Monday, May 10, 2010

is bp's blowout the three mile island of offshore drilling?

Treehugger | I'm a big fan of scenario thinking. Although no one can predict "the future," several plausible scenarios can be constructed, informing decisions made difficult by many unknowns. A good decision works in all the scenarios, a very weak decision only in one, and so on. The Big Picture blog has a wonderful article, called Oil Slickonomics, in which three up-to-date prospective scenarios for the BP blowout are succinctly described as: The Bad; The Worse; and,The Ugliest. The writing is powerful good at the end of The Ugliest, in which economics are discussed. Check it out - a short outtake follows.
Deepwater and all offshore drilling in the US has been set back for a generation, just as Three Mile Island set back nuclear power development for decades. No politician can win an election now with a permissive view on drilling. Sarah Palin's "Drill, baby, drill" now condemns her to political marginalization. Off shore drilling has lurched to the top of the political agenda in this November's election cycle.
I'll go out on a a limb here: if by elections this fall we are into The Ugliest, any oil money will be absolutely toxic to politicians who have accepted it. All bets would be off as to who'd ever again invest in deep water drilling platforms. Hence the TMI metaphor used in my headline (credit for the idea goes to The Big Picture). If on the other hand the responders pull off "The Bad" BP will be a corporate hero and their stock will rebound. Government Agencies will have regained the reputation they lost from the Katrina fiasco, Ms Palin will have her chops back, and so on. Higher stakes can not be imagined. Fist tap Dale.