President Obama has called it a ‘potentially unprecedented’ environmental disaster. What other fallout can we expect from the Deepwater Horizon oil spill? Simon Wilson reports.
Is this accident unprecedented?
Not at this stage, no. The current Deepwater Horizon disaster is hitting the headlines because of the ecologically sensitive coastline involved. But it is small compared to several previous oil slicks. Current estimates are that the broken well in the Gulf of Mexico is leaking 210,000 gallons of oil a day; that’s a tiny fraction of the 140 million gallons of crude disgorged into the same sea by the Ixtoc-1 blowout in 1979. In turn, the Ixtoc-1 disaster is dwarfed by the 1991 Kuwait spill, when Iraqi forces let 36 billion gallons of oil seep into the Persian Gulf.
How bad could things get?
In terms of environmental damage, the size of a spill is not necessarily the key factor, but rather when and where it happens. For example, the notorious Exxon Valdez spill in Alaska in 1989 wasn’t particularly big, but it contaminated 1,300km of shoreline. The present spill is, for now, rather smaller than ExxonValdez. But if oil continues to escape from the seabed at an ever-increasing rate, and if it cannot be fully capped for months, then the fisheries and fragile wetlands of Louisiana and Mississippi (particularly vulnerable during late spring) could be ruined for years. Some analysts even fear that the slick could be blown round the Florida peninsula and wash up on the Atlantic coast.
How likely is that?
No one really knows. The ultimate environmental impact of the Deepwater disaster will depend on a wide range of partially interlinked factors. These include the weather and the direction of ocean currents, as well as the success or failure of efforts to staunch the flow and deal with its effects. But there are some grounds for hope. So far, the wind direction has been relatively kind, pushing the slick away from the Gulf’s clockwise loop current. And compared with the thick, heavy crude that the ExxonValdez spewed out, the sweet, medium crude involved in this case evaporates more easily, is more responsive to the use of dispersants, and is easier to burn.
Will there be a backlash?
Past oil spills have certainly had a galvanising effect both on environmentalists and on politicians. For example, the Santa Barbara disaster of 1969 marked a turning-point in America. Then a Union Oil well blew out 8km off the California coast northwest of Los Angeles, and soaked 60km of shoreline with 100,000 barrels of oil. While not one of the biggest spills ever, it had a significant impact on public attitudes, helping to spark the environmental movement in the US, and leading directly to a raft of state and federal laws. Those included California’s offshore drilling ban that lasted until the mid-1980s.
How is President Obama reacting?
The two weeks since the Deepwater blowout have created a tricky situation for President Obama. He angered some Democrats in March when he announced a plan to expand offshore drilling. His so far uncompromising response to the disaster reflects his vulnerability on the issue. In California, Governor Arnold Schwarzenegger has reversed his support for expanding offshore drilling. And in Washington, the administration has supported a proposal by senators to make oil firms liable for up to $10bn of the cost of a spill. Currently there’s a cap of $75m, unless negligence or rule-breaking can be shown. But despite the new mood, a long-term ban on drilling in the Gulf of Mexico is all but unthinkable.
Why not ban drilling altogether?
Because the region accounts for a third of US domestic oil and gas production. In the four decades since the Santa Barbara disaster, demand for oil has surged 35%, while US domestic production has declined by a third. That leaves the US dependent on foreign imports for two-thirds of its needs; imports have doubled to more than 12 million barrels a day. That means, as the US Interior Secretary Ken Salazar put it at the weekend, that the oil and gas production from the Gulf Coast that essentially fuels the economy of this nation still continues to flow today and will continue to flow into the foreseeable future.
Will BP be part of that future?
It had better hope so: American operations make up 40% of its business. So far, CEO Tony Hayward has played a reasonably good public-relations hand. He blames the Transocean equipment BP was leasing, but has committed to pay up anyway. If BP does end up on the hook for compensation to fisheries and tourism businesses, and possible punitive damages, analysts have put the liability at up to $10bn. That’s a big, but not ruinous, sum for the oil giant. Indeed, the threat may have been overstated – several analysts have argued that the slide in BP’s shares is an overreaction. Nevertheless, there is a major long-term risk to BP’s reputation. Just how big that is will only become clear in the coming weeks and months.
Other giants sharing the pain
Those who think the sell-off in BP’s shares looks a little overcooked may also be underestimating the disaster’s impact on other oil industry giants, argues David Wighton in The Times. In Washington, any fresh impetus to pursue alternative forms of energy, or renewed hostility towards Big Oil implying tighter regulations that push up costs, will not be directed towards BP alone. The bottom line is that the Deepwater disaster is likely to make deepwater oil exploration in American waters more expensive and higher risk. That’s bad news for Exxon, Shell and Total too.