BP? Halliburton? Obama? Whom should we blame for the oil spill in the Gulf?

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May 25 2010 6:58 PM

The Buck Stops Over There

Whom should we blame for the oil spill in the Gulf? Take your pick. 

There will be plenty of time to assign blame for the Gulf of Mexico oil spill. But it never hurts to get a head start.

In his first speech after the spill, President Obama dumped responsibility on BP. And in the public mind, BP is still the main culprit, with 76 percent of Americans disapproving of the way the company is handling the spill. But as more information trickles out about what went wrong and how disaster might have been averted, the arguments over who to blame are becoming fully formed. Here's a look at where fingers have been pointing, and why:

BP: As the lease-holder of the Deepwater Horizon oil rig, BP bears ultimate legal responsibility for the cleanup. It will also have to pay damages. But how much responsibility does it bear for the explosion itself? The argument for the buck stopping at BP's feet is that the company was in charge, so it should have demanded the strongest safety standards possible. For example, BP could have demanded an acoustic switch that shuts off the well when the rig is damaged—a safety measure that's required in Norway and Brazil. Aggravating this narrative is BP's history of preventable disasters, including an explosion at a Texas refinery in 2005 and a leaky pipeline in Alaska in 2006. The Obama administration has also criticized BP for failing to act quickly or efficiently enough to clean up the spill and has demanded that it use a more environmentally friendly chemical dispersant.

Transocean Ltd.: While BP leased the rig, Transocean owned and operated it—and was therefore responsible for the equipment functioning properly. If the explosion was caused by a failed blowout preventer—a valve that seals off the wellhead—then Transocean would have to answer for it. BP executives also point to Transocean's Emergency Response Manual, which says that Transocean is responsible for activities on the rig—and therefore accidents—and that BP was only there to "assist."

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Halliburton: Halliburton's job was to cement the base of the well. So to the extent that a poor cement job contributed to the spill, blame Halliburton. Shoddy cementing is common on oil rigs, but Halliburton executives told the Senate recently that they were simply following BP's instructions. Indeed, it appears that BP may have skimped on testing the strength of the cement before ordering Halliburton to apply it.

Minerals Management Service: The federal agency in charge of regulating the oil and gas industry has been almost a parody of incompetence. It let industry officials fill out their own inspection sheets and then traced it over in pen, according to an inspector general's report. Inspectors accepted gifts, like tickets to sports events and pricey dinners, from oil companies. They watched porn on their work computers. (Perhaps they were simply researching the "junk shot.") In at least one case, an investigator may have conducted an inspection while tripping on meth. Not to mention the exemption from environmental impact analysis given to the Deepwater Horizon drilling operation in 2009. (When MMS did assess it in 2007, it estimated that any oil spill wouldn't exceed 1,500 barrels total. The current leak is at least 5,000 barrels a day.) The Obama administration has slammed MMS for its ethical lapses and announced plans to dissolve the agency and replace it with two separate entities—one for regulation and one for revenues.

George W. Bush: The Bush administration is to MMS as BP is to Transocean: It was in charge when oil industry regulation was relaxed, so the blame may fall to them. Environmental lawyer Robert F. Kennedy Jr. argues that Bush and former Vice President Dick Cheney staffed MMS with industry-friendly cronies who created the "culture of ethical failure" cited by an inspector general report. Sen. Chris Dodd made a similar point to Don Imus on Tuesday: "To lay this at Obama's doorstep, in light of years and years of regulatory permissiveness when it comes to these kinds of operations occurring, it didn't occur in the last year and a half."

Barack Obama: Few blame the Obama administration for the spill itself. But many believe it could have done a better job responding. Democratic strategist Donna Brazile called the president's response "not tough enough" on BP. In a rare alliance, so did Sarah Palin. Scientists say the administration has failed to collect solid data on the spill's scope and damage. Other critics have called for the government to step in and fix everything. But as Coast Guard chief Thad Allen said: "To push BP out of the way, it would raise the question, to replace them with what?" Politically, the administration's decision to expand offshore drilling—without much talk of its dangers—sets it up for some share of the blame. But in a heated speech in the Rose Garden, Obama pre-emptively rebutted attempts to blame the current White House: "From the day he took office as Interior secretary, Ken Salazar has recognized these problems and he's worked to solve them."

Congress: If members of Congress really wanted to prevent spills, they could have written legislation that required more safeguards (for example, the acoustic switch). They could have demanded better oversight by regulatory agencies. And of course they could have de-emphasized offshore drilling, which has boomed in the last decade. Congress also created the $75 million liability cap that's now causing headaches as part of a compromise after the Exxon Valdez spill. The might have considered the repercussions then instead of now.

Circular firing squads tend to be self-canceling, as casual observers lose track of who accused whom of what. But the oil spill is unlikely to follow that path. Too much attention is being paid and the stakes are too high. More likely, this blame-a-thon will resemble the one that followed the financial crisis. The causes of the crash were complex and numerous. But Congress eventually settled on two: the banks and the regulators. Hence the Goldman Sachs auto-da-fé and the regulatory reform bill that will revamp the rules of Wall Street.

Who will take the flak? As legal guardian of the spill—and with liability claims already totaling in the tens of millions—BP is already in the dog house. Unfortunately for Bush and Transocean and the rest, there's room for more.

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