Thursday, 29 July 2010

Minerals Management Service

Although as far as the oil industry is concerned, the Minerals Management Service performs the same safety regulation function in the United States as the Health and Safety Executive does in the United Kingdom, the two bodies are subtly different.

Without wishing to appear too moralistic, inspection and regulation of highly complex oil rigs undertaking drilling operations in very deep ocean waters, requires concentration, persistent attention to detail and good judgment. The consumption of copious quantities of Cocaine and Methamphetamine, albeit provided at no cost to either the inspector or the taxpayer, interferes with all of these mental functions in such a way as to entirely neutralize an inspector's value to industry and the wider society.

It is difficult to entirely suppress the suspicion that some of the blame for the Deepwater Horizon disaster lies with the remarkably complete failure of the Federal Government to provide competent regulation of a complex and inherently hazardous industry subjected to strong competitive pressure. In such a business environment, it is much easier for companies to spend money, and more importantly, management time and effort, on safety, if they know that government will do its job and ensure that rivals do the same.

Medawar also has a little prediction: BP's much scorned initial estimate that the costs of the disaster would be somewhere around $3bn, will turn out to be pretty accurate once legal costs are stripped away and one counts only the money actually spent on the physical cleanup and compensation actually received by injured parties. What BP didn't realize, is that in America, for every dollar one pays to an injured party, the legal profession will take nine dollars for itself. And if one attempts to avoid this, by paying money straight out to the injured party so they don't even have to take one to court, an enraged legal profession, many of whose members have political posts and even Senate seats, will simply set up a whole slew of "inquiries" which will eventually cost nine times as much as the compensation paid out without the payment of Shystergelt.

Since Thatcher, successive UK governments have foolishly attempted to run an economy based almost entirely on the banking sector. This hasn't been too successful an idea in practice. America's folly is to try and make the legal profession the backbone of the economy as well as the controlling force in society. It is difficult not to prophesy a certain amount of doom at this point.

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