Who Could Have Seen the Oil Spill Coming?

Includes: BP, RDS.A, XOM
by: John Lounsbury

I have written about the misspoken wailing by the many economics experts who said that nobody could have seen the financial crisis coming. In fact many did see it coming but those who were in positions of power did not listen. The same question can be asked about the disaster in the Gulf of Mexico. The answer is: Anybody who paid attention to the data would have seen that risks were increasing.

Alan Levin, writing in USA Today last week had an interesting review of the history of oil spills since 1970. I have found his data quite striking and have constructed two graphs to summarize.

It is obvious that both the number and the size of spills have been increasing dramatically over the years, especially the numbers of events in this century. The trajectory of this data should have been a warning that risk was increasing.

The industry response, quoted from the Levin article:

The amount of spillage represents a small fraction of that piped out of the ground, according to the American Petroleum Institute, a trade group that represents the oil and gas industry.

Levin also writes that the MMS (the federal Minerals Management Service) and BP did not respond to requests for comments on the article.

I would point out that the propaganda dispensed by the oil industry and their political minions has been that modern technology has made drilling for oil in more and more difficult places safer than drilling for oil has ever been. Apparently, these people were not looking at the data.

An interesting note is that BP has the largest number of spill incidents (23), but Shell (NYSE:RDS.A) is close behind with 21.

Disclosure: No positions