Devastation In The Gulf: Learning From the Gulf of Mexico Oil Spill (Pt. 2)

By Nathaniel Payne (Simon Fraser University & Justmeans.com)

Balancing the Risks

As Asian societies develop, governmental and private sector leaders are required to make significant decisions regarding the use and pursuit of natural resources. Governments face tough decisions regarding access to resources, mimetic and normative pressures from neighboring countries as well as private businesses to allow the capable organizations to pursue and harvest natural resources in challenging locales.

These pressures are often magnified by the countries own citizens who anxiously await access to jobs that natural resource harvesting operations provide. Unfortunately, these powerful pressures often blind decision makers to the potential economic and environmental costs that resource related disasters can ender. While an examination of recent history reveals that major accidents like the one the Gulf of Mexico anomalies, a historical review of past disasters shows that lasting damage from major environmental catastrophe’s are often beyond the scope of human imagination.

Look To The Future: Are we prepared?

As we look toward the future, it is prudent that societies around the world prudently analyze their decision making, particularly when those decisions surround the exploration of resources in obscure or untested locations. The accident in the Gulf of Mexico took place in ultra deep-water, an environment that the global oil industry entered approximately five years ago and is only starting to understand.

Many nations continue to wrestle with the challenges that deep water drilling imposes as well as the potential costs, particularly as nations including Russia consider mining deep water oil reserves in the Arctic. China for example, continues to grapple with the challenges imposed by this disaster. Oil companies have been operating in shallow water areas off the Chinese coast for 50 to 60 years, and are increasingly looking at deep water sources off the Asian coastline for new resource supplies.

While the oil spill in the Gulf of Mexico may help re-contextualize how Asian countries approach deep water drilling through the creation of new global standards which will ensure safe and sustainable production and operation in oil & gas industries, the adoption of these standards is not guaranteed. This is particularly apparent considering that the increased adoption of safeguards will increase production costs for oil & gas companies globally, while tightening competition for an already decreasing pool of accessible natural resource deposits.

In Malaysia, the Department of Environment continues to monitor and take responsibility for controlling oil spills that occur within Asian waters. For the last 15 years, the Department of Environment has continued to articulate the importance of conservatism, and established funding sources such as the Environmental Fund to prepare for potential maritime disasters.

Unfortunately, while safeguards are in place, more needs to be done from a regulation and collaboration standpoint to ensure that the decision makers involved in resource exploration discussions adequately weigh both the costs and benefits of natural resource harvesting. For example, as a member of the Association of South East Asian Nations, Malaysian representatives must collaborate closely with their neighboring countries and private industry to ensure that all South East Asian Nations are insulated from the potential consequences a major oil spill would have on the marine environment, economy, and the Asian people as a whole.

While it is easy to be coerced by various stakeholders into making decisions without adequately balancing the costs as well as the rewards, the potential clean-up costs and long term costs must be extensively considered when making resource licensing decisions. Additionally, when forming resource and environmental policies, governmental representatives need to interact closely with their North Asian counterparts, particularly the Chinese, whom are actively engaged in deep sea drilling. A major disaster in the ocean off the Chinese coast could have devastating implications for Malaysia and many of the South Asian countries that rely on their maritime waters.

For part 1, click here.

Nathaniel is business, finance, investment, and marketing researcher, education manager and author with a passion for writing, teaching, learning & research. Learn more about him here.