Private Sector Oil Spills
comments powered by Disqus
A column by Eduardo Porter in the Business section of the New York Times blames capitalism for the BP oil spill: "While in government hands, British Petroleum paid too little attention to profitability, constrained by its need to please elected officials who often cared more about keeping energy cheap and employment high. But in private hands, it may have cared about profits far too much, at the expense of other objectives."
The logic here struck me as suspicious, because there are plenty of other privately owned oil companies that don't have big spills, and there are plenty of government-owned oil companies that do have big spills.
The Daily Telegraph has a list of the top 10 oil spills in history. The largest came when the Iraqi government opened the valves of Kuwaiti oil as Saddam Husseins' forces retreated in the first Persian Gulf War. That was a government-caused spill, not one caused by private enterprise.
The third-largest was the Ixtoc I oil spill, at a well operated by Pemex, the state-owned Mexican oil company.
The sixth-largest was at the Norwuz oil field in the Persian Gulf, operated by the Iranian Offshore Oil Company, a subsidiary of the National Iranian Oil Company, which is owned by Iran's ministry of petroleum.
In other words, the Times columnist's notion that governments or government-owned oil companies just care about safety, while privately owned oil companies just care about profits and don't care about safety, is silly, or, at the very least, is unsupported by evidence. The Times column doesn't mention a single one of these spills caused by governments, though it dwells on BP's post-privatization errors.
The Times column concludes by suggesting a rule on what should be done by governments and what should be done privately: "a good rule of thumb to determine when a private company will outperform the public sector: if the task is clear-cut and it's possible to define concrete goals and reward those who meet them, the private sector will probably do better....But if the objectives are complex and diffuse — making it difficult to align profit with goals without undermining some other desirable outcome — the profit motive could well make conflicts more difficult to manage. In these cases, privatization is probably not the best solution."
By this "rule of thumb," the government should nationalize the news business.
Subscribe to the Mailing List
© 2017 FutureOfCapitalism LLC