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How to Think About Oil Spills

The perils of overreaction.

Jun 21, 2010, Vol. 15, No. 38 • By STEVEN F. HAYWARD
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A 2008 study published by the National Academy of Sciences observed that “nitrogen leaching from fertilized corn fields to the Mississippi-Atchafalaya River system is a primary cause of the bottom-water hypoxia that develops on the continental shelf of the northern Gulf of Mexico each summer.” The study concluded that our current ethanol production goals will increase dissolved inorganic nitrogen flowing into the Gulf by as much as 34 percent, and could make it impossible to achieve federal targets for reducing Gulf hypoxia: “Expanding corn-based ethanol production would make the already difficult challenges of reducing nitrogen export to the Gulf of Mexico and the extent of hypoxia practically impossible without large shifts in food production and agricultural management.”

In short, there is considerable risk that overreaction to the BP/Deepwater spill will have second-order environmental impacts that could be cumulatively worse than the spill itself, both for the Gulf and for other environmental arenas. Even if the costs of the spill exceed $15 billion (to be borne by BP) as now seems likely, the benefits of continued offshore oil production still exceed the costs by a wide margin. Economist Peter Passell estimates a net economic benefit of nearly a trillion dollars from continued offshore production. This will not be a popular position to hold so long as live streaming video of the oil spill continues and the media continue to cover the spill in a state of near hysteria. But it is at precisely such times that rational analysis needs to be heard.

Steven F. Hayward is the F.K. Weyerhaeuser fellow at the American Enterprise Institute and a contributor to AEI’s Energy and Environment Outlook.

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