Energy Policy and the Worst Case Scenario

We all make decisions about how much risk we are willing to take on as we go about our daily lives. Some of us focus more on probability (the likelihood that something bad will happen to us if we take a certain action) and others of us focus more on the worst case scenario, the most negative consequence that could reasonably occur in response to our action. If you focus purely on probability, an activity like skydiving is not particularly dangerous -- one death per 100,000 jumps is not too bad. On the other hand, skydiving accidents are frequently fatal when they do occur. The worst case scenario is severe.

Fear of the worst case scenario is perhaps the main reason why the United States hasn't embraced nuclear power to a greater degree than it has. The 1979 accident at the Three Mile Island nuclear plant that exposed millions of people to small doses of radiation had a decisive impact on public opinion. What happened at Three Mile Island wasn't the worst case scenario by any means -- no one died as an immediate result of the accident, and the public health implications of the event are still being debated. What it did, however, was remind the public, the government, and the power industry of just how dangerous nuclear power can potentially be. Nowadays the majority of the American people do support nuclear power once again, but 31 years is a long time for any event to hold a prominent place in the collective memory. Another serious nuclear accident could change perceptions in a jiffy, and regulators and the industry certainly haven't forgotten what happened in 1979.

The Gulf of Mexico Oil Spill of 2010, on the other hand, is a worst case scenario we're seeing unfold before our eyes. The initial catastrophe claimed 11 lives of oil workers, a tragedy in and of itself, but the ensuing disaster will have widespread implications for millions of people and animals. That the damage to the marine ecosystem and the Gulf Coast economy will be severe is a given -- how the disaster will affect the hydrologic cycle and weather patterns is more of an open question at this point. This thing is bad enough to fundamentally change how risky offshore oil drilling is perceived to be. The probability of such a spill hasn't really changed that much...remember, there's offshore drilling going on all over the world, from West Africa to the North Sea. Massive explosions and oil spills aren't typical occurrences. One study found that just 2% of the oil in the oceans is a result of offshore drilling. So, for me at least, the issue isn't whether or not offshore drilling is too bad for the environment to be permitted...what I wonder is if the worst case scenario is so severe that it's not even worth the small risk of such massive spills.

One approach is to try to make offshore drilling and nuclear power more safe through more stringent regulations. It seems clear that BP and Transocean did not do all they could do to prepare for a worst case scenario -- just as Three Mile Island changed nuclear governmental policies, so too will the Gulf Oil Spill change governmental policies towards offshore drilling. Still, regulations can only go so far. Accidents WILL happen. Although nuclear plants are probably safer now than they used to be, the cynic in me can't help but wonder if the main reason Three Mile Island hasn't been repeated is because the nuclear power industry was utterly stalled following the accident and has only very recently shown some signs of revival. I can imagine a new regulatory environment having a chilling effect on offshore drilling in the Gulf -- risky behavior is not always banned when it can be disincentivized instead. Is that the right choice in a world where petroleum is still king and likely still will be for some time to come? I'm honestly not sure. We've seen a glimpse of the worst case scenario for offshore drilling and it is extremely ugly, but if the end result of all this is that Americans will just consume more oil drilled offshore from other countries, is that really an environmental triumph or just an economic setback?