Chapter 6 of the text begins by pointing out that the US and Canada are, “virtually the only countries on earth where minerals can be owned privately.” This follows a section of the reading full of stories about oil spills, pipeline explosions, and a description of the remedial and arguably ineffective federal regulations that followed these incidents. When private industry holds too much sway with federal regulators, safety and environmental interests often lose to the deep pockets of the oil industry. Take, for instance, the BP oil spill. The Deepwater Horizon well did not have a remote control shut-off switch because they are not mandated by US regulations. It was proposed that the switch be made mandatory, but the Bush administration did not want to inconvenience the oil industry by requiring them to spend $500,000 per switch.
It is not certain that the switch would have prevented the spill, but considering the relatively low cost, why did we take that chance? Norway has a state-run oil industry and is one of the countries that require the remote shut-off switch as part of a comprehensive regulatory scheme. A report by DNV, a global risk-management company, created a report comparing Norwegian and US offshore drilling regulations.
The report describes Norway’s regulation scheme as performance-based and focused on risk management, while the US scheme is prescriptive. A performance-based system is a system in which the level of safety and performance is defined and companies are given a relatively high level of freedom in choosing how to meet the standards required. A prescriptive system sets specific standards for structures and equipment in an effort to prevent accidents and minimize hazards. In general, the report concludes that the higher level of safety in the Norwegian oil industry is due to the comprehensive regulatory scheme, emphasizing performance-based standards and risk management.
The Norwegian population, geography, political structure, value systems, and place in the global economy are very different from ours and the priorities of a state-run oil industry are always going to be different from those of a privatized industry. A state-run system will always need to balance the interests of the economy with the interests of the health and welfare of the people and the environment while a private system is going to be concerned first and perhaps solely with increasing profits. Looking at different websites, what comes up again and again is that Norway is a leader in safety and innovation in the oil industry while also turning a profit. According to economywatch.com, Norway is the third-largest oil exporter, so I think it’s safe to say that even with the heavy hand of government upon it, the Norwegian oil industry is doing ok. While I would never dare to suggest that we move to a state-run oil company like Norway, I think it is irresponsible of the federal government to continue to allow the oil lobbyists to prevent regulation of the industry and not to look to countries like this to improve our regulations.
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