A Damning Indictment?

Byron York, relying largely on Republican Congressional sources, makes the explosive claim that the Obama administration neglected the mundane business of regulating offshore drilling because it was besotted with “green” wind energy. Byron concludes:

[Proposals to reform the Minerals Management Service] would not have awakened an administration that, dazzled by the dream of renewable energy, neglected the dull but crucial work of keeping watch over the nation’s offshore oil industry.

It’s an interesting argument. I somehow missed it, but MMS was apparently awash in ethics issues in recent years:

The Minerals Management Service, which is charged with regulating offshore oil drilling, was a deeply troubled agency when Barack Obama inherited it from George W. Bush. Top MMS officials had been caught drinking, doing drugs and even having sex with oil-industry contacts. More prosaically, they accepted gifts from industry representatives and did favors for them.
The cleanup had already begun in the last months of the Bush administration, but President Obama and Interior Secretary Ken Salazar still had their work cut out for them.

The problem, Byron argues, is that they were more interested in pie-in-the-sky wind projects than in managing the actual source of much of the nation’s energy:

Under Obama, the Minerals Management Service, driven by a strongly ideological commitment to green energy sources such as wind and solar power, chose to stress “renewables” while de-emphasizing the tough and dirty work of managing the nation’s existing offshore oil wells.
“What they did essentially was divert the attention of the agency away from regulating offshore drilling and focus it on the expansion of offshore renewables,” says one well-informed Republican House aide.
It started early in the new administration. Salazar’s first departmentwide order, issued March 11, 2009, was to declare “facilitating the production, development, and delivery of renewable energy top priorities for the Department.”
Salazar chose Elizabeth Birnbaum to head the MMS in large part because of her record of environmental and green-energy advocacy. “We have changed the direction of MMS,” Salazar told the Senate last month, “by balancing its ocean energy portfolio to include offshore wind and renewable energy production.” Given the considerable size of the existing offshore oil industry, “balancing” the MMS portfolio meant putting a heavy emphasis on new offshore wind projects. “They were more into renewables offshore than they were into oil and gas,” says a GOP Senate aide who works in the area.

Birnbaum is gone, the only casualty of the spill so far, which perhaps is an implicit admission that the administration’s misplaced focus was at least partly to blame for the spill.
Here is the problem I have with blaming the oil spill on lax regulation: regulatory agencies are always captured by the industry they are supposed to regulate, and in general, this is not a bad thing. The case of the MMS may be unusually lurid and blameworthy at a personal level, but the fact is that regulated industries always have far more expertise than the regulators who are supposed to look after them. For regulators to defer to the regulated is, much more often than not, appropriate.
There are, of course, instances where an unscrupulous business can make a few quick bucks and disappear. Regulation can be helpful in such situations, and some others. But BP is hardly in that category. The idea that BP needed regulators to tell it not to spill millions of gallons of oil into the Gulf is absurd. Since the spill, BP has lost around one-half of its market capitalization, around $100 billion. The spill has been a disaster for BP and the executives who run the company, not to mention those on the oil rig itself, eleven of whom were killed when the rig exploded.
This incident didn’t occur because BP didn’t care about the environment or needed a government agency to tell it that an exploding oil rig would be a very bad thing. The individuals who work for MMS, even if their motivations are entirely pure, have zero skin in the game compared to BP. The Gulf oil spill is like the crash of a commercial airliner–the worst possible disaster for the company in question.
So I don’t doubt that the Obama administration’s juvenile “green energy” fetish diverted the attention of MMS away from offshore oil exploration, but I do doubt whether it makes sense, in the first place, to think that a government agency either knows or care more about preventing spills than BP.


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