Saturday, May 29, 2010

Greed Spill

There are still many questions about the BP/Transocean disaster in the Gulf but one thing is crystal clear, greed has once again trumped safety and common sense. This is yet another in a long string of examples of massively successful companies that still feel that it makes sense to save a few dollars by cutting corners. Just as we've seen in the recent financial debacle and the Upper Big Branch mine explosion, rich corporations played fast and loose with common sense because it was in their best financial interests to do so. Wall Street did it with people's financial future and the stability of the nation's economy. Massey Energy did it with the Upper Big Branch mine, costing the lives of 29 miners. And now BP and Transocean have done it with the environment of the Gulf Coast, the livelihoods of those in the fishing and tourist industries and they did it literally with the lives of 11 rig workers.

Now I'm not siding with Michael Moore to say that Capitalism should be killed, though his argument is not without its points. What I have maintained is that Capitalism will always, without careful oversight, trend towards corruption and fiscal lunacy. During the financial crisis companies seemed immune to any consideration of the inevitable result of the financial bubble. Instead of easing up and throttling back to cruising speed, knowing that the wave of profit was going to end and almost certainly end catastrophically, they slammed the throttle through the gate and flew into the wall at mach 3 screaming like nineteen year olds at a frat party. So quite clearly, we can't even rely on companies to look out for their own long term stability. It's true that this crisis came about from the unholy confluence of bad government decisions, inept or criminally negligent bureaucratic oversight, idiotic lending practices, over leveraged banks and investors willing to buy and sell anything, up to and including their own internal organs. And what do all of those factors have in common? Greed. Pure, undiluted greed. For money, power, influence or just plain bragging rights.

The Massey Energy mine explosion at the Upper Big Branch mine is another example of this triumph of cash over conscience. As investigations into the mine explosion that killed 29 continue, more and more evidence is coming to light about how Massey continually worked to avoid instituting safety procedures designed to disperse methane and coal dust just to save a little money and prevent even the slightest drop in production. A number of workers have testified that it was standard procedure when an inspector was onsite to relay the 'alert' down into the mine so they could scramble to put 'curtains' and other safety equipment into position prior to the inspectors reaching the area. A report on a number of 'crash' inspections where the inspectors immediately took control of communications and were able to reach the lower sections of the mine without any warning found numerous major violations in every single case. It's inconceivable to me that a company would show almost no concern whatsoever about the health and safety of workers in one of the most dangerous and unhealthy jobs in the world. I would think that it would be in the company's best interests to keep them safe and do everything to reduce the chance of a catastrophic event, even if only to avoid the risk of mine damage, investigations and lawsuits. But obviously I'm thinking too long term, whereas Massey is concerned with current numbers and making sure they never falter for any reason, even the safety of their workers.

The BP/Transocean disaster also seems to have greed as a major factor in the rig explosion and subsequent blowout in the Gulf of Mexico. According to some early investigation and interviews with the surviving crew of the Deepwater Horizon rig, BP pushed for and finally got the rig operators, Transocean, to go outside standard procedures for decoupling from the well head. This set the stage for methane to escape up to the surface where it ignited causing the explosion that eventually sunk the rig and caused the uncontrolled eruption of oil into the Gulf. Why did they want to alter the procedure? To speed up the operation and save money. This from a corporation that made over $6 Billion profit in the first quarter of 2010. Not $6B in earnings, $6B in pure profit. With that kind of margin, why quibble over the comparative pocket change of an extra day on-site? Greed. Sure they made $6 Billion last quarter, but why not cut some 'unnecessary' costs and go for $7B next quarter! It's this kind of warped drive to place profit above all other considerations that is unacceptable and leads to disasters such as the Deepwater Horizon fiasco, the Massey mine explosion and the financial implosion of 2008.

In fact, I submit that more often than not, major 'accidents' can be traced back to a decision somewhere along the way that placed profit above regulation and good judgement. Use a cheaper material than what was planned for, skip a final safety check or fail to do a careful stress test on a piece of equipment. All these things happen because those involved want to save money and everyone assumes that an accident will never happen to them. Safety checks aren't skipped because someone is bored, they are skipped because the operation is behind schedule and if they don't catch up it will cost someone money. Or they want to save someone money by finishing early. Or they get a bonus if they finish faster. See the common denominator here? I bet the vast majority of corporate and engineering disasters in America's history can be distilled down to one or more choices of profit over sanity. Just look at the BP/Transocean emergency plan for this current disaster. From what I can tell, the sum total of emergency planning was the blowout preventer on the ocean floor and if that didn't work, as it didn't, 3 months or so to drill a relief well. That's it! Everything else they are trying are either plans that have never actually worked in the past and whatever ideas they can scrape together as a result of post disaster brain storming sessions.

In fact Transocean, who owned the rig itself, more than almost anyone else, knew with some certainty what the worst case scenario was, long before this well was ever approved for drilling. Because 30 years ago a rig owned by a company called Sedco, caught fire and burned in the Gulf of Mexico in 1979, unleashing thousands of barrels of oil into the Gulf every day. Sedco is now better known as Transocean and proclaims on their web site, in a sad bit of irony "we are never out of our depth." I kid you not. Watching the archive footage from that disaster is infuriatingly similar to the current spill, right down to the failed blowout preventer. Even the technology used to attempt to stop the spill are all but identical. So while the technology to drill in deeper and deeper water has advanced at a quick pace, the tech to cap a blowout in deep water hasn't advanced in any meaningful way in over 30 years. If this doesn't upset you then you aren't paying attention. Why did they have nothing else prepared? This is the question I keep asking myself. It wouldn't take a petroleum savant to predict that it would happen again and likely at a much greater depth. So why? Because they didn't see how planning and training for this sort of worst case situation would have any positive affect on their profits. It costs money to design and test procedures and equipment to cap a blown out well head over a mile under water and financially the money spent has no positive bearing on the bottom line. From a purely accounting standpoint it would be money spent without any benefit. Unless there is a disaster, of course. So why waste money on equipment and procedures you never expect to use when you could spend that money on developing the technology to drill faster at deeper depths? It's like building a car to win the Indianapolis 500 and only as you cross the finish line do you get around to discussing how to actually bring the car to a stop.

This is why 'self regulation' or 'letting the free market decide' are not simply empty phrases, they are the harbingers of disaster. Anyone who believes that a for-profit industry can be trusted to self regulate is either a part of the industry in question, naive in the extreme or, I'm sorry to say, a complete idiot. Most, though certainly not all, corporations become more and more narcissistic the larger they become. At some point they reach a size, like BP or Massey, where the lives of their employees become vague and abstract concepts that only enter into corporate calculations as a column in a spreadsheet titled 'available resources'. A simple, calculated choice of whether to complete the well capping 'by the book' or save money and gamble that the odds are against an accident. Well, in this case 11 rig workers are dead and thousands of barrels of crude oil is gushing into the heart of America's aquatic bread-basket. Guess they chose wrong this time. Whoops! Of course next time they'll just weigh the odds again and are just as likely to make the same choice. As long as it's up to them. Corporations will always be selfish and amoral, especially once they go public and have to worry about quarterly earnings and the whims of the Market. I don't think 'Selfish' or 'Amoral' are traits we should encourage in our corporations and especially not in our financial institutions. But if they are going to function that way then we had better start paying attention.

That's why America, and any nation that stakes its power and stability on a capitalistic model, must have a system in place to counter corporate greed. Consider the metaphor of our highway and road system. We don't just put up a few caution signs and a weigh station here and there to check paperwork. We have traffic lights and stop signs to control the flow of traffic. We have state and local police to ensure drivers follow the rules and those who don't are fined or jailed. There are also those in the justice system whose job it is to provide oversight on the police to deal with any corruption. There are DMV regulations mandating safety devices and minimal mechanical soundness of our vehicles. There are inspections. There are traffic regulations to keep everyone moving in logical, controlled patterns and regulation on where and when you can park. Sure, there is the odd driver who bemoans the speed limit that prevents him from taking out his Porsche and screaming down the highway at 150 mph, but society has decided that public safety is more important than the whims of an adrenalin junkie. So why not apply these ideas to our corporate and financial system?

First, let's stop listening to every whimper from these sectors whenever a new regulation is proposed. Any objection from this quarter must be taken with a salt-lick sized grain of sodium since they have everything to gain from killing regulation. Second, make the regulations intelligent and fair, but difficult to circumvent. Third, ensure the penalties for breaking these regulations are severe enough, even for a company the size of BP, to 'encourage' compliance. Fines will only be effective if they are commensurate with the profits of the corporation in question so as to make noncompliance far too expensive and damaging to risk. Fourth, stop trusting corporations to actually follow the aforementioned regulations and make sure there is objective oversight in place. Fifth, there should be a series of checks and balances in place to verify that the oversight is clearly separated from the industry it regulates and that any corruption within that agency is swiftly addressed and severely punished (see point three). As part of this, regulators should be barred from crossing the lines to work for the industry they have been overseeing for five years or more. The last thing we need are regulators walking across the street to advise corporations on how to beat the oversight agency from which they just resigned or worse, giving corporations a pass on regulations to kiss up for a job. This has actually happened recently and I'm sure is not unique. Kind of defeats the purpose of oversight, don't you think?

As to the BP/Transocean disaster itself? If it was up to me, there would not be another approval for offshore drilling until or unless the company doing the drilling is able to demonstrate layers of redundant safety and emergency response procedures that are appropriate for the depth and manner of their drilling. Emphasis on 'demonstrate'. I don't care what someone scribbled on a bar napkin. I want it produced and tested at the depth it's rated to be used! I would order the shutdown of BP's other major drilling rig, Atlantis, which is currently drilling deeper and is only a hundred miles further out into the Gulf than the Deepwater Horizon. BP has already shown it cannot be trusted and does not currently have any workable plan to deal with deep water spills.  I would mandate that all operating offshore rigs would be subject to immediate and detailed safety inspections. Any violations that could bear on personnel safety or oil containment would result in a shutdown of that facility until it was resolved. No exceptions. Companies operating wells in US waters would be required, as stated earlier, to develop, test and deploy procedures and equipment appropriate to prevent or quickly stop a worst case scenario. No optimistic predictions! I'm talking what's the worst thing that could happen and what are the plans to deal with it. No plan, no production. This would have to be done within a specific time period or the well would be shut down. Liability for spills would be expanded well into the billions of dollars so that it would never again be worth the risk to bypass regulations or safety. Ideally this liability would be tied in some way to the company's profits so as to make the final number sufficiently agonizing. These penalties would be multiplied exponentially if the company was proven to have knowingly bypassed regulations.

Think I'm being too harsh? Tell that to the families of the 11 men who were killed on the Deepwater Horizon and the 29 who died at the Upper Big Branch mine. Tell that to the millions out of work all because of stupid decisions by people still racking in top dollar salaries. Tell that to the thousands of Gulf Coast residents who make their living from the fish, shrimp, oysters and other animals that will be devastated by this spill. Tell that to the tens of thousands of people along the coast from Texas to the Keys whose livelihoods depend on tourism. And please, try and explain the details of your concerns to the pelicans, osprey, tarpon, flounder, shrimp and all the other species who will die by the thousands because of the BP/Transocean disaster. I have zero sympathy for companies like BP and Transocean. They knew full well how badly things could go wrong, but they did nothing to prepare. No redundant systems to prevent the blow out. No viable emergency plans appropriate to the depth. In short, they did nothing except line their pockets, secure that the odds were in their favor. If both companies are destroyed in the process of cleaning up this disaster and trying to make reparations to the lives they have ended and shredded I will not shed one single tear. It will be an example to every other company about what happens when you sacrifice everyone else and everything else in the pursuit your wealth.

Monday, May 10, 2010

You MAY Have the Right

If there's one thing Americans are all very proud of it's our Constitution. Liberal, Conservative, Dallas fan, Libertarian  or Glenn Beck, they will tell you that the Constitution is what makes America the great nation it is. I too think this 200+ year old piece of parchment is one of the most important government documents ever written. It has all sorts of great ideas, such as having three equal branches of government. Integral checks and balances to keep any of the three from becoming too powerful. Unquestioned rights to freedom of Speech, assembly and religion. And another that we Americans are rightfully proud of, assumption of innocence. In other words, no matter how much anger we feel or how much proof we are told exists, those arrested are still the 'accused' or the 'alleged' criminal. They are a 'suspect' until they are proven to be guilty in a court of law. Innocent until proven guilty.

Yet somehow in recent years, with the threat of terrorism more and more a part of our lives, it has become acceptable to start overlooking these Constitutional protections when they are inconvenient. The same politician who will thump his chest and vow that the Second Amendment is sacred will turn to the camera another day and proclaim that we should be able to take an American citizen and strip him of his Constitutional rights simply because he is "accused" of being a terrorist. In fact Senator Lieberman, with several co-sponsors, is introducing a bill that would give the State Department the power to revoke the citizenship of Americans abroad if they are believed to be associating with the wrong people. Never mind that this makes the individual, an American citizen mind you, guilty without arrest or trial. Guilty based on what? A sliver of hearsay intelligence? A picture of you standing near or talking to a person 'of interest'? The whole idea is not only un-American, but sounds blatantly un-Constitutional. Just as bad though is that the bill would prevent nothing, would provide no actual protection at all. Look at the most recent terrorist suspect arrested, Faisal Shahzad who is alleged to have planned the unsuccessful NY Time Square bombing and also an American citizen. Sure he was out of the country for something like 5 months in Pakistan, but we didn't know about any of his contacts there until after the fact. We still don't know very much for sure even now. So the bill inspired by Shahzad's case would have done nothing to prevent it. And on top of that, the bill will waste time in Congress better spent on any of a dozen other serious items, including changes that would actually matter and not tear a hole in the Constitution in the process. Perhaps time would be better served in confirming the current nominee to head the Transportation Safety Administration, an appointment held up for the better part of a year with no end in sight.

It's the same thing with the idea of reading a terrorist suspect his Miranda rights. You know, "you have the right to remain silent. Anything you say can and will be used against you" speech we see regularly on every cop show. Miranda warnings have their roots in the 1966 Miranda v. Arizona Supreme Court decision that, to put it simply, said that before interrogation a suspect must be informed of their rights within the Justice system. See here for more info on Miranda Rights. It's just a requirement to ensure the person under arrest is aware of their rights, nothing more. Nobody seems to have a problem with Miranda for serial killers, rapists, pedophiles and the like. But read them to a terrorist suspect and suddenly half the country goes up in hysteria. I know we all hate terrorists. 9/11 has scarred us all to some degree or another. But this is America, and as we are so very proud, we have a justice system that is based on innocent until proven guilty. Yet as soon as we hear someone use the 'T' word we all start frothing at the mouth. Suddenly we are trying to come up with any possible way to circumvent our own justice system so we can rush them to the electric chair as soon as possible. Forgetting, of course, that they haven't actually been convicted of anything yet. I'm sure someone will say, "yeah, but so-and-so confessed!" So? Many criminals do confess, yet we still have a trial or at least go through the prescribed legal steps for judgment and sentencing. Some will point out that terrorists are evil monsters who don't deserve the rights of our legal system, citizen or not. To tell you the truth,  while I do hate terrorists, I'm actually more scared of serial killers. Yet I still support their rights to due process. And if it's good enough for the twisted sociopathic likes of Jeffrey Daumer and Charles Manson then I say it's good enough for Faisal Shahzad, the failed Yuppy bomber.

Some of this is political posturing, but that doesn't excuse it. Pandering to the 'hang 'em high' crowd in direct opposition to our legal system is pathetic.  We have laws and we have procedures for those who break them. The most important thing is that we follow the law. Otherwise it's just an arbitrary decision by whoever is in power that moment. America's justice system is based on strict codes and procedures to ensure it is as impartial as possible. Are we really ready to take these decisions away from the courts and hand them over to politicians and bureaucrats who are more interested in polls and campaigning than justice? It's easy, and darkly satisfying to take someone like Shahzad and dispose of him violently like a Bond villain. But this would require us to willingly sacrifice what it is to be an American. To say to our fellow Americans and the rest of the world that our laws are not impartial, that the law only applies to certain people, under certain circumstances who shall be determined at a later date and based upon criteria to be decided later. That would be a change in the very fabric of our society and way of life due to continued threats of violence, wouldn't it? Sounds kinda familiar to me . . .

Definition: Terrorism
"The deliberate commission of an act of violence to create an emotional response through the suffering of the victims in the furtherance of a political or social agenda."

Tuesday, May 4, 2010

The Best We Can Do?

A superstitious soul might think Mother Nature was trying to tell us something. On April 5th, a mine explosion in the heart of coal country kills 29. Less than a month later an explosion on a deep water oil rig kills 11 more and ultimately destroys the rig itself. In addition to the lives lost, the rig disaster also left a ruptured well head spewing oil into the Gulf of Mexico from nearly a mile deep while supposedly smart people scratch their heads and wonder why that blowout preventer failed to actually, you know . . . prevent anything. As the massive, and expanding oil slick threatens to hit the wetlands and coastal fisheries of Louisiana it seems well past time to ask if this is really the best we can do?

Many will say that these events are a tragedy, but something we have to live with because we 'need' the oil and 'need' the coal. No choice, they'll say. But is that true? Look, fossil fuels are called that because that's what they are: fossils. The end products  of a hundred million years or more of plant and animal life dying and interacting with heat, pressure and other assorted phenomena. These are not resources that are springing magically from the bosom of the earth. They are a distinctly finite sprinkling of combustible materials left from bygone days. The compost of another age. But no matter how you phrase it, this stuff is running out.

This isn't my opinion. It isn't a Liberal conspiracy theory. It's irrefutable fact. You only have to look at what extremes coal and oil companies are having to go to just to keep up the supply. We've tapped the majority of the land-locked oil reserves already and those will be running out faster than you might think. Especially with growing economies like China and India sucking harder on that particular straw every year. So now we're trying to drill wells a mile or more beneath the waves, looking for whatever more we can slurp out of the Earth's nooks and crannies, like butter from an english muffin. Coal mines are wandering for miles under the mountains and in some places they aren't even bothering with mines at all. They just lop the tops off mountains and sift through the remains.

Do you realize that for all the interesting ways we've come up with to use oil, gas and coal that when you strip away the techno fluff we're using energy 'technology' that is little changed from that first moment humans discovered fire? Think about it. In the hundreds of thousands of years since that fateful discovery, no one will ever know exactly when it happened, our primary energy sources have been the burning of assorted materials. Wood, coal, oil, gas, peat, grass, whatever. Is this really the best we can do? Are we actually satisfied with this state of energy production? All that time and "Can we burn it?" is the best we can do? I may be mistaken, but one of the only truly innovative and applicable energy sources we've come up with in all that time is nuclear fission. And that's all about starting a nuclear reaction, without letting it get out of control. So one mistake at the wrong time can have horrible consequences that make oil spills or mine explosions seem like minor traffic accidents. Chernobyl anyone?

So perhaps it's time to pull our collective heads out of the fireplace and start thinking outside the box we've been stuck in for millennia. Man has done a lot of amazing things and figured out a lot of unbelievable stuff, but we're still, when all is said and done, just tossing stuff on the bonfire to see what will burn or explode. I think it's time we tried something new, don't you?