Offshore Drilling - Why Do We Ignore Long Term Cost?

Shortly after writing about my concerns with the way the BP oil spill was being handled, I received some messages which got me thinking about something else entirely. I called BP out on their unbelievably low estimate of how much oil was being spilled, talked about how the media (with the exception of NPR) weren’t investigating the numbers, mentioned that the cost will be much higher than expected and called for an end to offshore oil drilling. The messages I received all came down to statements like, “It’s because of people like you that we pay so much for gas and oil” and "We have to drill offshore for energy independence."

I have also been hearing the claim that this BP oil spill is a one time accident and an unfortunate rare mistake. That is just not true, this isn’t the first time and it won’t be the last time that a lot of oil has contaminated our oceans. Oil spills aren’t the only problem with offshore drilling either. Offshore rigs dump a steady stream of pollution into our waters, including drilling fluid and toxic metals. Just the existence of these rigs cause a wide range of health and reproductive problems for fish and other marine life. They destroy kelp beds, reefs and coastal wetlands. After this disaster we can clearly see that when something goes horribly wrong we will be paying for it for a long time, perhaps even decades.

Image from howstuffworks.com

I do mean that we will be paying for the cost of offshore drilling. The environmental problems caused by BP will effect much more than the environment. We will end up paying for a significant portion of the clean-up, we will pay for increased sea-food costs, we will be paying for the health problems associated with exposure to the oil and we will be paying for the massive loss of jobs. These things have to be taken into consideration when evaluating the “cost” of oil production but a lot of people seem not to be able to see past the price at the pump. All these economic systems are connected and there is a “true cost” behind the surface cost that we must pay attention to.

Many people also claim that limiting oil companies from drilling offshore is what makes oil and gas prices so high. Take a quick look at the value of these corporations, the amount of oil available and how much money they are actually making and you might change your mind. Beyond that there is the twisted economics of oil speculation, which keep the prices artificially higher than true supply and demand would make them. Much like the artificial manipulation of interest rates by the FED, oil speculation causes an energy commodity “bubble” which increases the price of oil and will eventually burst. While the FED continues to devalue the American dollar, the commodities future market raises the price of oil and we end up paying a lot more than we would for this natural resource.

Image from howstuffworks.com

The long term cost of a spill of this magnitude far outweighs the shore term savings at the gas pump. If we want to pay less for gas and oil we have to look at the big picture. If the American dollar continues to loose value at an alarming rate, we will get less for each dollar we spend. If we don’t regulate oil speculation and the commodity futures market, we will pay more for gas and oil. Most importantly, if we don’t take into account the true cost of oil drilling we can’t really know how much we are loosing. We have to pay attention to long term costs and make a judgment call when it comes to offshore drilling. We may get a short period of cheaper gas prices, but when something goes wrong we could end up paying a lot more in other, hidden costs. We have to think big and long term or we will continue to dig ourselves into a hole that we can’t climb out of.