Scenarios: BP spill to prompt many new regulations

By Tom Doggett

WASHINGTON (BestGrowthStock) – The massive oil spill in the Gulf of Mexico is expected to prompt far-reaching U.S. regulations to prevent similar accidents in the future.

Major oil spills have resulted in new rules before, from the requirement to use double-hull tankers following the 1989 Exxon Valdez oil spill in Alaska to a moratorium on offshore drilling after a spill off Santa Barbara, California in 1969.

U.S. authorities will not be able to begin a full investigation until the oil leak is stopped, which may take 60 to 90 days. Interior Secretary Ken Salazar is conducting a preliminary 30-day review and could recommend interim emergency regulations for offshore drilling.

Already, some lawmakers and environmental groups are calling for tougher rules on offshore drilling, especially in deep waters, where industry has had trouble capping leaking oil wells.

As BP Plc struggles to contain the spill, the following are scenarios for new regulations and policies that may result in response to the oil spill.

REQUIRE REMOTE SHUT-OFFS

The United States might follow the lead of Brazil and Norway and require offshore platforms to have remote-control shutoff triggers. Workers escaping a burning rig could send signals underwater to shut valves on a leaking pipe on the sea floor. Mandating $500,000 acoustic valves for the rigs could save millions of dollars a day in fighting an oil spill.

MOVE DRILLING FARTHER FROM SHORE

Moving future drilling further offshore, say 75 miles, could help protect coastlines from spills and ease opposition to drilling.

Senators on Tuesday proposed such a 75-mile limit as part of a climate-change bill that they plan to introduce. Originally, the climate bill would have included the less-restrictive 50-mile limit.

IMPROVE TECHNOLOGY TO HOLD BACK OIL

Floating booms are often the first line of defense in controlling oil spills and protecting beaches. They work best with spills in the calmer waters of a port, but are too short to hold back oil and often become tangled when waves pick up out in the Gulf. There could be a call for federal and industry research into developing booms that work better in deeper water with big waves.

LIABILITY OF OIL FIRMS MAY INCREASE

In response to the BP oil spill, legislation has been introduced in the Senate that would raise an oil company’s economic liability in a spill from $75 million to $10 billion.

Higher liabilities could boost drilling costs for companies, forcing them to impose much stricter safety procedures. But such a bill could be popular in an election year, with the spill threatening long-term harm to families and businesses.

TAX BREAKS MAY END FOR OIL COMPANIES

The Obama administration has called on Congress to end billions of dollars in tax breaks and financial incentives for the oil industry, arguing oil companies make enough money and don’t need help from taxpayers.

Such a move would not be directly related to the BP oil spill, but lawmakers could score points with voters by voting to end tax breaks for big oil companies like BP.

OFFSHORE DRILLING BAN REINSTATED

Some environmental groups want to ban new offshore drilling altogether, but the Obama administration is still committed at this point to expand offshore energy exploration.

However, under an extreme scenario, there could be a massive outcry and a call for a ban if the oil spill continues for two or three months, gets caught in the Gulf stream and spreads around the tip of Florida and up the East Coast.

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(Reporting by Tom Doggett; Editing by Russell Blinch and David Gregorio)

Scenarios: BP spill to prompt many new regulations