Oil companies' history of ducking safety improvements before big spills.

News and commentary about environmental issues.
May 7 2010 5:25 PM

Before the Big Spill

Oil companies have a history of ill-timed fights against safety improvements.

The site of the recent Gulf oil spill. Click image to expand.
The site of the recent Gulf oil spill

In the last half-century, three major oil spills have significantly marked American politics—the 1969 Santa Barbara, Calif., spill, the 1989 Exxon Valdez spill, and now the 2010 spill in the Gulf. They have a striking thing in common: Each occurred after the oil industry successfully resisted demands for safety improvements that would have greatly reduced the damage the spills caused. These technological fixes either were already standard or would later become so—and mandatory. By fighting them off in the short-term, the oil companies cost themselves huge amounts of money and the rest of us an environmental debacle.

Off the coast of Santa Barbara in the late 1960s, the Union Oil Company operated just beyond state waters, where the federal government makes the rules. Those federal rules were more lax about safety than California's. In particular, the oil companies successfully avoided state requirements to use extra protective casing to strengthen the well and prevent accidents.  After the well blew out in 1969, approximately 100,000 barrels of oil spilled into the ocean, polluting the beaches and near shore waters.

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Take two: In the late 1970s, the Carter Administration and environmental advocates called for double-hull oil tankers that would protect against spills by providing a second hull to absorb impacts and safeguard a ship's oil. The oil industry insisted that single-hull tankers were safe and headed off the double-hull mandate. After the single-hull Exxon Valdez tanker crashed in Prince William Sound and spilled 270,000 barrels of oil, a Coast Guard study suggested that a double-hull probably would have reduced the oil spilled by 60 percent. Congress passed legislation in 1990 requiring double-hulls in Prince William Sound by 2015, and more than 100 countries have pledged to ban the single-hull tankers by the same year. The Exxon single-hulls continue to chug along, though.

In the Gulf of Mexico, BP and its drilling contractor, Transocean Ltd., chose not to install a $500,000 remote-control shut-off switch that might have contained the recent spill from BP's well. Norway has required these switches since 1993. The U.S. Minerals Management Service considered a similar requirement several years ago, but the oil industry killed off the proposal. And so, but for $500,000, we probably have billions of dollars in liability and cleanup expenses in the Gulf, plus a long-term threat to the livelihoods and ecology of the region that we can't yet quantify.

Cutting corners to keep down costs is an age-old business strategy, from coal mines to sweatshops and the dumping of hazardous wastes. The history of these oil spills makes clear, however, that when it leads to a disaster, cost cutting becomes a bad corporate bet.

The Santa Barbara spill kicked off the environmental decade of the 1970s, spurring an otherwise indifferent Richard Nixon to champion the National Environmental Policy Act and creation of the Environmental Protection Agency. Any developer in the past 40 years who has struggled to complete an arduous environmental impact statement can partly credit Union Oil's resistance to additional well casing for NEPA's tough rules. The California spill also prompted a decades-long moratorium on new oil drilling off the coast of California.

The Valdez spill invigorated institutional investors and environmental activists to press companies to adopt the Ceres Principles, a new code of corporate environmental conduct. The accident also brought the passage of the Oil Pollution Act of 1990, which barred the Exxon Valdez ship and others involved in oil spills from operating in Prince William Sound.

So if you take a longer environmental view, has the industry's balking over safety improvements actually been a boon? It's not pretty, but birds dying coated in oil and fishermen lamenting their losses can change the political calculus. This recent spill is yielding a similar backlash against Big Oil. The spill has significantly undercut President Obama's proposed expansion of offshore drilling. Politicians from Florida to Virginia are lining up to oppose coastal oil development.

The problem is that offshore drilling is key to the White House's proposed grand bargain on energy and climate. On Friday, Lindsey Graham called for delaying the climate bill, in part because of the renewed opposition to drilling. If the already-tenuous deal unravels, then the Gulf oil spill will not just be an environmental disaster. It will also be a political one.

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