Questions and Observations

Free Markets, Free People

World Health Org – We’ll prioritize health research, you just pay for it

At its base, most wars are a fight over resources and power.  The wars waged by governments and quasi-governmental agencies over revenue are really no different – they too are constantly looking for the resources to extend their power.  Take the UN’s World Health Organization:

The World Health Organization (WHO), the United Nations’ public health arm, is moving full speed ahead with a controversial plan to impose global consumer taxes on such things as Internet activity and everyday financial transactions like paying bills online — while its spending soars and its own financial house is in disarray.

The aim of its taxing plans is to raise “tens of billions” of dollars for WHO that would be used to radically reorganize the research, development, production and distribution of medicines around the world, with greater emphasis on drugs for communicable diseases in poor countries.

WHO resents the fact that most of the research done in the world is done on non-communicable diseases such as cancer instead of communicable diseases such as malaria and tuberculosis mostly effecting poor countries.  WHO points to a 1986 study (1986?) that claims only 5% of global R&D was applied to health problems of developing countries.  Of course most understand that the developed countries already have effective methods of dealing with those communicable diseases that could be transferred to poorer countries, but that would kill their bid for this massive money and power grab.

Anyway, here’s the plan. WHO presented a “suite of proposals” for “new and innovative sources of funding” to WHO’s Executive Board in January.  Apparently they got the go-ahead then:

Now the proposals are headed for the four-day annual meeting of the 193-member World Health Assembly, WHO’s chief legislative organ, which begins in Geneva on May 17.

The Health Assembly, a medical version of the United Nations General Assembly, will be invited to “take note” of the experts’ report. It will then head back with that passive endorsement to another Executive Board meeting, which begins May 22, for further action. It is the Executive Board that will “give effect” to the Assembly’s decisions.

What it all means is that a major lobbying effort could soon be underway to convince rich governments in particular to begin taxing citizens or industries to finance a drastic restructuring of medical research and development on behalf of poorer ones.

The scheme would leave WHO in the middle, helping to manage a “global health research and innovation coordination and funding mechanism,” as the experts’ report calls it.

In effect, the plan amounts to a pharmaceutical version of the U.N.-sponsored climate-change deal that failed to win global approval at Copenhagen last December. If implemented as the experts suggest, it could easily involve the same kind of wealth transfers as the failed Copenhagen summit, which will send $30 billion a year to poor nations, starting this year.

An international cap-and-tax plan failed in Copenhagen, but never fear, there will always be some international organization with “innovative, new ideas” about tapping your wallet.   And all it needs, as was the case in Copenhagen, is enough gullible governments to agree to need for the tax (thankfully in this country, the Senate must ratify any such foolishness and to this point, at least, has refused such nonsense).  The “new and innovative” taxing, er, funding methods include:

• a “digital” or “bit” tax on Internet activity, which could raise “tens of billions of U.S. dollars”;
• a 10 percent tax on international arms deals, “worth about $5 billion per annum”;
• a financial transaction tax, citing a Brazilian levy that was raising some $20 billion per year until it was canceled (for unspecified reasons);
• an airline tax that already exists in 13 countries and has raised some $1 billion.

I bring all of this up to point out that whether this particular bit of nonsense goes anywhere, there are people and organizations all over the world (the UN in particular) which are constantly trying to establish “new and innovative” ways to increase their power and take your money.  These attempts, in the wake of this global economic downturn, are going to intensify in the years to come.  WHO is only a harbinger of these types – both domestic and international – who are going to try to tax us till we drop.  Revenue sources are the new key battleground for governments and NGOs, and when it all is boiled down to it’s essence, your earnings are the primary source for their future expansion of power.

The best way to counter this addition to power is to follow Nancy Reagan’s advice and just say “no”.

~McQ

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

CBO – health care will cost $115 billion more

The deeper look into the recently passed ObamaCare continues to yield “surprises”.  I put “surprises” in quotes, because to those who took the time to actually think about what was being proposed and the institution doing it, none of this really comes as a surprise.

For instance – does it surprise anyone that large companies might drop their health care coverage because the incentive to keep it is less than the incentive to drop it?  The new law actually makes it cheaper for Verizon, AT&T and Deere to pay a penalty and drop coverage than to continue to pay it.

It should certainly come as no surprise, then, that the monstrosity the Democratic Congress passed might cost more than they claimed originally.  Remember this is the second upward revision by CBO.  In March CBO jacked the cost up from $788 billion to $940 billion.  Now that CBO has had the opportunity to actually read and study the entire bill and consider its cost implications at leisure it has found about $105 billion in additional spending necessary to “fund discretionary programs overhaul” and an additional $10 to $20 billion (always go with the higher number in cases like this) for “administrative costs to fund the overhaul”.  This revision puts us over a trillion in cost over 10 years – the figure opponents claimed the cost would be while $788 was being touted by Democrats.

While this comes as no surprise – at least to me (trust me, there’s going to be a lot more increased cost found in this absurd bill) – the following made me to laugh out loud and caused others to stare as I did so:

But a Democratic leadership aide on Capitol Hill said the Congress will have to stay within the budget.

“Just like other authorized programs, the discretionary programs in health reform will need to compete for funds within set budgetary limits,” the aide said.

You just can’t make some of this stuff up.  And I do wonder if he said it with a straight face.

~McQ

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

Government and obesity: Because it does everything else so well

Read the first sentence of the story carefully – the rest flows from there:

A White House report warns, “The childhood obesity epidemic in America is a national health crisis.”

An “epidemic”.  A “national health crisis“.  Got it? 

We have a climate crisis.  Solution: Big government.   We have a financial crisis.  Solution: Big government.  We have a health care crisis.  Solution: Big government.  We have an childhood obesity crisis.

Create a “crisis” and then create the solution. Any guess what the solution might be?  If you’ve been paying attention lately, you do:

The review by the Task Force on Childhood Obesity says one out of every three children is overweight or obese. The task force is a key part of First Lady Michelle Obama’s campaign to solve the problem of obesity within a generation. President Obama ordered the comprehensive review of the issue.

The report includes familiar themes, emphasizing the importance of improved nutrition and physical activity. It also calls for some new and dramatic controls on the marketing of unhealthy foods.

It doesn’t require an advanced college degree to understand the thrust of those two paragraphs. “Solve the problem” is short-hand for enact the necessary controls to achieve the desired government goal “within a generation”.

You’re certainly not going to accomplish that by “suggesting” things be done, are you? And of course, the task force makes that quite clear with its “new and dramatic controls” on the marketing of whatever it or government decides are “unhealthy” foods.

Here’s what that means:

The task force wants junk food makers and marketers to go on what amounts to an advertising diet. It says media characters that are often popular with kids should only be used to promote healthy products. If voluntary efforts fail to limit marketing of less healthy products to young viewers, the task force suggests the FCC should consider new rules on commercials in children’s programming. It also challenges food retailers to stop using in-store displays to sell unhealthy food items to children.

More intrusion, more restrictions, less freedom. And, of course, if they get away with it with children, will the same sorts of restrictions be far behind with adults?

More:

The advisory panel proposes better food content labeling on products and vending machines. Restaurants and vending machine companies are urged to display calorie counts. The experts say the FDA and USDA should cooperate with the food and beverage industries to develop a standard system of nutrition labeling on the front of packages. The study also suggests that restaurants should re-evaluate portion sizes, improve kids’ menus and list more healthy food choices.

Of course the task force is only “suggesting” these “improvements” now, but don’t forget that bold line above, “if voluntary efforts fail …”, well the implication is clear isn’t it? The same agency which has now undertaken to limit your salt intake by fiat is certainly up for dictating portion sizes, what should be on a kids menu and what is and isn’t “unhealthy” don’t you think?

And if you’re still not quite getting it yet, this should drive the point home:

The task force also sees a potential pocketbook approach to keep people from buying unhealthy foods. It calls for analyzing the effect of imposing state and local sales taxes on less healthy products.

Heh … well of course they do. And they’d not be averse to a federal tax either.

So where do they get the idea they have the right to pursue this? We’ll maybe “right” isn’t the proper word, but “power” works.  I think you might have already figured that out by now:

The report found one out of every three children is overweight or obese, conditions that increase their risk of developing diabetes, heart disease and cancer in their lifetimes. The cost of treating obesity-related ailments is estimated to be $150 billion per year.

And the government has put itself in charge of containing health care cost, hasn’t it?

It was that “health care crisis” they just “solved”, remember?

[HT: Jenn F.]

~McQ

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

Unemployment benefits and the law of unintended consequences

We often point out the unintended consequences of government actions simply to make a point to those who think government is the answer to all problems. Those that believe that need to closely consider the results of government “solutions”.  For instance – let’s extend unemployment benefits and extend and extend them some more.  How could there possibly be a downside to that?

In a state with the nation’s highest jobless rate, landscaping companies are finding some job applicants are rejecting work offers so they can continue collecting unemployment benefits.

It is unclear whether this trend is affecting other seasonal industries. But the fact that some seasonal landscaping workers choose to stay home and collect a check from the state, rather than work outside for a full week and spend money for gas, taxes and other expenses, raises questions about whether extended unemployment benefits give the jobless an incentive to avoid work.

Members of the Michigan Nursery and Landscape Association “have told me that they have a lot of people applying but that when they actually talk to them, it turns out that they’re on unemployment and not looking for work,” said Amy Frankmann, the group’s executive director. “It is starting to make things difficult.”

Of course, what is happening is those drawing the benefits are dutifully applying for jobs as required by the state in order to continue to draw unemployment benefits.  But, when it comes down to actually taking a job, they’re not at all interested – they applied to continue to qualify for the unemployment compensation, not actually get a job.

So wait a minute – are you saying that a landscape worker can’t make as much as someone on unemployment.  Well, yes, but not for the reason you think:

The average landscape worker earns about $12 per hour, according to the Michigan Department of Labor and Economic Growth. A full-time landscaping employee would make $225 more a week working than from an unemployment check of $255.

But after federal and state taxes are deducted, a full-time landscaper would earn $350 a week, or $95 more than a jobless check. The gap could narrow further for those who worked at other higher-paying seasonal jobs, such as construction or roofing, which would result in a larger benefits check.

The maximum weekly benefit an unemployed Michigan worker can receive is $387.

Some job applicants are asking to be paid in cash so they can collect unemployment illegally, said Gayle Younglove, vice president at Outdoor Experts Inc. in Romulus.

“Unfortunately, we feel the economy is promoting more and more people and companies to play the system and get paid or collect cash money so they don’t have to pay taxes,” Younglove said.

Heh … ya think?!

Michigan offers unemployment benefits for up to 26 weeks (6 months). When those benefits run out, unemployed can apply for extended federal benefits up to a maximum of 99 additional weeks.

The federal jobless benefits extension “is the most generous safety net we’ve ever offered nationally,” said David Littmann, senior economist of the Mackinac Center for Public Policy, a free-market-oriented research group in Midland. The extra protection reduces the incentive to find work, he said.

It’s impossible to know exactly how many workers are illegally declining employment, but 15 percent of Michigan’s economy is underground, where people trade services, barter or exchange cash without reporting it to the government, Littmann said.

No incentive to go back to work and have a large portion of one’s earnings go to taxes and a large incentive to game the system andcontinue drawing the benefits while engaging in (and growing) the underground economy – all of these unintended consequences provided by?

Government – which as usual doesn’t know when to get out of the way.

But, this will come as a comfort, I’m sure:

A person becomes ineligible for benefits if he or she fails to accept suitable work, said Stephen Geskey, director of Michigan’s Unemployment Insurance Agency.

Yeah, I’m sure that’s strictly enforced and working out very well saving taxpayer dollars – don’t you?

~McQ

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

Welfare State’s Death Spiral

Robert Samuelson sees what is going on with Greece and the PIIGS as the beginning of the end for the welfare state:

What we’re seeing in Greece is the death spiral of the welfare state. This isn’t Greece’s problem alone, and that’s why its crisis has rattled global stock markets and threatens economic recovery. Virtually every advanced nation, including the United States, faces the same prospect. Aging populations have been promised huge health and retirement benefits, which countries haven’t fully covered with taxes. The reckoning has arrived in Greece, but it awaits most wealthy societies.

In fact, it is more basic than that.

The welfare state’s death spiral is this: Almost anything governments might do with their budgets threatens to make matters worse by slowing the economy or triggering a recession. By allowing deficits to balloon, they risk a financial crisis as investors one day — no one knows when — doubt governments’ ability to service their debts and, as with Greece, refuse to lend except at exorbitant rates. Cutting welfare benefits or raising taxes all would, at least temporarily, weaken the economy. Perversely, that would make paying the remaining benefits harder.

Catch 22 – Countries that will, regardless of what they do, adversely effect their economy.  They must pick their poison if they want to remain afloat.  All Greece demonstrates is a country further down the road toward this death spiral than others.   Samuelson points to this in some debt figures as a percent of GDP:

Countries everywhere already have high budget deficits, aggravated by the recession. Greece is exceptional only by degree. In 2009, its budget deficit was 13.6 percent of its gross domestic product (a measure of its economy); its debt, the accumulation of past deficits, was 115 percent of GDP. Spain’s deficit was 11.2 percent of GDP, its debt 56.2 percent; Portugal’s figures were 9.4 percent and 76.8 percent. Comparable figures for the United States — calculated slightly differently — were 9.9 percent and 53 percent.

I think you can see the trend.

Dean Baker disagrees with Samuelson, claiming Samuelson seems to have forgotten there’s a recession going on and parroting the old and increasingly discredited line that this is a time governments must spend more:

During recessions budget deficits always expand as tax collections fall and spending on items like unemployment insurance and other benefits rise.

Contrary to what Samuelson claims in this column. Most European countries have been willing to pay the taxes needed to support their welfare states. And this has not prevented them from maintaining rates of productivity growth (the long-term determininat of living standards) comparable to the United States.

But a quick check of some OECD numbers don’t seem to bear Dean’s claim that they’ve maintained productivity growth has rivaled those of the US (who, btw, is also in trouble and headed down this road):

Take a look at the PIIGS. Other than Ireland, those are not productivity numbers to brag about. In fact, look at the Euro 15. Those are not numbers to sustain the type of welfare system Europe has laid on and they certainly don’t signal healthy economies. They instead point to economies which are quite fragile and susceptible to downturns at any moment.

Samuelson is right – this is the biggest and best warning welfare states are going to receive. We can’t afford what governments have been doing for decades. Greece is the canary in the coal mine. We ignore it at our peril.

~McQ

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

Eggs, Omelets, etc.

Here is a police video.  It’s a warrant service on a chap who was believed to have an excessive amount of marijuana in his home.

Alas, the house wasn’t chock full of the sweet hemp of happiness.  Fortunately, however, the family owned a couple of dogs, so the raid wasn’t a total loss.

Megan McArdle says it very well:

This is our nation’s drug enforcement in a nutshell.  We started out by banning the things.  And people kept taking them.  So we made the punishments more draconian.  But people kept selling them.  So we pushed the markets deep into black market territory, and got the predictable violence . . . and then we upped our game, turning drug squads into quasi-paramilitary raiders.  Somewhere along the way, we got so focused on enforcing the law that we lost sight of the purpose of the law, which is to make life in America better.

I don’t know how anyone can watch that video, and think to themselves, “Yes, this is definitely worth it to rid the world of the scourge of excess pizza consumption and dopey, giggly conversations about cartoons.”

And, frankly, I wouldn’t care if the guy had a room full of China White stacked up to the ceiling like he was Authualpa stockpiling gold for Pizarro.  Absent a compelling physical threat from the “dealer”, there’s simply no reason for the police to launch this style of paramilitary raid on a home, especially with children present. Yet, this has become practically the standard method of warrant service.  It’ll probably come as a shock to you, but I can remember a time when nightime raids on private homes were considered the hallmark of police states.

Now, it’s just called “policing”.

And if the 7 year-old kid in the video had been clipped by a stray round or richochet, I’m sure the officers involved would regret it, personally. But, they would undoubtedly say, “I was just doing my job,” a phrase that runs a close second only to “I was only following orders” in the Banality of Evil Hall of Fame.

And the idea that their choice of these tactics will eventually make such an outcome inevitable would probably never even occur to them at all.

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

Why is Janet Napalitano still Secretary of DHS?

Tim Cavanaugh wonders if her latest utterances (not much different than her previous ones) are enough to finally get her fired?  I don’t know, but to say I have no confidence in her abilities would be an understatement.  Every time she has opened her mouth to comment on a security situation, she’s been wrong.  As Cavanaugh notes, that’s a reason to be concerned:

But it’s more than a joke because not all the people making those wildly wrong claims about Shahzad’s background and motivation were pundits or minor potentates like New York Mayor Michael Bloomberg. The “one-off” attack line came from the highest official in the American government charged with preventing attacks exactly like Shahzad’s: Secretary of Homeland Security Janet Napolitano.

It was her department which released the confidential memo, essentially a republishing of the scare-mongering Southern Poverty Law Center’s dubious assessment of supposed right-wing hate groups, in which DHS warned against “returning veterans” being a threat.  It has appeared, at least to many, that she is more concerned about the possibility of a domestic, right-wing problem than facing the facts that the recent threats and failed bombing attempts have all come from international Islamic terrorists.

This is an obvious politicization of her office. (Napolitano’s favored targets — health care protesters and disgruntled veterans — are distinguished not by their propensity toward violence but by their opposition to the administration.) But if you believe in the necessity of a Department of Homeland Security, every day Napolitano is in charge of it creates an actual risk to life and property. Napolitano has a positive burden of proof: She needs to demonstrate some understanding of how to do her job, or she needs to be fired, for the security of the United States and the safety of the American people.

I have to agree – at every opportunity she’s downplayed the real and emphasized that which hasn’t materialized yet. She seems, like much of the left, to be obsessed with the possibility of domestic right-wing violence with little or no evidence of its existence.  That speaks to me as politicizing the problem based on an agenda.  We don’t need a politically driven hack in the highest domestic security position in the nation.  Perhaps it’s time for President Obama to say “heckofa job, Nappy” and help her transition into a less demanding profession – that of a retired politician, or perhaps a political science professor at a backwoods college somewhere in the NorthEast.

~McQ

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

The other shoe drops – Fannie Mae asks for $8.4 billion

A few days after Freddie Mac requested $10.6 billion, Fannie Mae has asked for $8.4 billion:

Fannie Mae requested another $8.4 billion from the federal government on Monday, saying that due to trends in the housing and financial markets, the company expects its deficits to continue.

The government-controlled mortgage giant announced Monday that it lost $13.1 billion applicable to common shareholders in the first quarter of 2010.

The request cames just four days after Fannie’s twin Freddie Mac also asked for a handout – to the tune of $10.6 billion – after posting an $8 billion quarterly loss.

Don’t forget, this is off budget money – even though it adds to the deficit, its not counted – yeah, you figure it out.

Also remember that while Democrats rail against Wall Street and it’s culpability in the financial collapse, it was Freddie and Fannie which were implementing the policy of the US Government (namely the Community Reinvestment act which essentially gave them license to push and buy up sub-prime mortgages).

Finally this:

In using Fannie and Freddie to prop up the mortgage market, the government in December lifted a $200 billion limit on their bailouts, essentially giving the twin housing lenders a blank check. Fannie Mae has already received $76.2 billion from the federal government and Freddie has gotten $50.7 billion.

Both of these institutions, controlled totally by government, are still loaded to the gills with toxic assets. And government is using the smoke screen of financial regulation to attempt to hide the problems that Freddie and Fanny have. Blank check – nice fix, eh? It’s your pocket into which these two organizations are dipping.

~McQ

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

To my friends in the oil industry

Almost everyone has heard of the infamous “Blackhawk down” incident in Somalia in which Army Rangers were ambushed while on a mission and 18 brave special operators died.  COL David Hackworth, one of the most decorated and outspoken field commanders during Viet Nam, blamed the fiasco on two of the generals there.  His words are harsh, but they tell the tale:

[The generals] made every basic error in the book, beginning with not understanding the enemy. They had bad intelligence, were overly dependent on firepower and technology and were arrogant. Nor did they bother to put a go-to-hell-plan in place in case the [stuff] hit the fan.

That “go-to-hell” plan Hackworth is talking about is something every operations officer in the military has learned about from history and experience.  Essentially a “go-to-hell” plan envisions the very worst case scenario one can imagine in an operation and that scenario is then planned for, staffed,  equipped and exercised (at least at a sand-table level) in case it has to be executed.  The point, of course, is that plans usually don’t survive first contact and commanders are faced with situations in which they have to modify orders and, in dire cases, enact the “go-to-hell” plan.  With such a plan in place, commanders have the chance of minimizing the losses they may be facing – in territory, casualties and effect -because they have planned for this eventuality.  Without it, however, they’re likely to be left in the situation that Hackworth describes in Somalia – nothing ready to go and trying to improvise everything at a critical moment.  That rarely, if ever works out well.

Anyone watching the situation in the gulf with the oil spill has to believe that they’re witnessing the very worst case scenario that can be imagined in that type of an environment – a cutting edge, deep water platform has an explosion, burns and sinks.  Tragically 11 lives are lost.  The riser to the surface is bent and the blow-out prevention device fails allowing 5,000 barrels of crude oil to escape from the well head daily 5,000 feet below the sea.  A true nightmare.

But seeing the reaction to the situation, I had to ask, where was the “go to hell” plan?

As anyone who reads this blog regularly knows I am a proponent of continued exploration and exploitation of petroleum reserves because the alternative fuels and technologies simply aren’t available yet or can’t be produced cost effectively.  They’re certainly the future, but not for some time to come.  Oil remains, and will remain, a critical component of any future energy plan.

I’ve been able, through trips paid for by the American Petroleum Institute, to educate myself on the petroleum industry and see first hand what they do and how they do it.  I’ve seen their intensive focus – bordering on the obsessive – on safety and the precautions they take to produce oil safely and in an environmentally friendly way.  I’m certainly not an expert, but I do know that this is an industry that deserves our support because they provide a critical product – the lifeblood of our nation – and they care about how they produce it.

Unfortunately, this spill and the inability to cap the well is reflecting on the industry in a way which will be detrimental in the long run to both the industry and our energy future.  Certainly they’ve reacted as well as they can given their resources and their effort has been mammoth in size and scope. But the bottom line is the problem for which they didn’t plan persists.  And each day the problem persists, the public’s confidence in the industry’s ability to produce oil off-shore in an environmentally responsible way wanes.  That’s reality.

That reality drove me to participate in an American Petroleum Institute conference call last week as an invited blogger. I posed the following question to the panel:

My question has more to do with the future, I guess.  My background is military plans and operations, and when we wrote plans and operations, we always had a “go to hell” plan, you know, in which the worst-case scenario was imagined and planned for.

I get the impression that what’s going on out there is definitely the worst-case scenario for the petroleum industry.  And my question is, why wasn’t there a “go to hell” plan, or if there was, did it envision this?  And in the future, will the industry address this type of a scenario and have teams and equipment available to address it more quickly?

Richard Ranger, who is an expert on Upstream/Industry Operations for API fielded the question and replied:

And I think really, the array of vessels, the number of personnel, the amount of equipment being deployed indicates that it is execution of what I think you could call the “go to hell” level of an oil spill contingency plan.  The plans that are developed – BP, other companies in the industry that have them are, you know, routinely re-examined and adjusted based on lessons learned, most usually from drills and exercises.

And the drills and exercise – because, you know, our record, certainly, up until this horrible incident has been a record where there have been very few spills of scale against which to test a plan.  So the drills and exercises themselves are carried out at different scales.  They’re carried out not simply by the companies, but in collaboration with government officials, be it – usually involving, for the OCS, the Coast Guard and Minerals Management Service.  There’s a tremendous transfer of knowledge throughout industry and between industry and government.

Now, so the question, in terms of scale here, was there access to equipment for an immediate response?  Yes, there was.  Was there access to additional, out-of-region equipment to cascade into the Gulf of Mexico to augment the initial response?  Yes, there was.  Has there been a scaling up of the government or public side of the response across Coast Guard districts and involving additional personnel from both federal and state agencies?  Yes, there has been.

This event has been moving at a very fast pace, but I think it would be mistaken to suggest that there hasn’t been, really, a very complete commitment, certainly, of the resources that BP has available, the resources that the key government agencies have available, and most importantly, the resources, the expertise and the personnel that the response organizations, like MSRC, have available.  So I would argue it’s been demonstrating scalability of the response plan.

While it is clear that the industry has responded as best it can it is also clear, at least to me, that the industry has no answer to the scenario which has unfolded before it with the Deepwater Horizon disaster.  In essence they relied on technology to be the failsafe and it failed them.  And when it failed, there was no real backup plan – a “go to hell” plan – to do what the failed technology hadn’t done.

As to the plan Richard talks about – it is a plan mostly geared toward oil spill containment, as he notes.  But the real problem isn’t just containment.  In fact the need for containment is a result of the real problem.  An unchecked deepwater blowout, albeit one caused by a catastrophic accident.  No planning, apparently, had been made to address a deepwater blowout in which all the technological failsafe devises didn’t do their job.  That was the point I was trying to make.  So I asked a follow-up question:

I guess what I’m getting at, Richard, is the fact that there’s been – it’s been almost a month fabricating this dome that’s going to be placed over the wellhead. And while I appreciate the fact that people have responded and are out there doing the best they can, and that we don’t know whether this dome is going to work or not, that kind of gets to my point. If this dome had been available at the time of the accident, and if it, in some way, had been tested or we knew more about it, wouldn’t that type of a response have been much more, I guess, impressive than what we’re seeing now?

Richard answered and, as you’ll see, eventually acknowledged that perhaps that particular scenario hadn’t been on the industry radar screen as perhaps it should have been:

Well, I guess, Bruce, in response to that, with your military background, I forget how the words go, but you’re probably familiar with the adage that you have a plan and once the gunfire starts, you throw the plan away.  And I think what there has not been before is this type of catastrophic event effecting a failure of the drilling rig.

The sinking of the rig, the consequent bending of the riser and the creation of a situation where you’ve got this, you know, significant leak of oil from below the sea floor and you have to put something over that leak – so this is kind of a serial number one effort that, I think with all of the anticipation and all of the forward planning, this particular scenario, perhaps, hadn’t been envisioned before.

So your question’s a good one.  There are things that are going to be learned about the performance and effectiveness of this particular piece of equipment, but I think it’s a significant achievement that, in the span of a very few days, this idea was conceived, this piece of equipment’s been fabricated and being brought to the location.  So yes, I would agree you’re partly right, but I think the response that BP and others have put together shows the adaptability of people and expertise when confronted with the kind of situation we have here.

Those are the words of an honest man realizing that perhaps, despite the heroic effort that BP and others have made, there was no real “go to hell” plan in place that envisioned this obvious (now) worst case scenario or how to defeat it.  Instead they are pretty much reduced to winging it at the moment.

And, of course, the failure of the first attempt to place the containment dome only strengthens the point.

My desire here isn’t the beat up on the petroleum industry.  As I’ve said I’m a huge supporter of what they do and how they do it.  I’ve also pointed out that another institution – the military – of which I’m a very big supporter has learned this lesson the hard way.  Instead this is intended to point out what I see as a deficiency the industry needs to address and address quickly because the policy implications of not doing so are profound.

We all know what will happen next.  There are obvious political ramifications to this. It will start with Congressional hearings and a battle over the safety of off-shore drilling.  The sides are well known.  Unfortunately, situations like this hand ammunition to those opposed to the oil industry and drilling that they’ll gladly use.  In fact, gleefully use.  This sort of on-going, constantly-in-the-news disaster is a political God send to them.

To begin to win back those who are now wavering about off-shore drilling, the petroleum industry has to be able to show Congress and the public that it understands the gravity of the problem,  accepts the worst case scenario as possible and is developing a plan to deal with it.  It will have the equipment necessary along with trained crews available in the future to cap something like this is days – not weeks or months.  The industry must also have a plan to  successfully manage the situation that develops after containment and until a more permanent solution can be implemented (such as a relief well).

For example, if the containment dome is found to be a workable solution and eventually successfully caps the well, such domes would be prefabricated and available in all areas where off-shore drilling is being done or planned, ready for immediate deployment if necessary.  That sort of plan would point to a proactive industry learning and applying lessons from this situation to prevent it from happening again to the extent this situation has developed.  The industry has already proven that it can deploy containment assets quickly to address a spill.  That’s both noteworthy and praiseworthy.  But everyone also understands that those assets are finite and the probability of continued containment success lessens each day that the spill builds and the surface area grows.

In order to regain the initiative in the policy realm, it is critical at this juncture that the industry begin an immediate analysis of this disaster and the formulation of a critical “go to hell” plan.  It may not answer all the mail when the inevitable political hearings begin, but it will demonstrate an engaged industry that has recognized the reality of the problem and is working proactively (and without Congress mandating solutions or increasing regulation) to provide a workable and timely solution should such a situation ever again occur.  And that may also help allay the fears of some and stiffen the spines of others that are ready to abandon the effort to drill off-shore.

Time is critical and off-shore drilling is vital to our national interest and national security. I’m sure the brilliant minds within the industry can come up with a contingency plan that will make the case for its continuance.

~McQ

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

Observations: The Qando Podcast for 09 May 10

In this podcast, Bruce, Michael, and Dale discuss unemployment, Greece, and the BP offshore drilling leak.

The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.

[ad] Empty ad slot (#1)!

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

Buy Dale’s Book!