Energy Macro – Oil Spill takes Center Stage – Commentary
The deadly TransOcean Horizon explosion has given way to a building environmental disaster in the US Gulf of Mexico, with potentially significant implications for a number of energy sectors. Offshore drilling has always been complex and potentially dangerous, involving high technology sensing and controls along with equipment designed to withstand/deliver massive brute force to the task. An (arguably) strong long term safety record, however, pales in the wake (no joke intended) of the magnitude of the few failures that do occur. On the heels of a fatal explosion in the Massey coal mine last month, the reality of the vitality and ‘noneconomic’ costs of resource extraction are, unfortunately, in full focus. And with this week’s ‘approval’ (subject to years of litigation?) of the Cape Wind project, the contrasts magnify. While offshore wind projects could be as much as twice the cost of onshore, with their own maintenance and qualitative drawbacks, the comparisons will look pretty favorable against photo shots from Louisiana.