beyond pure efficiency or cost improvements. We have safety devices on all sorts of consumer products, some of which were only introduced as a result of years of product liability litigation – is that what is required to win over Dr. Economides? Or are we back to adopting military strategic thinking and calculate what “acceptable losses” are? The Coup de Grace: Jobs at any price Finally, Dr. Economides tries to demonstrate that large job losses in the US occurred each time there was an oil supply disruption of more than 2 million barrels per day, providing us with a graph, which for appearances’ sake, at least mentions the “2008 recession”. Therefore, he argues, a drilling moratorium is bad for the US economy, the consumer, and causes job losses – jobs that will never be regained. A truly gloomy picture, making the lone voice shouting “Drill, Baby, drill” appear as the epiphany pulling us out of the doldrums, especially because of the lack of viable alternatives for the immediate future. This was the drum beat heard during the Industrial Revolution in England when nobody cared about the impact of the thousands of tons of sulphur being blown into the atmosphere by burning coal. Fortunately, we have moved on – both in time and in our thinking. As far as the number of alleged job losses or job gains is concerned, in the absence of a proper legend to Dr. Economides’ graphic illustration of the US employment situation, one may question the figures on the same grounds as one has natural doubts about employment statistics generally, irrespective of their source. Nobody explains what happens to the thousands who have exhausted the period during which they can claim unemployment benefits – where do they go afterwards in the statistics? What happens to all the jobs that are lost because US entrepreneurs decide to farm out jobs to India, Mexico or Canada? Where will the fishing industry and the tourist industry in the Gulf of Mexico feature in Dr. Economides’ graph? Gloom, but not necessarily Doom There is no argument against the premise that we heavily depend on oil, and that this will not change overnight. There is also no argument against the premise that dependency on foreign oil supplies invariably includes instability factors. There is no argument against the premise that we should drill for oil in domestic and offshore waters, both to satisfy demand and decrease dependency on foreign supplies. Nobody can seriously dispute either that, due to decades of our own neglect and disregard, we have no immediate fuel alternatives available on a larger scale. But there is an argument against the premise that the end justifies the means. This is not a “black-and-white” scenario as Dr. Economides tries to imply. There is no reason why tighter and more effective government controls, new oil exploration, and improved safety cannot go hand-in-hand. The “drill-at-any-price” philosophy is outdated as well as out of place – we are already paying the high price for the mistakes and errors that were made by past generations who adhered to this line of thought, and to use job-loss-scare-tactics to cause us to throw caution into the wind, is not the way forward. After all, who actually benefits from complacency and “laissez faire”? Not the oil or drilling industry since the cleanup costs will be astronomical and any oil production interruption costs money. The true (and perhaps only) beneficiaries will be the legal profession as decades of litigation tend to follow such incidents. Hence, if one searches for a sense of perspective in the context of the Gulf of Mexico disaster, there is and remains a case for future onshore and offshore drilling and oil exploration, but please not at the same price as has been paid by the Siberian Tundra, which has been drenched in oil from leaking pipelines over decades. We need further research into improving drilling safety, and to criticize the Obama administration for allowing such a breathing space may indicate that a reassessment of values and priorities is overdue. Finally, one can hardly think of a better opportunity than the current oil spill to speed up the process of developing, and employing, alternative and less destructive sources of fuel and energy. One might imagine that the job growth potential inherent to such development would be substantial – and put a severe dent into the underlying thinking that any reduction in oil production equals job losses.