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Gail Tverberg

Gail Tverberg

Gail Tverberg is a writer and speaker about energy issues. She is especially known for her work with financial issues associated with peak oil. Prior…

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Research Reports on the Economic and Environmental Impact of Oil Spills

Research Reports on the Economic and Environmental Impact of Oil Spills

Every area of science or of business has its own area of research, literature,  resentations and conferences. Since people in the field tend to read the same literature, this defines the "group think" of the field--whether right or wrong. I can only barely scratch the surface of oil spill literature, but I thought I would point out a few things I found.

On April 30, 2010, the US Congressional Research Service issued a report called Oil Spills in U.S. Coastal Waters: Background, Governance, and Issues for Congress. An important graph in the report is this one:

Volume of Oil Spills

The rather clear indication from Figure A-2 is that oil spills in US waters are pretty much going away. Even if the information was put together from other sources, this is what regulators and people working for oil companies would be looking at. It would be easy to get the idea that the whole issue of oil spills really didn't need too much vigilance now. Technology improvements over the years and better regulation regarding shipping had practically eliminated oil spills, so why worry about (or spend much government money on) oil spills any more?

Economic Costs of Oil Spills

One of the issues discussed in the Congressional Research report noted above is the economic cost of oil spills. There are three major types of costs of spills:

- Cleanup Costs
- Natural Resource Damages, including the cost of returning resources to the pre-damage condition
- Other Economic Costs, such as loss of tourism or interruption of local businesses

One reference that is cited is a 1999 report by Dagmar Etkin called Estimating Cleanup Costs for Oil Spills. This report shows (among other things) that even excluding the Exxon Valdeez Oil Spill, US average clean-up costs are three times those of elsewhere in the world.

Average Cleanup cost

A person might wonder, if, in the litigious US society, costs are defined differently than elsewhere in the world. If a bird is coated with oil, are other  countries going to the same expense to try to save it? If tourism is down, are people who lost business, (plus their lawyers) being compensated? Does the government work very hard at keeping costs down, or do bureaucratic rules keep costs up?

I did a back of the envelope cost calculation using the European costs. If the spill lasts for 120 days and averages 40,000 barrels a day, a total of 4.8 million barrels (or 655,000 metric tonnes) would be spilled. European costs adjusted to 2010 dollars, the cost would amount to about $11,266 per metric tonne, resulting in total costs of something like $7.4 billion. US costs would be at least three times as much.

When decision-makers are deciding what clean-up actions to take, a major consideration is cost. There is a section in the same paper by Etkin called Cleanup Strategies. It points out cleaning up oil off-shore is a whole lot cheaper than cleaning up oil once it hits shore, and that the use of dispersants is usually a whole lot cheaper than the manual clean up of shorelines.

Choices made in cleanup strategies and the decision-making process in the aftermath of a spill can significantly affect cleanup costs. Cleanup costs are often directly correlated with spill impact, particularly shoreline impact, so that reducing the spill impact can result in reducing the spill response costs (Etkin, 1998b,c). Likewise money well spent on an effective cleanup can significantly reduce later natural resource and property damage claims.

When oil spills near a potentially sensitive coastline or resource (and near a potentially sensitive public), the most cost-effective approach to a cleanup operation is to invest as much equipment, personnel, and energy into keeping the oil away from the shoreline or sensitive resource. One unpublished study by an economist (Franken, 1991) suggests that in spill incidents in which the oil impacts a coastline, as much as 90–99% of the cost of cleanup is associated with shoreline cleanup procedures, especially when manual methods are employed. Franken (1991) showed that the cost of removing oil off shore (by either dispersants or mechanical recovery) averaged $7,350/tonne, whereas shoreline cleanup ran as high as $147,000–$294,000/tonne.

Conferences

There are International Oil Spill Conferences (IOSCs) every three years, and regional conferences more often. About the next conference, we read:

The 21st Triennial International Oil Spill Conference on will be held May 23-26, 2011 at the Oregon Convention Center in Portland, Oregon, USA. Over 2,000 people from 50 countries are expected to attend the technical sessions and view more than 250 exhibits. The Conference theme for 2011 is: "Industry and Government Working Together".

There IOSC has searchable archives with more than 3,000 papers.

By. Gail Tverberg

Gail Tverberg is a writer and speaker about energy issues. She is especially known for her work with financial issues associated with peak oil. Prior to getting involved with energy issues, Ms. Tverberg worked as an actuarial consultant. This work involved performing insurance-related analyses and forecasts. Her personal blog is ourfiniteworld.com. She is also an editor of The Oil Drum.




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