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Why the oil spill isn't BP's fault

By Kris Sayce - posted Friday, 18 June 2010

There's nothing the mainstream press enjoys more than an environmental disaster. And paradoxically, there's nothing the green lobby gets a bigger kick from than an environmental disaster.

But the real disaster isn't the oil spill it's the fact that 11 people were killed when the oil rig exploded in late April. Not that you hear too much about that.

You see, as terrible as it may seem, and as incomprehensible as the amount of oil leaking into the Gulf of Mexico is - up to 162,000 barrels equivalent per day - the long term effect of the oil spill is likely to be, well, hardly noticeable.


Sure, you've seen the protests about the impact on wildlife and oil washing up on the beaches. And sure, there have been plenty of references to the Exxon Valdez in 1989, which according to our friends at Wikipedia resulted in the deaths of "100,000 to as many as 250,000 seabirds".

We'll agree, that's a lot of birds. Although, when you put it in perspective, even the top-of-the-range number would have only resulted in a decline of the world bird population by 0.00025 per cent.

And even the population of the formerly endangered bald eagle was barely dinted by the Exxon Valdez. According to the same Wikipedia reference, 247 bald eagles died following the incident. If we assume they died as a direct result of the Exxon Valdez oil spill it still only reduced the total bald eagle population of the Alaska/British Columbia region by about 0.35 per cent, given that population numbers in that region in the early 1990s were forecast to be between 60,000 and 80,000 individual birds.

In other words it would have taken a disaster 243 times larger than the Exxon Valdez to wipe out the entire bald eagle population. So the miniscule impact on wildlife following that event hardly warrants the use of the term "ecological disaster". Ecological annoyance would probably be more accurate.

Look, I'm not saying that you can just go around killing things and then say, "Oh, but it's only 0.0000000001 per cent of the total population, it doesn't matter". What I am saying is this ...

First of all, there's a tendency by the mainstream media to fall for the environmental propaganda too easily. All they need is a couple of videos of a budgie covered in oil and a distressed rock drenched in the same for it to make front page news.


But second, and perhaps more importantly, whenever such a "disaster" as this happens it's invariably the case that the blame is apportioned to the wrong person or organisation.

As you'll have noticed, the evildoer tag has been attached to BP, with the CEO Tony Hayward being cast as the Dick Dastardly of the corporate world.

But as is usually the case, the real cause of the problem has been overlooked. You see, it's not BP that is ultimately to blame, even though the oil has come from their oil rig. And it's not entirely the fault of the legislation passed in the US during the 1980s that limited the liability of oil companies to just USD$75 million if a spill occurred.

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First published in Money Morning on June 17, 2010.

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About the Author

Kris Sayce is editor of Money Morning. He began his financial career in the City of London as a broker specializing in small cap stocks listed on London’s Alternative Investment Market (AIM). At one of Australia’s leading wealth management firms, Kris was a fully accredited adviser in Shares, Options and Warrants, and Foreign Exchange. Kris was instrumental in helping to establish the Australian version of the Daily Reckoning e-newsletter in 2005. In late 2006, he joined the Melbourne team of the leading CFD provider in Australia.

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