It’s egg-on-their-faces time for the assorted politicians and pundits who dismissed the potential for spills in offshore drilling as an acceptable price to pay for access to undersea riches. Does that group include us (Hahn and Passell)? Yes and no. We admit to writing articles, both technical [Download Here] and journalistic, concluding that drilling in the Outer Continental Shelf was likely justified on economic grounds. And we made the case again, a scant month before the BP platform blew up in the Gulf.
So, why the weasel words? Because, like all conscientious benefit-cost analyses, ours was no better than the information available at the time. If we were to do it over, we wouldn’t change the basic approach – in the end, every policy decision that yields costs and benefits is a benefit-cost analysis, and we prefer the kind that are made openly, with the best available data. Only next time, we’d have more information.
That said, we think a moratorium on deep-water drilling makes sense until we understand the BP catastrophe and are confident that we have the technology to contain the consequences of accidents in such challenging waters. We also believe that there needs to be a hard look at the liability structure – less to punish the bad guys than to create appropriate incentives for investing in safety.