What is the Cost of an Accident? California Turns Down $1.5 Billion that Could Help it Balance its Budget. Why? Because of 1969 Oil Spill.
According to a Reuters story, California could have had $1.5 Billion in oil lease revenue.
Why would the legislature of a cash strapped state turn down free money? Because of concerns about environmental damage due to oil spills. The fear was born from a 1969 spill that occurred off Santa Barbara.
Today, the environmental record for drilling and production from offshore facilities is much improved. But the “cost” of an accident back in 1969 is still being felt.
Therefore, Plains Exploration & Production will not be allowed to drill a new well from an already existing platform in “federal” waters. The new well requires state permission because the drilling technology now allows them to drill into “state” waters.
So the next time someone asks you what the cost of an accident is, don’t forget to include the costs to a whole industry when one company makes a mistake and everyone (including the government) is penalized.