Drilling Plan Is Good for Consumers — and the Environment
Five years is a long time. Sporting victors, ruling parties, and business conditions are constantly changing, making it hard to plan for the next half-decade. Maybe that’s why five-year plans don’t have the best track record. But the Trump administration’s five-year plan to dramatically increase offshore drilling around the United States gives cause for celebration — especially for taxpayers, consumers, and businesses vulnerable to high oil prices and onerous regulations.
The blueprint, unveiled by the president in January, identified areas in the Outer Continental Shelf (OCS) to be leasable for oil and gas exploration purposes. Now, as the Department of Interior (DOI) firms up the plans drawn out four months ago, additional details have emerged from the administration’s agenda. Under the leadership of Secretary Ryan Zinke, DOI is planning significant modifications to drilling safety and inspection regulations put into place under President Obama.
To many on the Left, the one-two punch of expanding leasing and curtailing regulations amounts to a surprise attack on the environment. Earthjustice president Trip Van Noppen, for instance, calls the plan an “all-out assault on public lands and waters.” These and similar concerns arise in part from past spills that have resulted in billions of dollars worth of damage.
While ecological advocates are right to keep risk in mind, they fail to consider the unintended consequences of drilling restrictions and regulations. A full accounting of risk shows that the administration’s permissive policies will lead to better outcomes for customers, taxpayers, and, yes, even the environment.
To many advocates of drilling restrictions, the case for heavy-handed rules seems straightforward. Most remember the terrible pictures of birds and fish drenched in “black gold” following the Gulf of Mexico spill nearly a decade ago. But as with most policy, the devil lies in the details. The problems that led to the Deepwater Horizon spill largely had to do with equipment that was wired incorrectly and had a failed battery, according to an analysis by the U.S. Chemical Safety Board. Resulting regulations, ushered into law in 2016, applied an array of technical measures designed to reduce risk.
But new “drilling margin” requirements meant to make companies work more carefully around water pressure while drilling may actually cause an increase in blowout risk. With the new rules, operators using lighter muds to fill wells while drilling stand less of a chance of getting fined by the government. Mud weight, however, must be at a sweet spot, and getting the weight too low can result in a myriad of issues. Engineering scholars at the University of Uyo caution that, “too low mud weight may result in collapse and fill problems.” Frequently opening up blowout preventers to inspections can also compromise the system’s structural integrity, opening up the door to further risk.
When the federal government tried to quantify the costs and benefits of the proposed drilling margin rule, they simply assumed that tighter rules and more inspections would cause at least a 1 percent reduction in blowout risk. This made it easier to make the math work, since industry costs from the rule are estimated to be around $1 billion over the next decade. But not only is this assumption unjustified, the added costs inevitably get passed onto customers in the form of higher fuel prices and scarcer supply. Taxpayers also get squeezed, as the federal government spends tens of billions of dollars each year in petroleum costs.
To some environmentalists, however, hiking the price of fossil fuels and limiting extraction is a positive development. But here, advocates of green energy would be wise to think through the broader environmental impacts. If electric cars pick up the slack, for instance, the resulting increase in nickel mining in Indonesia and the Philippines will drastically increase pollution. What’s more, unlike the U.S., these countries have fewer safeguards in place to minimize the health and environmental consequences. The same goes for solar panel production, which comes at a hefty cost to residents of the developing world, recent tariffs notwithstanding.
Rather than exporting jobs and ecological harm to poorer countries, the U.S. can take the lead on energy while also increasing well-paying drilling jobs that are getting safer by the day. Already, robots are performing vital inspection services that were unavailable at the time of the Gulf of Mexico disaster. Private innovation plus safety improvement means more jobs, lower prices at the pump, less taxpayer money wasted on expensive energy sources, and a cleaner environment.
Ross Marchand is the director of policy for the Taxpayers Protection Alliance.