It would cost the oil and gas industry about 7 to 12 cents a barrel of oil to pay for an augmented federal regulatory regime that might help avoid a repeat of the BP oil spill in the Gulf of Mexico, two members of the National Oil Spill Commission told Congress Friday.
“That’s less than a quarter of a cent per gallon of gasoline,” Donald Boesch, president of the University of Maryland Center for Environmental Science, told members of the House Committee on Transportation and Infrastructure. “It’s a very modest cost that’s easily affordable for the industry.”
But after the hearing, Rep. Jeff Landry, R-New Iberia, said the spill commission’s recommendation that industry pay more to regulate itself is a “non-starter.”
“It’s not going to happen,” said Landry, who represents the coastal district hit hardest by the disaster.
While the Obama administration has said the oil and gas industry can easily afford to pay to raise the bar on its conduct, the industry says it already pays plenty into federal coffers, and oil patch lawmakers, including Democratic Sen. Mary Landrieu of Louisiana, agree.
The two commissioners who appeared before the House panel Friday – Boesch, a Louisiana native, and Terry Garcia, an executive vice president with the National Geographic Society – argued that it is in the oil and gas industry’s absolute, bottom-line self-interest to back with its bucks an improved regulatory regime that has the resources to review and process the permits necessary to get the industry back to drilling in the deep waters of the Gulf. It also must minimize the chance of ever again experiencing the phenomenal costs being borne by BP in the wake of the nation’s worst oil spill.
But Landry said the industry had an exemplary safety record – describing the Macondo blowout as “the first major accident” amid some 3,200 wells drilled in the deep waters of the Gulf – and that the oil companies, more than anyone, had taken the disaster to heart in reviewing their well designs and drilling procedures.
Landry said the lesson of Macondo was not that there is too little regulation, but that existing regulations were not adequately enforced, and that the move toward more regulation by the Obama administration and recommended by the commission, is a step in the wrong direction.
Landry did say that he agreed with the commission’s call for greater protections for rig workers, and said he worries what would have happened if the Damon Bankston had not been nearby and in a position to rescue the survivors of the Deepwater Horizon explosion and fire, which killed 11 men.
Landry pressed retired Coast Guard Adm. Thad Allen, who was national incident commander during the spill, about the importance of having a vessel within range during drilling. The congressman has not yet come up with a plan to ensure that is the case.
“On the lighter side,” Landry told Allen that he had just talked to “your favorite parish president, Billy Nungesser, and he said to say, ‘hello.'”
“I’m feeling the love,” said Allen, who was subjected to withering criticism from Nungesser during the tense days of the spill.
About the time the hearing was wrapping up, Treasury Secretary Timothy Geithner was addressing Louisiana political and business leaders at an economic development brunch.
Afterward, Sen. David Vitter, R-La., said he was “frankly stunned by President Obama’s treasury secretary’s opening remarks that claimed that the state of the oil industry was ‘very good,’ and a few seconds later, ‘we need to make sure Washington doesn’t get in the way'” of drilling.
“What is more frustrating is that the Louisiana Chamber of Commerce-type members moderating the event wouldn’t put any tough questions to him,” Vitter said.
The brunch, featuring an address by a Cabinet secretary, was closed to the press at the behest of Michael Hecht, president and CEO of New Orleans Inc., a lead sponsor of the event. Hecht said he was simply following past practice, although reporters have often been allowed to attend in previous years.
Jonathan Tilove can be reached at firstname.lastname@example.org or 202.383.7827.