The fact that BP was engaged in activities that had a chance of causing widespread harm should have required that they demonstrate the means to minimize the harm.
They have already drawn on the Coast Guard for help, and have now asked for broad government help.
Should the government help?
If so, how much help?
Shouldn't this fall on the insurance companies? Haven't we removed the economic incentive of the insurance companies to stop the leak?
Two words: moral hazard.
Why provide for such a contingency, at considerable expense, when you know that Uncle Sam will swoop in to the rescue when it happens? They are still going to pay for all the expense the government incurs but that is a discount on maintaining the capital (ships etc) required themselves. That portion of the cost will be subsidized by the taxpayers unfortunately. Absolutely the government should step in to help at this point since that is what is implied by the current structure. It won't get done otherwise and I don't think we want that. It should fall on the companies themselves but that is not reasonable to expect when the current incentive structure points in the opposite direction. The incentive structure is broken beyond belief and when that is the case you are bound to get perverse outcomes.
I don't see where the current structure implies anything like what is going to have to be done. I see a report by BP that asserts the chance of a major spill from the Deepwater Horizon is small, and of that spill reaching the coast negligable (which is a funny word). If the insurance companies were happy with that assessment, then maybe they know how to stop the leak, because I can't imagine they will want to pay on claims against BP. If were only a few billion dollars, that would be one thing, but something tells me this one goes beyond the ability of the insurance companies to pay.
The government didn't force BP to practice extremely irresponsible behavior. They don't even have internal knowledge on how to stop the leak, yet they went ahead with activities that created the leak. The industry lobbied against being required to install acuostic safety valves, and they won!
I bet those valves look pretty cheap right about now. It just goes to prove that you can't be too careful when messing with crap that can affect millions of people.
The chance probably was small, but it happened. Somebody F'd up and BP is going to pay a huge price tag for it and absolutely those valves probably "look pretty cheap right about now." I don't know anything about insurance though. As far as I know the whole price tag is going to fall on BP based on the statements I've read but I could be wrong. I thought your question was essentially "why don't these companies keep their own sufficient clean-up response teams?" If that is the question then I stand by my original answer. Why would you when the government will do it for you? If that isn't the question then I am unsure what is.
Government created another "crisis" in order to have it State controlled.
"Government created another "crisis" in order to have it State controlled."
I'm buying puts on BP, and calls on Koolaid.
That is pretty far fetched my man. Not everything is a conspiracy to empower the state.
BP pays for cleanup.
That's the brilliance of it. It doesn't have to be a conspiracy. Government just has to wait until BP drops the ball. And then they take advantage of the situation. No need for sabatoge or anything.
Curtis Zwick wrote the following post at Sun, May 2 2010 1:04 AM:
That is pretty far fetched my man. Not everything is a conspiracy to empower the state.