Tuesday, July 13, 2010

New rules for deep water drilling

Interior Secretary Ken Salazar came out with new regulations yesterday to restrict deep water drilling in the Gulf after the last set of regulations were overturned by the courts. They want to be sure that better safeguards are in place, and the information requirements include proof that the equipment will do the job it's designed for and evidence that increased cleanup capacity can and will be on hand when extraction happens.

After the Minerals Management Service was revealed to be literally in bed with the energy industry, we've started learning more about how (little!) this part of our economy was regulated. I hate bureaucracy and red tape as much as the next person, but when we have spills in the Gulf like this we remember why these institutions exist. Adequate regulation is crucial to maximizing social benefits- actual and potential externalities need to be counted alongside profits as part of the value of industry. Obviously profits are, and should be, protected (though in the news we usually hear references to "lost jobs" rather than "lost profits") but some balance needs to be maintained, and if this spill isn't a siren call for more attention to be put on this industry, I don't know what would be.

More opinions on the new regulations are here.

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