President Obama rolled out the big guns in late May and early June against the Gulf of Mexico oil spill.
First, the administration turned to Hollywood. Movie director James Cameron was brought in on June 1, along with various scientists and experts, to brainstorm on how to plug the oil leak. Why Cameron? Well, he’s filmed stuff underwater.
This follows on past efforts to tap the “expertise” that apparently comes with making movies. In 1985, for example, actresses Jessica Lange, Jane Fonda and Sissy Spacek testified before Congress on agricultural issues because, well, they played farmers in the movies.
And in April of this year, actress Sigourney Weaver testified before a congressional subcommittee on the topic of ocean acidification. After all, she portrayed an environmental scientist in Cameron’s film “Avatar.”
With “Wall Street: Money Never Sleeps” — the sequel to “Wall Street” (1987) — opening on Sept. 24, I assume we’ll be seeing Michael Douglas (a.k.a. Gordon Gekko) on Capitol Hill to say something about financial industry regulation.
Who says politicians waste time and money?
More serious was the White House’s salvo on launching criminal and civil investigations on the Gulf spill.
On June 1, the President declared: “If our laws were broken leading to this death and destruction, my solemn pledge is that we will bring those responsible to justice on behalf of the victims of this catastrophe and the people of the Gulf region.”
U.S. Attorney General Eric Holder followed with a press conference. Noting that 11 lives were lost and citing various environmental-related statutes, Holder announced the existence of an ongoing criminal and civil investigation of the spill. He declared, “We will not rest until justice is done.” Asked about any evidence of criminal activity, Holder responded: “We have what we think is a sufficient basis for us to have begun a criminal investigation.”
While most would agree that any potential breaking of laws deserves prosecution, various questions spring from the Obama administration moving in this direction at this point in time.
Is this about politics and trying to regain lost ground in the polls? After all, the Justice Department usually doesn’t talk about investigations until charges are filed. For good measure, is the government going down the path of criminalizing a freak accident, or legitimate business decisions that have unforeseen negative, even tragic, results?
If the answer to either of these questions turns out to be “yes,” or even if there is widespread suspicion that is the case, then there will be serious fallout for business, investment and the economy, most directly in the energy sector.
And don’t forget about the President’s May 27 order for 33 deepwater exploratory drills in the Gulf to suspend operations, to ban further Gulf exploration for at least six months, and to stop exploration in Virginia and Alaska offshore waters.
Any extended offshore ban will have very real consequences for U.S. consumers and businesses. API’s President and CEO Jack Gerard was on target when pointing out: “An extended moratorium on safely producing our oil and natural gas resources from the Gulf of Mexico would create a moratorium on economic growth and job creation — especially in the Gulf States whose people and economies have already been most affected by the oil spill — by undercutting our nation’s access to affordable, reliable, domestic sources of oil and natural gas.” API reports that 70 percent of the oil and 36 percent of the natural gas from federal Gulf of Mexico production in 2007 came via deepwater.
But if the Obama White House is choosing to ignore economic reality, and thereby risk reduced energy investment and higher energy prices, perhaps it should take note of the latest, post-spill polling on offshore energy development. While a small decline in support has occurred, as one might expect, a Rasmussen Reports survey of likely voters released on June 1 showed that 58 percent support offshore oil drilling, with 20 percent opposed and 21 percent undecided.
Let’s be clear. There’s not much the president can do about plugging an oil leak after a major accident. That falls to the oil companies and their engineers. However, the federal government can play a key role in aiding the clean up. In addition, the government should prosecute any real wrongdoing. But it also has an important responsibility to make clear that it is not involved in a politically-driven witch hunt to shore up poll numbers. That, quite frankly, is far from clear right now.
Finally, the White House and Congress must establish a policy environment in which U.S. energy resources can be tapped in a sound, safe way. Unfortunately, for far too long, extensive oil and natural gas resources — offshore and onshore — have been placed off limits by the government for no legitimate reasons. And risks now run high that such misguided prohibitions will persist, and perhaps even expand.
Keating is chief economist for the Small Business and Entrepreneurship Council. He can be reached at email@example.com.