What Actually Happened to the Oil Spilled in the Gulf? It Matters a Lot for Business
Here's some rather gloomy news just days into 2011 that will have policy and economic implications: We'll probably never know just how much oil BP left in the Gulf of Mexico (PDF link). The Congressional Research Service, a taxpayer-funded think tank for Congress, issued a report last month on the fate of the oil from the Deepwater Horizon disaster. The reports aren't made public. Thankfully, the Federation of Scientists released the report Monday so we could all take a peek (h/t The Hill's E2 Wire blog).
The "Fate of the Oil" report tries to answer a question that we should know by now: Where did the oil that wasn't skimmed, captured or dispersed go? Most folks may think of this as an environmental question. But the answer has implications on the future spill response, fines assessed on BP and other responsible parties, and future policy decisions.
How much missing oil are we talking about, really? The CRS figures that even assuming half of the oil has been removed from the Gulf through direct recovery, burning, skimming or evaporation, a substantial portion -- more than 100 million gallons or 2.4 million barrels -- remained. Unfortunately, the CRS report doesn't come to any conclusions except that no one knows at this point what happened to the remaining oil. And then it concludes with this final stinger:
It is debatable whether the fate of the remaining oil will ever be established conclusively. Multiple challenges hinder this objective: the complexity of the Gulf system; resources required to collect data; and varied interpretations over the results and observations. Moreover, as time progresses, determining the fate of the oil will likely become more difficult.Why it matters
For one, it makes assessing the long-term impact on the Gulf marine environment impossible. And without accurate information, preparing for another oil spill disaster is even harder. It also gives BP some room to fight off government fines and downplay restoration costs.
The CRS also hits on another possible outcome, which could impact U.S. energy policy in the long term.
Because evaluating the actual fate of the oil may take time and may prove difficult, perceptions of the oil's fate may influence congressional interest and action, with consequences for the affected stakeholders.Meaning, if business-friendly politicians want to claim that the oil degraded and had little impact on the environment, they might succeed in diverting attention away from cleaning up and protecting the Gulf. Conversely, if environmentalists establish a gloomy narrative of hidden ecological disaster, we could see over-regulation and the stifling of offshore drilling in the region.
BP and the oil industry should take particular note to that final point. BP's initial resistance to determine the size of the spill may have hurt the offshore drilling industry more than if the company had been transparent from the get-go.
Photo from U.S. Coast Guard, Deepwater Horizon Response
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