Full Title: The BP Gulf Coast Oil Spill, Option Value, and the Offshore Drilling Debate
Author(s): Institute for Policy Integrity
Publisher(s): Institute for Policy Integrity
Publication Date: April 1, 2011
Full Text: Download Resource
Description (excerpt):
In the wake of recent unrest in the Middle East, rising gasoline prices have politicians from both parties scrambling to ramp up domestic oil production. Perhaps ironically, this scramble coincides with the one year anniversary of the BP Gulf Coast Oil Spill, the single largest offshore oil spill in history.
This regulatory report examines the economics of increased domestic oil drilling, in light of large uncertainties associated with this activity. Many of the most important factors for making smart choices about oil drilling are uncertain: future oil prices cannot be perfectly forecasted; science has a limited understanding of the scope and consequence of environmental damages from oil exploration, production, and accidents; and the rates of technological innovation for both production improvements and cleanup technologies are difficult to predict.