A Development Perspective on the Gulf's Big Spill

This is a joint posting with Julia BarmeierThe oil leak in the Gulf of Mexico is turning out to be the worst environmental disaster in United States history—we now know that as much as 40 million gallons of oil may end up in the Gulf, destroying wildlife and livelihoods, and taking years to clean up.Spills of this magnitude are not new to the developing world. Take Nigeria, for example. Due to poor regulation and pervasive corruption, we do not know for certain how much oil has leaked into the Niger Delta region. In 2006, it was reported that 500 million gallons of oil—a quantity not that different from the new estimates of the Gulf leak --has been spilt in the Delta over the past 50 years. The Nigerian National Petroleum Corp estimates that some 650,000 gallons of oil were spilled in 300 separate incidents each year; other reports indicate that Shell (which is now looking to drill in the Arctic) spilled nearly 4.5 million gallons of oil into the Niger Delta in the last year alone.Anger over the environmental consequences of the spill is palpable, as evidenced on TV, radio, and the Internet. The live video feed of oil gushing from the bottom of the ocean floor has been viewed by millions. Americans care about the people whose livelihoods have been lost, as well as about the ecologically precious wetlands and its wildlife. But there is a cost to keeping our oceans clean and our air breathable—we must reduce our consumption of oil and make the effort to move to cleaner sources of energy. President Bush lost the opportunity to impose a carbon tax after 9-11 (when gas was only $1.66 per gallon). President Obama must not lose the opportunity that BP has inadvertently presented to him, to convince the American public to make some sacrifices if we want clean air and clean oceans. Higher U.S. taxes on petroleum and the resulting reduction in demand would not only lead to a cleaner environment in the United States, it might also help to reduce the incentive for drilling and exploration in developing countries, where pollution is poorly regulated and the discovery of oil is so often associated with corruption that it has been called the “oil curse.”Renewable energy can be generated almost anywhere, so why has the U.S. government (including the current Administration) done so little to make it more available? The amount of solar energy that can be produced on just one acre of land in Texas each year is equal to 800 barrels of oil. And new technologies are emerging every day, such as plug-in hybrids that can be combined with flex-fuels to yield 100 mpg, large-scale solar thermal plants, and wind farms. These must be brought to market now and on a significant scale, with a careful combination of incentives, subsidies, taxes, and willpower. The privates sector is an essential partner in this effort and we must take advantage of their resources and knowhow.The Gulf spill is a huge opportunity to turn oil into salt. Anne Korin, a brilliant scholar who writes on oil dependence, points out that countries routinely fought wars over salt until alternative technologies for preserving food became available. President Obama’s should seize the moment to turn oil into salt—by making the supply of oil irrelevant with a variety of affordable alternatives. Countries with significant oil production are easy to name, but as Korin says—do we even know where the world’s salt reserves are?