News of BP PLC's (NYSE ADR: BP) Gulf Coast oil spill was only hours old when Money Morning readers first weighed in on the tragedy. The chief concern: U.S. taxpayers will yet again be stuck with the tab for a problem caused by corporate malfeasance and lax governmental oversight.
Stricter government regulation could enforce safety shut off valves with remote control operations – a device that could have prevented the current disaster. The hefty $500,000 price tag on the safety control has been a past deterrent, but hard to argue against in the wake of the billion-dollar Gulf spill.
But investors understand that the long haul is what really matters, meaning that there's perhaps a bigger question here than who's at fault, and what will this cleanup cost….
Washington wants to limit U.S. dependence on foreign oil and create jobs, while also protecting natural resources and preventing future spill disasters. But the United States faces a future in which oil prices are likely to soar as thirsty nations compete for dwindling supplies.
Clearly, our leaders in Washington, the U.S. energy sector and U.S. environmental agencies and interests will have much to debate in the months and years to come.
This prompted last week's installment of Money Morning Question of the Week: Is U.S. offshore oil drilling going to disappear – why or why not? How does the industry affect you as an investor, taxpayer and consumer?
Here is a collection of thoughtful reader responses regarding the future of drilling and the oil spill.
Drilling Can't End Soon Enough
My answer to your question is: I hope so – and the sooner, the better.
How do you risk-manage something like this? When the outcome of something going wrong is unacceptable (and I definitely view a spill as unacceptable), seems to me youjust don't do it.Not to mention that decreasing, not increasing dependence on oil is supposed to be the order of the day given the economic and political realities surrounding the energy situation on our planet.
So the bottom line: I am hoping that sanity will reign and that we will move away from oil and in the direction of solutions where the worst-case scenario is still acceptable – so that risk management is even possible – and which are, furthermore, sustainable.
– Cara T
Lesson Learned – Hopefully
Years ago I heard someone say, "Experience is what you get when you don't get what you want." By that definition, BP and the other companies associated with the Gulf oil catastrophe are getting a lot of experience, and in the short term we are likely to see permits to drill offshore restricted, or even eliminated completely. However, there is too much oil in offshore reservoirs to declare a permanent moratorium on drilling for it and using it.
Despite this catastrophe, I don't see Brazil or others stopping development of their resources, although I am quite sure that they will pay very close attention to how we deal with this situation. They are not fools, and they will certainly want to learn from our experience.
And down the road, when oil is in shorter supply, and much more expensive, the U.S. will again open up some offshore locations for exploration. There will certainly be those who will protest vigorously, but ultimately the promise of those billions of barrels of oil will overcome the resistance. It may well not happen under the current administration, but eventually the political and economic forces will align themselves, and efforts to tap these reserves will resume.
And when it happens, the lessons learned in this debacle, along with those learned in other offshore drilling locations around the world, will hopefully provide the means to develop them safely. I'm not sure that I think that this is a good idea, but my reservations about the wisdom of drilling in such locations are irrelevant. At some point, drilling will resume.
– Gordon F.
Cars Drive Need for Oil
Drilling will continue. The impetus for offshore drilling is controlled by the demand for oil. Government regulations always bend in favor of the majority, and the majority of people (with money) own cars. Offshore drilling will continue as long as cars run on oil.
Drilling in deep ocean is just another job that is created by demand. As long as we let
our cars determine our destination, our destination will be where the oil is. "Safety" is relative to the profits and risks, and the data will be modified accordingly. New devices, higher profits, higher risks – but people will still keep driving even when they don't have to.
– Dan C.
It would be folly to not continue offshore drilling in the U.S.
We must continue to drill and find safeguards to avoid the repeat ofthe catastrophic event of late. To stop now will do nothing but keep us enslaved to foreign powers that hate us !
– Walter T.
The current "oil spill", which in actuality should be called a "man-made" leak of epic proportions, will be the greatest ecological disaster seen to date, by an order of magnitude you guys just don't seem to get…
– Lynn A.
No Other Choice
There is no way this country can and will survive at this time without continuation
of oil and gas drilling on our own leases both on shore and offshore. We do not have an alternative resource at our disposal at the present time to keep the country going. We should continue drilling and exploring where known deposits are located!
– Posted on our Web site 5/6/10 by "Richard M. Samic, Sr."
Killing by Drilling
The oil company (BP) will never, never live long enough to make up for and compensate for the loss of the animals that depend upon unpolluted waters. When will we learn and take action; when there are dead oceans and no longer anything living therein? Won't that be too late?
Our government…they are too busy taking payoffs to do anything about these types of tragedies. It is you and I, the public, John and Mary Q, [who] stand to lose the most…
– Posted on our Web site 5/10/10 by "Helen"
Oil Drilling is Not the Answer
Every thing to do with oil is based on greed from the drilling to the filling station .The government is not one bit interested in the people, only in filling their own pockets.
Oil is going to run out – every one knows it, but they do not come up with a plan to take its place. They better get serious soon or it will be too late…
The only way is to offer an incentive so the ordinary backyard mechanics and scientists get to work on the problem. They are the ones that made America what it is today.
– Posted on our Web site 5/10/10 by "Craig Thomas"
[Editor's Note: Thanks to all who responded to our seventh installment of the Question of the Week feature regarding offshore oil drilling. Be sure to answer next week's question: How has the market's "flash crash" affected your investment behavior? Do you like the steps taken so far to prevent this from happening again?
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Is there a topic you want to see covered as a Question of the Week feature? Then let us know by e-mailing Money Morning at firstname.lastname@example.org. Make sure to reference "question of the week suggestion" in the subject line. We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate – via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
- Money Morning:
Full Cost of Gulf Oil Spill Just Beginning to Surface
- Money Morning:
BP Bites the Bullet: Analyzing the Full Cost of the Gulf Oil Spill
- Money Morning News Archive:
Question of the Week Feature