BP Gulf oil spill: “Penny Wise and Dollar Foolish”

Charity Azadian

Everyone wants to know, why can't anyone figure out how to plug the 60,000 barrels of oil leaking every day from the bottom of the ocean? Why? It's very simple; of course, British Petroleum (BP) and the U.S. government have been "penny wise and dollar foolish."

The meaning of this phrase is something along the lines of "saving a little money only to lose a great deal more due to one's stupidity." In this case, the stupidity belongs to both British Petroleum for not investing at least 10 percent (instead of a meager 1 percent) of their enormous profits into R&D, and to the recklessness of the American government for being foolish enough to believe that the oil companies would have a set of standards for dealing with disasters.

In 2009, BP's profits were up 70 percent with total profits for FY 2009 at $14 billion. The frugality of BP and the American government, combined with a lack of knowledge about underwater drilling, has bankrupted the hearts and minds of people around the world. Now, almost 80 days after the oil spill, the feds and BP have been taking turns pointing fingers at each other, but both are at fault for the slow-paced response to the original spill. How's that for dollars and sense?

Most tragedies can be prevented, but once again, BP and the U.S. government are not students of history - Exxon Valdez - case in point. A simple illustration of this laissez faire methodology is evident in the American public safety policies used for creating STOP signs. Most STOP signs are placed on the road not because the government had the foresight or research to know where to put the sign, but rather because too many accidents had already taken place at a particular crosswalk or intersection. This "after the incident" type of policy can be seen infecting every department of the federal government as well as in every oil company. As the wise theorist Herman Kahn frequently observed, unpredictable contingencies always are the product of bad management and bad luck.

So what happens when people don't listen, and when accidents keep happening and no one pays attention? Economic and environmental disasters happen.
For more than a decade, offshore rig operators were told to have other systems in place should the Blow Out Preventer (BOP) fail. Blow Out Preventers are not new technology. But like any technology, they are only as safe and effective as the people and procedures that use them. Yet, no one listened, and no one enforced these safety precautions, it seems. And one might think that after 1,443 drilling accidents in offshore operations - leading to more than 40 deaths, more than 300 injuries, and 356 oil spills between 2001 and 2007 - someone would have enforced something.

We can tolerate failure in many technologies we use daily. When our computer crashes, we curse and reboot, but some failures cause too much havoc to tolerate so we focus on prevention. Just as our technology is not adequate for dealing with an offshore oil spill after it happens, there is little we can do to save the passengers after an airplane crashes. Thus, for decades, the aviation industry and government regulators cooperated on prevention.

It looks like what happened in the Gulf is like an airliner taking off with a list of outstanding maintenance reports, plus ice on the wings and letting it fly into a thunderstorm. In aviation, this nightmare scenario just would not happen. Pilots, mechanics, and controllers would be fired immediately for neglecting the rules.
An offshore oil well can affect the lives and livelihood of far more people than the passengers on an airliner. Shouldn't the people responsible for the oil well be held to at least the same standard as the people responsible for the airliner?

Today's oil spill failure occurred not because offshore oil drilling is morally bad, but because it is inherently risky, and the people who should know better took short cuts. An investigation may indeed show that enforcement of existing rules would have been sufficient to avert the disaster. After all, that seemed to work for over 3,800 other wells drilled in the last 30 years in the Gulf of Mexico.

All BP had to do was heed the warnings over Blow Out Preventers - which ultimately failed and contributed to the fireball over the Gulf of Mexico - and BP most likely wouldn't be in the mess it finds itself in today.

BP's Blow Out Preventer was a 325-ton, $15 million beast that sat at the bottom of the Gulf, controlling pressure or shutting down flow if something went wrong. Had it been working properly, it would have kept gas from running up too quickly into the rig, which is exactly what happened and what sparked the explosion of Deepwater Horizon. Had BP listened to warnings, the Gulf wouldn't be full of oil. Had the feds doing the inspections done their job of enforcement correctly, the Gulf wouldn't be an ocean of oil.

It was really only a matter of time before another accident happened.

And now, new questions are being raised about the testing of the Blow Out Preventers. At a recent hearing before a House subcommittee, Rep. Henry Waxman, D-Calif., revealed that the BP Blow Out Preventer had a leak in a crucial hydraulic system and had failed a negative pressure test just hours before the April 20th explosion. And, at a hearing in Louisiana a few days earlier, the government engineer who gave oil giant BP the final approval to drill admitted that he never asked for proof that the preventer worked.

As for cleaning up the disaster, guess who has come to the rescue? Robin Hood himself, actor Kevin Costner, has saved the day. Costner was interested in an oil skimming technology that the U.S. Department of Energy came up with in 1992, but had no interest in, so he invested roughly $20 Million dollars of his own money into R&D over the course of just three years and came up with a robust technology that skims 99% of the oil off the ocean's surface. Amazingly the government and oil companies had no interest in such technology, Costner states, even though an oil spill happens every day. It is clear that the government and BP remained passé and succumbed to the "out of mind out of sight" way of thinking. Clearly, those at fault have had no interest in remediation or response efforts to oil spills, and as Costner states "it may seem an unlikely scenario that I'm the one delivering this technology at this moment in time, but from where I'm sitting, it is equally inconceivable that these machines are not already in place."

At first light of this tragedy, a task force of outside experts who are unbiased should have been established. This task force should be comprised of both private sector and government consultants who have no stake in the matter and have governing authority to give directives on corrective actions. Specifically, the task force should immediately oversee a to-do list of the following: 1) Waive the Jones Act, 2) Accept more international assistance, 3) Waive or suspend EPA regulation, 4) Allow sand berm dredging, and 5) Stop Coast Guard budget cuts. And, finally, the last and most important step should be to mandate mitigation. Congress must mandate that oil companies invest in mitigation technologies and policies immediately.

From now on, the old phrase "penny wise and dollar foolish," has a new spin, and should be in the mental toolkit of every businessperson and government employee!

Charity Azadian is a professor, diplomat and author. She served as the first Special Assistant on International Affairs for the Science and Technology Directorate at the U.S. Department of Homeland Security (DHS), and soon thereafter served as a Senior Advisor on Nuclear Nonproliferation matters at the U.S. Department of Energy (DOE) in the administrations of President George W. Bush.

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