Self-Regulation in the Corporate State: The BP Spill
Which system failed?
With modifications on May 18, 2010
With some 7,000 barrels of oil spilling into the Gulf of Mexico each day from BP’s exploded Deepwater Horizon well, offshore drilling and oil-industry regulation have returned to the front pages.
The familiar old trap is set: Do you want unfettered markets and oil spills or government regulation and safety? The implied premise is that the oil industry operates in a free market. So, the argument goes, the only alternative is government regulation.
On first glance that story is plausible.
From USA Today:
The company that owns the offshore well spewing crude oil in the Gulf of Mexico and other major oil companies spearheaded a campaign to thwart a government plan to impose tighter regulations aimed at preventing similar disasters, according to government records. Tighter regulations would have required that drillers perform independent audits and hazard assessments designed to reduce accidents caused by human errors, but the federal Minerals Management Service (MMS) has so far not imposed the rules in the face of near unanimous opposition from oil companies. Oil executives — including BP, which leased the rig that exploded April 20 — argued that the industry had a solid environmental record and most companies had voluntarily adopted similar safeguards to protect against a major spill. They also said the new rules would have been too costly.
So: the MMS wanted to regulate, but the industry said it could regulate itself at lower cost, insisting it was a good steward of the environment. This is not to say that MMS was right and the companies wrong. For reasons provided below, government regulation is fatally flawed. Further, this is not just a simple matter of regulation. More fundamentally it’s a matter of ownership. The government has proclaimed itself the owner of the offshore positions where oil companies drill. In a free market those positions would be homesteaded and managed privately with full liability. In the absence of a free market and private property, built-in incentives that protect the public are diminished if not eliminated. Bureaucrats and “political capitalists” are not as reliable as companies facing bankruptcy in a fully freed market.
Observe: The New York Times reported, “Despite … repeated promises to reform, BP continues to lag other oil companies when it comes to safety, according to federal officials and industry analysts.” The Times said BP chief executive Tony Hayward “conceded that the company had problems when he took over three years ago. But he said he had instituted broad changes to improve safety….”
Why did BP have problems? The Times goes on: “Some analysts say the safety problems indicate that BP has not yet reined in the culture of risk that prevailed under Mr. Hayward’s predecessor, John Browne…. Mr. Browne set aggressive profit goals, and BP managers drastically cut costs to meet their quarterly targets. After the 2005 explosion in Texas City [killing 15 workers], investigators found that routine maintenance that might have averted the accident had been delayed because of pressure to reduce expenses.”
Another question can be asked: Has BP been too busy spending money to impress the government and the public with how “green” it is to look after safety adequately?
What we seem to have is a company that, in pursuit of short-term profits, was less than meticulous about safety (other people and their property, that is) while it and its industry effectively vetoed government safeguards that might have prevented the explosion that killed 11 workers and caused the damaging spill.
Some will defend BP in the name of the “free market” or minimize the event, protesting that the Obama administration’s remedial measures will “undermine our capitalist system.” Meanwhile, the “progressive” statists will declare that once again the free market has failed. The respective bases will be rallied.
Corporatist System
But BP’s defenders and statist critics both have it wrong. This is not the story of a well-meaning or negligent firm operating in the free market. Negligent or not, BP is a player in a corporatist system that for generations has featured a close relationship between government and major business firms. (It wouldn’t have surprised Adam Smith.) Prominent companies have always been influential at all levels of government — and no industry more so than oil, which has long been a top concern of the national policy elite, most particularly the foreign-policy establishment. When state and federal governments failed in the 1920s to put a lid on unruly competition and low prices through wellhead production quotas (prorationing), the oil companies turned to Franklin Roosevelt and the federal government, winning the cartelizing Petroleum Code, significant parts of which were revived after the National Recovery Administration was declared unconstitutional. In the 1950s, when cheap imports depressed prices, the national government imposed quotas on foreign oil. Venezuela was the chief target at the time. (In 1960 OPEC, a “cartel to confront a cartel,” was founded.) Republican or Democratic, energy policy is not made without oil industry input.
In this context there’s less to the contrast between government regulation and corporate self-regulation than meets the eye. Self-regulation in a corporate state does not constitute the free market. When companies are sheltered in any substantial way from the competitive market’s disciplinary forces, incentives turn perverse. Moreover, “state capitalism” and the corporate form – with its agency problem – can produce the temptation to cut costs imprudently in order to make the next quarterly report look attractive to shareholders. “Putting profits before people” is a feature of state, or crony, capitalism not the free market.
Knowledge Problem
Those who see “tougher” government regulation as the answer are evading some formidable objections. First is the knowledge problem. Empowering regulators to prevent the next disaster tells us nothing about how they would know what to do without imposing costs that would dwarf any benefits.
Second is “regulatory capture.” Regulators and the industries they oversee develop mutually beneficial relationships that would appall those who idealize regulators as watchdogs. The rules that emerge from those relationships tend to foster more monopolistic industries.
It took the Deepwater Horizon tragedy to bring out the fact that a single federal agency, the Minerals Management Service, is “responsible for both policing the oil industry and acting as its partner in drilling activities,” writes the New York Times. “Decades of law and custom have joined government and the oil industry in the pursuit of petroleum and profit. The Minerals Management Service brings in an average of $13 billion a year. Under federal law, even in the case of a major accident, the company responsible for the oil well acts in concert with government in cleanup activities.”
The coziness between government and the oil industry is also apparent in the cap on liability for damages – a paltry $75 million — from offshore oil spills (not including cleanup costs). The interesting question is whether BP’s dubious conduct would have been different without the cap. Hayward, the Wall Street Journal reports, “admitted the U.K.-based oil giant had not had the technology available to stop the leak, and said in hindsight it was ‘probably true’ that BP should have done more to prepare for an emergency of this kind.” Transocean, owner and operator of the rig, is petitioning to limit its own liability to $26.7 million. (Moral hazard matters, but the story is complicated. Oil spills have been decreasing, and no energy development is without its risks.)
The free market will undoubtedly take the rap — but it’s an unjust rap. According to Reuters, “Like BP, both Transocean … and Halliburton, a contractor, also pumped money into the campaign war chests of senators who sit on the Energy and Natural Resources Committee and the Environment and Public Works Committee.”
I have a feeling the companies weren’t buying repeal of corporate favors.
Comment by TokyoTom on 14 May 2010:
Sheldon, great post.
I also posted a few thoughts in response to Lew Rockwell’s sympathy for BP and in reply to a response by Stephan Kinsella:
Risk-shifting, BP and those nasty enviros – TT’s Lost in Tokyo http://bit.ly/alFkim
Poor statists! If we close our eyes tightly enough, we can see clearly that Corporations are innocent VICTIMS, of governments that foist on them meaningless grants like limited liability & IP, and of malevolent, grasping citizens http://bit.ly/dc3RD9
I agree with what you wrote, but would note the following as well:
- government’s “ownership” of the seas & seabed leave a continuing tragedy of the commons in its wake, as resource users have no rights to manage, invest in sustainability, or exclude, sue or negotiate with other users whose interests or use conflicts. Thus, fishermen, shrimpers, oystermen and the like were not in a position to negotiate in advance with BP on precautions, and are poorly situated to seek damages.
- you touched on the ridiculous and counterproductive limitation of liability the the US government gifted to BP, but fail to directly note or criticize the much deeper and pervasive problems that stem from state governments’ grant of corporate status, particularly “limited liability”.
From limited liability and corporate status flow a steady transfer of risks from enterprises to the public as a whole: the corporate form enables the growth of large enterprises poorly managed by shareholders (who are dis-incentivized by “veil-piercing” judicial doctrines from trying to closely manage, and generally have little practical ability to oversee anyway), the growth of risk-taking by managers (who, like shareholders, can capture the upside of risky ventures but have little or no personal liability when injury is caused to innocent third parties), growing power and ability to influence judges, politicians and media – and so greatly eroding strict common-law protection of property rights from pollution, and resulting threats to health and safety that spur government action and thus the cycle of struggle for control over government, in which insiders always have the upper hand.
But beside these points, I note that simply explaining that what led to the spill and our general state of affairs was not “free market” capitalism isn’t particularly helpful in giving people direction on how to improve our situation.
Should we:
- insist on ending legislative grants of limited liability, both for ocean oil & gas drilling and for corporations generally? should we insist that drilling only be conducted by partnerships that have no limited liability (but can buy insurance)?
- are there tools of moral suasion that we ought to apply? should we be insisting on naming the names and demanding personal responsibility by managers involved?
Not merely your diagnosis, but your thoughts on practical courses of treatment would be helpful.
Pingback by Sheldon Richman doesn't feel sorry for BP, either - TT's Lost in Tokyo on 14 May 2010:
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Comment by DownsizeDC on 14 May 2010:
I heard it said that in a free market (no limited liability or liability caps) that no one would build a nuclear power plant. I wonder if it’s also true that no one would drill for oil offshore.
If both are true, then environmentalists should call for repealing regulations, not adding to them.
Pingback by reboot the republic » Self-Regulation in the Corporate State: The BP Spill on 14 May 2010:
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Comment by Paul Mollon on 14 May 2010:
Thank you Sheldon for shedding light through the usual statist hysteria. Predictably there is a FB group called “One million strong against off-shore drilling”; containing all the wishing-will-make-it-so arguments for “clean energy”. UGH
Comment by Kevin Carson on 14 May 2010:
Excellent. I don’t think there’s any doubt removing the liability cap would have an effect on behavior. If there were no liability cap, the scale of liability for this spill would have amounted to a corporate death sentence. If BP’s assets were liquidated to pay hundreds of billions of $$ in economic damages and the senior managers who deliberately encouraged cutting corners were forced into personal bankruptcy, I think strong liability insurance would become de rigeur for the industry. And the insurers would have a major interest in implementing an inspection regime with teeth in it.
Comment by Stephan Kinsella on 14 May 2010:
This is a good piece–unlike Carson’s (uncharacteristically) weak one on this topic. Of course, Lew’s comments were not a defense of BP of the type Sheldon rightly criticizes; none of us are under any illusions that there is no corporatism going on here. And even if BP was too careless and negligent, that doesn’t mean we ought not feel sympathy for them (presupposing they will in the end take the brunt of the costs of the damages).
Tokyo–of course the state should get out of the incorporation business altogether, just as it should get out of marriage. Of course it should end its limited liability grants (and it should also end its court system that would impose liability for torts etc. in the first place).
The question is: in a free market, with the state out of the way, if a contractual-”corporation” were formed–call it a Hessen–would passive “shareholders” have liability for torts committed by employees/agents of the Hessen they held a share in? You have to argue for it, carefully. Pilon and Hessen have explained why there is no need for a limited liability grant b/c there is no reason to impose vicarious liability on a shareholder in the first place — http://www.stephankinsella.com/2009/10/26/pilon-on-corporations-a-discussion-with-kevin-carson/ .
To argue otherwise you would need to articulate a careful, libertarian-based theory of causation and responsibility which none of the left-libertarian opponents have done, to my knowledge. Rather they just assume it’s obvious that a shareholder should be liable and would be, if not for the pernicious limited liability privilege. They just point to a few “moral hazards” and incentive effects they don’t like, as if consequentialism were not controversial. Or they just trot out an unthinking “owners are responsible for their property”–which is doubly flawed: first, owners are responsible for their actions, not their property; second, relying on the state’s own legal classificaiton scheme to call a shareholder an “owner”–ownership is the right to control and obviously the shareholder can’t fly the corporate jet or use the corporate boardroom or set policy or manage employees etc. see http://blog.mises.org/8993/the-over-reliance-on-state-classifications-employee-and-shareholder/
So the shareholder’s role in the company is limited, and if you come up with an ad hoc vicarious responsibility conclusion to get what you want, it’s going to rest on an at least implicit causation idea that is so broad that you would also have to say that many other actors connected to the Hessen are also vicariously liable for its torts: employees, creditors, suppliers and other vendors, consultants, customers, attorneys, accountants, stakeholders, and on and on.
Comment by Tom Blanton on 14 May 2010:
I must be a heartless bastard. I can’t seem to find it within me to have sympathy for BP. But, even if I really wanted to have sympathy for BP, I can’t identify exactly where this sympathy should be directed. Should I visualize BP’s Articles of Incorporation? Should my heart go out to the BP corporate logo or should I weep for BP’s CEO, who probably will only have a small amount shaved from an outrageous bonus?
I tried to feel sorry for the water polluted by the oil and couldn’t even muster up even a morsel of heartfelt compassion. Forget about the ecosystem – what has that done for me lately? Maybe I’m just clueless, but I just can’t seem to find a worthy victim in this mess. If there are any real victims, it may those who have to endure the endless babbling about who and/or what is to blame and who and/or what is the victim. And then there’s the fish – I imagine they are pretty depressed about all of this.
Pingback by Richman and Carson on the BP Oil Spill on 14 May 2010:
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Comment by Dennis on 14 May 2010:
This is an excellent article illustrating the corporatism that has become so omnipresent over the past 30 years. I say it is excellent because I am in agreement.
However, on the flip side I also believe that safety is in the best financial interest of BP and I frankly doubt that they knew they had a problem here. After all, who wants a PR disaster such as this? I realize that this is not the gist of the article and I, too, will refrain from defending BP because none of us can know (or need to know) what goes on in their boardroom.
Again, this is a terrific example of how corporatism/statism has led to a false sense of security, unrealistic expectations regarding security, and a less than trustworthy bureaucracy.
Comment by Anna O. Morgenstern on 14 May 2010:
Stephan, I do think it is possible for a limited shareholding of the sort you mention to arise in a free market quite easily. In fact it is probably statist “corralling” of finance that created the sort of contradictory form of limited liability corporations we have today, and the concept of “public ownership”.
Sure, you could make a contract that says “Pay us 1 dollar, you get a share of profit, after the following has been … yadda yadda”, with no implication of ownership.
On the other hand, owners are responsible for their property, in that their actions caused the property to fall into their hands in the first place. If you buy a car, for instance, and the car blows up and kills some bystanders while it’s parked, I would predict that a free-market court would find you liable.
Now, there could be a chain of responsibility. If you lend your car to your friend, who kills some people through negligence, in the end it is your friend who is *directly* responsible (which I think is analogous to how you perceive a firm committing a tort through mis-management). But I could see a free-market court ruling that the families of the victims could sue you (for letting your friend drive), who could in turn sue your friend (for misusing your property to your detriment).
What I don’t think any free-market court would rule was that an abstract organization could “own” anything. The firm (or any other organization) would not be seen as a separate entity from its owners. Its assets would be collectively owned by the owners of the organization. The “shareholders” might not all be the legal owners, but someone would be. Those owners might contractually limit their liability among themselves and their customers/vendors/etc, but they could not limit it against people at large who never agreed to any such contract.
I suspect you’re looking for a way to smooth out legal situations in a free market so complex trade can exist without constant threat of tort. I believe some sort of insurance system would fill that role. That is to say, in the normal course of business, interlocking insurance agreements would cover things in such a way that would prevent ongoing/frivolous/minor tort suits and would function like a limited liability system in some ways (“by accepting this insurance contract you agree to abide by our arbitration on matters not involving direct gross negligence, etc”).
If something like a BP spill happened in a free market, first of all, the ocean areas would already have demarcated ownership grids, so the victims could be well identified, and insurance would handle the claims against BP (such as they may be) pretty smoothly. These insurance companies would also probably have done a very rigorous diligence on BP’s risk factors as well, possibly preventing such a spill in the first place.
Pingback by Week in review « Craig W. Wright on 14 May 2010:
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Pingback by effects of deepwater horizon incident - Mutha Fuckin' Magic Up In This Bitch on 14 May 2010:
[...] Kevin Carson in Sympathy for the Devil, BP. Sheldon Richman, editor of The Freeman, weighs in with Self-Regulation in the Corporate State: The BP Spill. Stephan Kinsella, "Austro-anarchist" writer/lawyer (from Houston) sums things up in [...]
Pingback by The American Spectator : AmSpecBlog : Different Implications for BP in a Real Free Market? on 15 May 2010:
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Pingback by Self-Regulation in the Corporate State: The BP Spill « thak’s cool links on 15 May 2010:
[...] The Freeman | Ideas On Liberty » Self-Regulation in the Corporate State: The BP Spill. Whatever you want to say about the oil-spill debacle, don’t call it the effect of the “free market”. We don’t have one of those–and never have. [...]
Comment by AR on 16 May 2010:
Really?
In a free market, corporations do not externalize costs?!
I don’t see ANY conservatives falling all over themselves to remove the tentacles of corporate lobbyists and influence from government – instead they’re the ones FIGHTING for ‘corporate free speech’ and the most laughable (if it weren’t so injurious to our on-life-support principle of one man-one vote), ‘corporate PERSONHOOD’.
When you TRULY begin to fight corporatism, you’ve become a PROGRESSIVE.
And it’s OK for Republicans to be progressive, just ask Teddy Roosevelt!
Comment by Tim on 16 May 2010:
Anyone who claims the oil industry operates in a free market is either ignorant or willfully engaging in deception. As Sheldon points outs, the $75 million cap on liability provided by federal law represents a huge subsidy and is an invitation to moral hazard. This is not to suggest this accident proves BP’s negligence. After all, off-shore oil drilling is inherently risky and accidents do happen. However, if BP faced the full costs of strict liability, the company would likely invest more in safety or perhaps abstain from off shore drilling all together.
A legal regime that scrupulously protects property rights and holds individuals as well as corporations strictly liable would be far more effective and just in protecting the environment than the current system which relies too much a politicized, corrupt, and incompetent government bureaucracies.
Comment by scott on 16 May 2010:
No one can claim that oil is a free market because of simple market analysis. In the free market there is competition and alternatives. What alternative to oil is there? None. Oil prices couldn’t have run up to $147/barrel if there was competition.
If nothing else, our military represents such a substantial externality that no one could call this a free market. Further, the very grades of gas, the special allowances we give refiners to pollute so we can have this essential fuel are appropriate use of gov’t.
It’s not that gov’t creates these markets, or turns them this way. There are just some markets that don’t have competition and alternatives. These are problematic markets.
Again, it will serve you well to consider that there are Three markets–the free market, the professional market and the utility/monopoly market. Each of these operates differently, pricing is different, and the power of the consumer is different.
Your arguments pining for simple markets is as feckless and idealistic as the Communists. Condemn yourselves to irrelevance or come to terms with these three markets. It’s not statism.
Gov’t was created to confront these monopolies. Whether Roads, sewage, water, armies, or later electricity, telephony these inelastic markets leave consumers powerless. They don’t even have the freedom to boycott these essential goods.
I don’t like Walmart, but I can boycott Walmart. How do you boycott BP? That is the difference between these markets.
Pingback by Liberator | A free market take on the BP spill on 16 May 2010:
[...] generations has featured a close relationship between government and major business firms.” (The Freeman) Jesper Juul Andersen E-mail: FJERNDETTEjesper.juul.andersen@gmail.com Hjemmeside: Jesper Juul [...]
Comment by thor on 17 May 2010:
First, let me say, I am not a market fundamentalist. I do not believe any version of “the market is always right” or “the market always works”.
Having said that, I would like to comment on the reasoning involved in this article. I’ve heard it many times. Not a free market, therefore, not a problem with the free market.
Okay. But by the same token – not a free market, not a result of the free market. All of the advances of the last one hundred years can not be said to be the result of the free market because no nation on earth practices the free market.
What I’m saying is – these arguments are weak and you need better ones.
Pingback by The government’s hidden role in the BP oil spill :: Liberty Maven on 17 May 2010:
[...] * don’t have the profit and loss incentive that private insurance companies do; they don’t go out of business for their mistakes * tend to impose one-size-fits all rules that don’t work as well as the site-specific requirements that insurance companies impose * and often act as partners in the industry they regulate, not as watchdogs http://www.thefreemanonline.org/columns/tgif/bp-spill/ [...]
Pingback by Self-Regulation in the Corporate State: The BP Spill | The Freeman | Ideas On Liberty « The Chocolate Savant on 17 May 2010:
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Comment by Michael on 17 May 2010:
@Kinsella
Control brings the shareholder profit or loss. Shareholders control the factors of production in the market. Shareholders have placed themselves in a rather odd position where they cannot exercise control very well. That’s their problem. Not mine. Shareholder choose to set up or participate in a bussiness structure with som inherent problems in it (action). Shareholders assigned capital and choose to do risky bussiness in the oil sector rather than for intance solar cells (action). Thus shareholders are bussiness owners and exercise control over the market.
If you assume liability is *usufuruct* and not connected to private property then I hardly see any justification for your conceptual Austrian understanding of what *private property* is. If you disconnect responsability from your artificial austrian private property rights the people loose faith in it. Private property becomes *usufuruct* as well.
Pingback by Freedom is the Problem? « LewRockwell.com Blog on 23 May 2010:
[...] successes outside the left/right party paradigm, Keynesian end times upon us, and the nastiness of the pseudo free market BP disaster, the governing elites blame freedom, and not themselves. The NYT continues the trend, blaming the [...]
Pingback by Freedom Is the Problem? | Austrian Economics Blog on 23 May 2010:
[...] successes outside the left/right party paradigm, Keynesian end times upon us, and the nastiness of the pseudo free market BP disaster, the governing elites blame freedom, and not themselves. The NYT continues the trend, blaming the [...]
Pingback by Errors of Enchantment » BP Oil Spill a Coporatist Failure, not Free-Market Failure on 25 May 2010:
[...] think BP’s liability should have been curtailed by Congress in the first place. As libertarian writer Sheldon Richman points out, weak and poorly administered government regulations and liability protections are part of the [...]
Comment by onedroprule on 25 May 2010:
I saw a similar argument to this free market analysis on another page and posted the following response which I think is applicable here as well:
“your free market analysis assumes that companies given more control would take more care, but there is no reason to believe this is the case. As we see in reality, companies’ bottom line is profit. If it were profitable to take less precaution, whether a company owned the ocean property or not, a company would indeed take less precaution. For example lets say a megacompany in your total free-market universe (let’s call them Halliburton) owns multiple plots of ocean land. If it were profitable for Halliburton to spoil one of those plots (maybe to damage a competitor’s abutting ocean property) then it very likely would. And that’s assuming that everyone is on their best behavior as libertarians always seem to despite enormous evidence to the contrary.”
Comment by Cole on 26 May 2010:
Loved this article, but can you, Sheldon, or someone else here guide me toward some more articles or, better yet, books, that expound in more depth on the PDF you linked to about the ‘problems with the corporate form’?
I really found the arguments in that PDF persuasive, but after debating it with my father in-law this past weekend (who took many of his arguments from Hessen’s “In Defense of the Corporation”, which I borrowed and will be reading soon) he bought up many good arguments (many of which have been bought up as well in some of the comments on this thread).
One of arguments was in regard to how business on a scale where a huge amount of capital is needed could raise that capital if every shareholder who simply invested, say, $100 or $1000, was suddenly liable for a hell of a lot more should a lawsuit be bought against the business. Who would invest? I certainly wouldn’t.
Anyway… any help in furthering my knowledge of the problems with the corporate form and the ‘principle-agent’ problem would be greatly appreciated.
Pingback by The Making of an Oil Spill - Hit & Run : Reason Magazine on 28 May 2010:
[...] that the BP oil spill shows the dangers of "disempowered government," Sheldon Richman paints a more nuanced picture: [T]his is not just a simple matter of regulation. More fundamentally it's a matter of ownership. [...]
Pingback by Never Yet Melted » Regulation and the Oil Spill on 29 May 2010:
[...] Sheldon Richman, in the Freeman, explains that the reality of the current situation is far more [...]
Pingback by Pelosi blames Bush administration for BP oil spill on 30 May 2010:
[...] it also sad that these deaths could have been avoidable as well as the oil spill. I also thought this article was interesting for that matter. It suggest that we are living in a Corporate State instead of a [...]
Comment by sam on 31 May 2010:
Uh, I think some of you folks are mistaken re the 75$ million cap and BPs ultimate liability:
Comment by John Morgan on 31 May 2010:
Deepwater Horizon fix and Oil spill cleanup Solution
May 30, 2010
Dear Engineering screener;
Thank you for the opportunity to make two suggestions for a fix to the riser pipe leak and the leakage oil that is on the surface of the ocean and directly underneath the surface say 200 ft or more.
I do not pretend to be an expert in the field of petroleum physics but I do have expertise as a scientist of physics.
I will not write this document as a technical brief in order to save time and debate.
You obviously have a lot more data at your disposal than I do, so I will keep my suggestions brief as well. I am not seeking any fortune or fame, only doing my duty as an American and scientist to help solve your current issues.
Now you seem to have decided to lower a valve to the floor and affix it to the existing riser. Fine.
I am assuming you will be cold cutting some distance from the riser below the bent end. You will experience a noticeable increase of flow because of the elimination of the crimped riser pipe.
I am suggesting a new 2 piece blowout preventer/valve.
That is fine as long as you are in position with your replacement fitting (valve) attached to the top of a single blowout preventer valve. Those two must be attached before lowering over the original cut and prepped riser pipe. Now it’s important that both valves remain open until they are placed and secured on the precut riser pipe. There will be an increase in upward thrust of material once the original riser pipe has been cut and threaded in readiness of the new double piece valve. (Single Blowout Preventer and valve. See: Remotely controllable subterranean oil well valve United States Patent 3870098 as an example.
It’s important to use two work subs to hold the valve in place and to lower it 50 ft or so above the riser cut. The reason is the reduced risk of losing it due to the increase flow rate of fluid, (force) against the new valves and subs. Once in place you can affix it to the riser and seal it with the valves open during this process. Once secured, close the blowout preventer valve followed by the new attached valve. That valve can be ready to receive a new riser pipe connection to begin the continued transfer of product from the well. Manufacturing and design of this new double valve can be down in a week if you get reliable people to do it. To place it should take a day or so.
I am assuming that you are using 21 inch rising pipe, so the two valves must be a match. Keep in mind the flow and force of the material ejected from the pocket of oil. The two relief wells ready in August, some 90 days out will only reduce the flow of the original well hole, so it’s important to get a new valve in place to stop the immediate flow and begin again.
The purpose of the patent above is to use the example as a guide to the new 2 valve fix that I suggest.
Oil cleanup: This is simple; you have access to many tankers that are more than 200,000 DWT that are equipped with pumps on board. You will use the same equipment to instead “suck” the oil from the surface surrounding the coast before it gets to shore. Now you will however have with it saltwater (use a Desalter) and maybe depending on the filter that is used some other materials. Now the refining process has not changed for some time and boiling off the water and other containments will have to be done to get to the final product which in turn will lead to whatever your refining process requires (process units).
There will be allot more fluid content in the tanker holding tanks than normal thus the frequency of return trips and or the quantity of tankers employed. With this you do not need to use any chemical disbursements that only add to the problem and to the political arena.
The existing globules of oil below the surface can also be “sucked” up as well using the same method. You will have to find a refinery that will allow you to process the seawater/oil combo. They will have to have boil makers and pipefitters handy to replace any piping, etc that will be affected by the contaminated oil. The costs in the end will be allot cheaper than what you will be paying now and in the future not to mention the environmental and business losses that have already occurred.
The key now is to move quickly and with people that do not sit around all day at meetings that are non productive. 24 hour a day work schedule is in order to fix this costly accident.
If you would like to speak with me further you have my contact information.
Good luck with what you do.
Sincerely,
Judah Ben Hur
CTO
Gaiacomm International
http://www.gaiacomminternational.com
Gaiacomm@yahoo.com
Pingback by Too Big to Fail or Too Big Failed? « Erich Miller for Congress on 1 June 2010:
[...] payer subsidies for favored businesses, along with politically expedient oversight is a toxic mix. One we can no longer afford. To change the perspective we must change the people we put in government. Mr. Waxman and the RNC [...]
Pingback by Let’s Put the Oil Spill Crisis to Good Use and Take Control on 4 June 2010:
[...] of complete failure and bankruptcy in the free market place. Sheldon Richman in his blog post “Self-Regulation in the Corporate State: The BP Spill” on the Freeman blog states it well: So: the MMS wanted to regulate, but the industry said it could regulate itself at [...]
Pingback by The Facts Were These… » Blog Archive » Let’s Put the Oil Spill Crisis to Good Use and Take Control on 4 June 2010:
[...] of complete failure and bankruptcy in the free market place. Sheldon Richman in his blog post “Self-Regulation in the Corporate State: The BP Spill” on the Freeman blog states it well: So: the MMS wanted to regulate, but the industry said it could regulate itself at [...]
Pingback by BP: Liability vs. Regulation - Hit & Run : Reason Magazine on 4 June 2010:
[...] advocates have also called for reforms ranging from mandating liability insurance to rethinking the limited liability corporation itself. But the basic approaches are constant, even if the details vary. One group focuses on regulation, [...]
Pingback by BP: Corporatist Couch Potato Or Market Hero? | LILA RAJIVA: The Mind-Body Politic on 4 June 2010:
[...] Sheldon Richman: “With some 7,000 barrels of oil spilling into the Gulf of Mexico each day from BP’s exploded Deepwater Horizon well, offshore drilling and oil-industry regulation have returned to the front pages. [...]
Pingback by Self-Regulation in the Corporate State - Politics and Other Controversies -Democrats, Republicans, Libertarians, Conservatives, Liberals, Third Parties, Left-Wing, Right-Wing, Congress, President - City-Data Forum on 5 June 2010:
[...] [...]
Pingback by Roundup on BP | Austro-Athenian Empire on 8 June 2010:
[...] Sheldon Richman here, [...]
Pingback by You Really Want Government Drilling for Oil? | The Freeman | Ideas On Liberty on 11 June 2010:
[...] (I didn’t say it was the legitimate owner.) The owner leased its property to a private company, BP, with a bad safety record (though a good one for sucking up to the environmentalist establishment [...]
Pingback by You Really Want Government Drilling for Oil? – Dark Politricks on 12 June 2010:
[...] didn’t say it was the legitimate owner.) The owner leased its property to a private company, BP, with a bad safety record (though a good one for sucking up to the environmentalist establishment [...]
Pingback by BP Oils Spill: So what failed here, the market or the State? on 13 June 2010:
[...] (I didn’t say it was the legitimate owner.) The owner leased its property to a private company, BP, with a bad safety record (though a good one for sucking up to the environmentalist establishment [...]
Pingback by You Really Want Government Drilling for Oil? | STATESMAN SENTINEL on 13 June 2010:
[...] didn’t say it was the legitimate owner.) The owner leased its property to a private company, BP, with a bad safety record (though a good one for sucking up to the environmentalist establishment [...]
Pingback by Perseverance Pays on 25 June 2010:
[...] Self-Regulation in the Corporate State: The BP Spill | The Freeman … [...]
Pingback by Free Markets, Incentives, and Oil Spills | Whiskey and Car Keys on 1 July 2010:
[...] This is exactly the kind of idiocy that passes for wit inside the beltway. Libertarians often get a rap for being corporate shills, but there’s a reason we’re free-marketers, not Corporationists. Sheldon Richman explains: [...]
Pingback by Blagnet.net » Obama regime’s refusal of Dutch help for the BP oil spill on 1 July 2010:
[...] fairly fast and effective ways to mitigate an oil-spill catastrophe. And while it’s true, as Sheldon Richman reminds us, that environmental catastrophes are more accurately attributed to government failure than market [...]
Pingback by yankee bastards - Mutha Fuckin' Magic Up In This Bitch on 16 July 2010:
[...] between government and established politically connected firms is to blame. (For more, see Self-Regulation in the Corporate State: The BP Spill.) But Ulstertalbot, certainly you must realize that the dumbshits who join statist murder gangs [...]
Comment by Jesse on 6 August 2010:
So, with unlimited mobility and no reasonable system of global liability, I’m quite unclear on how a corporation (and more specifically the key decision makers within a corporation), would be interested, or indeed even capable of meaningful self-regulation.
Under the systems you propose, it is an entirely reasonable proposition for a CEO to employ entirely unsound practices in any number of fields with the expectation that he will in the short term enrich himself and his allies, and disengage from the corporate entity itself before the proverbial crows come home to roost.
To put a colorful spin upon the matter, it would be as if some evil spirit had possessed my body, used it to commit murder, and then departed before the police came to take custody of me.
And yet, this is precisely how our entire corporate system functions on a day to day basis – how else then are we to manage a larger society (or indeed, protect corporations themselves from such forms of abuse) other than regulation?
To my eye our legal systems have proven woefully inadequate, generally incapable of even identifying malefactors until years after the damage is done, much less bringing them to account for their actions, and indeed, I don’t see any magical way of improving them to do so.
Shareholders can be held to account of course, but in our current system they too are often very nearly powerless to affect decision making, so the point there is mainly collective vindictiveness rather than effective liability.
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