Monday, March 24, 2008

Small Oil Spill with Possibly Big Significance

Oil spills represent a form of collateral cost for the oil industry. (Those against Cape Wind have raised the issue that the proposed wind turbines will introduce a risk of a small oil spill in the Sound. Interested readers should look to the materials at for more detail on the government's risk analysis.)

The most recent oil spill to hit the national media occurred in San Franscisco and was reported in media including the New York Times:

A useful understanding of the reaction to this spill comes from a person who teaches at the Coast Guard Academy. It turns out that prior to 9/11 the Coast Guard would have reacted quickly to the spill and contained it within about two hours. However, after 9/11 the Department of Homeland Security was created and the Coast Guard was placed within it. This changed the chain of command and the priorities. Tradeoffs could have been anticipated, and in fact were abstractly anticipated by myself right away, and more formally by Richard A. Posner in Preventing Surprise Attacks: Intelligence Reform in the Wake of 9/11. In this case the Coast Guard reaction was delayed while they sorted out authorization to address the spill. A lot of this can be understood and predicted by reference to organizational theory, the psychology of organizations, and strategy and structure from business school. I understand that the Coast Guard is now challenged to come up with solutions, and that they are working at it.

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