Business Costs & Regulation

A New Global Focus: Oil Spill Prevention

Oil-producing countries will tighten their rules -- but not to the point of restricting output.

The U.S. won’t be the only country tightening up on deepwater oil drilling in the wake of the Deepwater Horizon oil well disaster. The U.K., Brazil, Mexico and Canada, as well as the U.S., will insist that offshore oil wells be outfitted with acoustic switches. Such systems, now required by Norway, are anchored near a well to trigger blowout preventers. They activate when they detect sounds indicating something is amiss, such as oil rising too quickly or natural gas bubbling up.

The U.S., U.K., Brazil, Mexico, Canada and Norway are likely to establish permanent spill response centers, requiring oil companies to pay for stockpiling materials needed to minimize damages. The U.S. has a program in place, funded by refiners, but it only pays out if the government can’t decide who’s responsible for a spill, or rules that an involved company is blameless.

Odds are the U.S. will adopt a well-by-well review and approval process,replacing the blanket approval the feds now give drillers using industry accepted standards. The new process will require the oil companies to prove to the regulators' satisfaction that they have devised technologies and systems that would staunch an oil flow if that well failed. Drillers also will be required to show they have a plan to mitigate any oil leaks.

African nations may follow suit. Other Western Hemisphere and European countries already require that each drilling operation be considered a unique proposition. But all countries will avoid overly tough restrictions that could crimp output.

More draconian measures will get an airing, but they’re unlikely to be adopted. For example, the government won’t require U.S. oil companies to drill an emergency relief well alongside each new well in water 1,000 feet or deeper.

The U.S. also won’t declare an outright ban on drilling oil wells in water of that depth. Doing so would hurt U.S. producers and help foreign competitors “because it is very likely (similar bans) won’t be required off of West Africa, Cuba, Brazil or other places where there are vast amounts of oil” in deep water, says Philip Sharp, president of Resources for the Future, a think tank focused on worldwide environmental and natural resource issues.

Most Popular

When Could We Get a Third Stimulus Check?
Coronavirus and Your Money

When Could We Get a Third Stimulus Check?

President Biden and others in Congress are pushing for a third-round of stimulus checks, but it might be a while before we get them.
January 20, 2021
Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS has an online tool that lets you track the status of your second stimulus check.
January 18, 2021
20 Best Stocks to Buy for the Joe Biden Presidency
stocks to buy

20 Best Stocks to Buy for the Joe Biden Presidency

Joe Biden has been sworn in as America's 46th president. These are 20 of the best stocks to own under the new administration.
January 20, 2021

Recommended

6 Money-Smart Ways to Spend Your Second Stimulus Check
Coronavirus and Your Money

6 Money-Smart Ways to Spend Your Second Stimulus Check

If you don't have to use your second stimulus check for basic necessities, consider putting the money to work for you. You'll thank yourself later.
December 28, 2020
11 Superfoods to Boost Productivity at Work
business

11 Superfoods to Boost Productivity at Work

When you’re faced with a hectic workday, it can be all too easy to make some not-so-healthy food choices in between attending meetings, checking email…
December 9, 2020
19 Best Costco Kirkland Signature Products to Buy for the Holidays
spending

19 Best Costco Kirkland Signature Products to Buy for the Holidays

From Costco Kirkland Signature Nuts and other holiday snacks to Costco Kirkland Signature fruitcakes and gift sets, there are a ton of holiday bargain…
November 24, 2020
Dear Mom and Dad: Thanks
Making Your Money Last

Dear Mom and Dad: Thanks

Ideally, living at home should provide a way to improve your financial well-being and lay the groundwork for future success.
November 17, 2020