Protecting the Oil Industry

If drilling for oil has the potential to cause vast damage, then the drillers of oil need to have the financial wherewithal to repair that damage when it occurs. That’s the kind of personal responsibility the Republican Party stands for. So Republicans certainly wouldn’t object to raising the liability cap for offshore drilling accidents so that taxpayers aren’t the hook for the costs. Right?

You underestimate the Republican party. None other than Alaska Republican Lisa Murkowski stood up to object. Yes, the senator from the state that got hammered by the Exxon Valdez spill objected to raising the liability cap.

And what was her argument? If the liability cap is raised, that might exclude small oil companies from being able to get the insurance and financing necessary to drill offshore. After all, only the oil giants could afford $10 billion. That is to say: only the oil giants can afford to clean up after themselves.

You’re not dreaming. That’s really the argument. Murkowski wants small, independent oil companies to be able to privatize the profits of offshore drilling but offload the financial risks to the public. And she frames it as avoiding a “Big Oil monopoly” on drilling. She’s just defending mom-and-pop oil shops! The gall is breathtaking.

That’s David Roberts. On a historical note, this is pretty much how the nuclear power industry is treated too. Back in 1957, when no one knew just how dangerous nuclear plants were, insurance companies were unwilling to write open-ended policies for them. Congress, however, didn’t want that to get in the way of nuclear development (too cheap to meter, after all!). So they required plant operators to buy the biggest policies they could, and then put taxpayers on the hook for any damages above that.

Oh wait. No they didn’t. Actually, they set up a $10 billion insurance pool funded by the industry. Taxpayers were on the hook for anything above that, but at least the industry as a whole was responsible for the first $10 billion. If Murkowski is so worried about all those small oil companies, maybe she should support the same kind of fund for offshore drilling. But I guess that would be socialism. Or something.