Federal Judge blocks deep water drilling moratorium

People basically freaked out to the extent that they set back our nuclear power catastrophically due to one accident that was 0.00000001 the problem of the current gusher.

But oh no, don't try to figure out what happened to this one. Pretty amazing. Such is the hold that "scary radiation" has on people, do to nothing much more than crappy science education.

 

I don't think actual impropriety is all that important - the goal should always be to avoid even the hint of potential impropriety. I can't imagine it would be that hard to find a judge that doesn't own stock in the major deep-water drilling companies - unless the amounts of stock he owns were relatively small, there was no reason to not excuse himself.

That said, I don't have a problem with the particular ruling.

 

I haven't read it yet but it's surprising - this is an administrative law review and "arbitary and capricious" is the standard, which means that you simply have to have some ratonal basis/process for your decision.

I would think (without having read the case law) the fact that deepwater drilling, when it goes bad, produces unstoppable, irreperable disasters that we can't stop once they've started due to technology to be enough in and of itself to cross that threshold. But I haven't read the case law so I might be wrong.

 

Just to clarify, I'm not a lawyer, so I'm not really critiquing it from a legal standard.

I'm just looking at it from a practical viewpoint - the fairly tiny chance of another disaster vs the very real damage that occurs from unemploying however many people and damaging all those economies. I sort of view it like a temporary restraining order where there would be irreparable harm from the ban. From that perspective, I can understand overruling the ban.

To me, it's like shutting down air travel for 6 months after 9/11 until we could get all the new security procedures in place - we didn't do that because there was a practical consequence of that vs the relatively small risk of a 2nd incident.

 

i would agree that degree of investment could play a role in an extreme case...but given the amounts reported it does seem fairly immaterial for a man who has been a judge for as long as he has.

 

The problem with the "tiny chance of it happening again" argument is that the damage that we are trying to avoid here isn't actually quantifiable - it's effectively a black swan (black pelican?) event that we still don't really understand and can't cost out at this point. When a hyper-disaster is part of the cost benefit equaiton it gets very very very tricky to do the math of the Hand formula.

 

I don't know what the totals are, but the post here mentioning it seemed to be "less than $15,000" in a handful of companies, plus up to $50k in bonds. That could add up to more than $100k, and that was in 2008 - if that was near the bottom of the market, that could have appreciated a lot. That could be a lot of money, and Transocean and others are down close to 50%, so if this helps them get back to where they were, you're talking pretty significant profits as well.

That said, all of that is a bunch of "could be" situation . It could also be that he owned $1000 in each and we're talking a tiny amount. I'm not really sure.

 

This is why three-mile island was such a landmark, don't you think? It wasn't even *that* bad, but the idea of an unquantifiable future disaster led to extreme caution moving forward.

 

Absolutely. But you could say that about a lot of different things and use that to justify shutting down a whole array of random industries. The only thing different here is that we had a big oil spill so we're focused on that - but that doesn't change the risk. The risks of an oil disaster is not appreciably different today than they were 6 months ago.

 

youre right about all the "could bes". I was just assuming that a man of his age, who has been a judge for as long as he has, would have a nest egg where ~100K would not make or break him.

But again, that's a "could be"...maybe he has gone wild on the lap dances and needs every little bit of loot he can muster up

 

Why can't we do something like put the moratorium in place and lift it on a case by case basis as relief wells are drilled for each deep sea operation.

 

Oh definitely - I don't know that it would make him or break him. But if a judge makes a ruling that makes him $50k, that's not much different than a company bribing him w/ $50k to make a ruling that would benefit them - and there'd be no question that we'd say the latter was a significant sum of money and totally unethical, etc.

 

From what I gather, Horizon Deepwater had issues on that well that day and there were signs of problems that they ignored. If nothing else, we could just require government officials (paid by the rig operator) on all rigs to actively watch safety procedures and give them authority to shut down any rig that has any issues.

 

The judge who blocked the moratorium sure has some oil company investments:

http://blogs.chron.com/newswatchenergy/archives/2010/06/judge_who_overt.html

Conflict of interest, perhaps, or just simply the fact that if you invest in the market, there will likely be the side effect investment in oil?

 

unless that Judge held a significant amount of stock at the time he gave the ruling, it's no big deal.

 

The risks arent' different but it's glaringly apparent that the regulatory regime was broken and that the technology to stop these failures if all else fails doesn't exist.

And speaking of 6 months, I mean it's going to be extracted then anyway, it's static, it ain't going anywhere.

 

I find it funny that no one points out that the moratorium doesn't affect oil production at least in the near term to a few years out.

It only applies to oil exploration, not current wells that are in production. So it prevents the drilling of new holes - not restricting use of existing ones.

How is that going to be so devastating on the Gulf coast? How many people does drilling an exploratory well actually employ?

We are talking about a moratorium that is affecting a handful of wells - not hundred something. And do people remember that once Deep Horizon had drilled the well - they were going to cap it and save it for use at a later time....perhaps when oil prices sky-rockets.

The moratorium hasn't even affected gas prices - that should tell people a lot on how significant it is. I think it's odd for a judge to prevent a moratorium on new oil well drilling until they understand the risks better.

It's like grounding a fleet of aircraft after one has a catastrophic accident that can't be explained fully.

Hmmm....just like grounding the Shuttle Fleet after Challenger blew up mid-air. No one criticized that situation then. Why is this one different?

Oh...because you have a dem in the oval office!

 

Just like RocketsJudoka, you hinge your argument on the "unexplained" nature of the accident. While that is technically true, it's becoming rather obvious that BP took major shortcuts that resulted in a signficantly reduction in safety for the operation.

I don't think it's right to just blindly shut everyone down and cause all of this economic drama for a rather small chance of a "fundamental design flaw" inherent to all drilling operations. It's a miniscule risk.

That being said, I agree with you regarding the actual impact. I've read that this really only affects 33 planned wells, whereas 3300+ are still in operations.

The whole things seems more political than anything else - maybe Obama et. al. could focus there energies better by going through the regulators that violated ethical codes and job obligations associated with the design and operation of these wells...

On the other hand (I'm waffling...) it seems like prudence to take a step back and reevaluate...the oil is not going anywhere and the industry has no one to blame but itself (or BP).

 

It's got to be hard to invest in the market and NOT have oil related investments somewhere in your portfolio.

For all we know, the guy has a couple of mutual funds that happen to include the stocks for all those companies listed in that blog. If he has shares in an S&P-index fund, is he not allowed to make rulings that may affect any of those 500 companies?

With all the offshore rigs currently drilling that AREN'T experiencing any problems (99.9%), a moratorium seems pretty extreme to me. Shutting down air travel for 6 months after 9/11 is a pretty good analogy.

 

The problem is that the judge in his ruling mentioned doing it because of job loss?

Judges aren't allowed to make decisions because of that. If he had a constitutional ruling that would make a difference. The decision will be overturned.