Wednesday, April 28, 2010

Corporate incompetence, corporate profits and explosions on offshore oil rigs

(image courtesy of the NY Times)

There are eerie similarities between last weeks explosion on the BP run Deepwater Horizon oil rig in the Gulf of Mexico that killed 11 workers and the oil leak and explosion at the Montara (West Atlas) oil rig off the WA coast in late 2009.

As we await the Report of the Rudd Government initiated Montara Commission of Inquiry into the 10 week long oil leak from the West Atlas Oil rig owned and run by PTTEP Australasia, the shocking explosion and sinking of BP's Deepwater Horizon rig in the Gulf of Mexico reminds us one again of the environmental and safety disasters caused by offshore drilling.

The explosion and subsequent sinking of the Deepwater Horizon rig killed 11 workers and is now pumping 42,000 litres of crude oil into the Gulf of Mexico. The oil has reached the Louisiana coast and threatens marine environments, marine life (including fish and birdlife) high value coastal wetlands and various industries.

The cause of the explosion in the Gulf of Mexico is not known, although an inquiry is investigating civil or criminal violations by the rig operators. As in the West Atlas case, the responsible company failed to activate devices to stop oil flowing in an emergency.

Only recently the US Government considered imposing tougher safety and environmental regulation, however the industry objected strenuously, claiming its voluntary programs were successful. It is also worth noting that in the same week as the explosion BP announced that its profits in the first quarter of last year doubled to $6.08 billion (from $2.56 billion).

Worth noting as well is that the loss of life and environmental catastrophe in the Gulf of Mexico is causing trouble for the Obama administration which was looking to expand off shore drilling without adequate safeguards.

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