Course:ECON371/UBCO2011WT1/GROUP5/Article7

• Econ 371 Winter 2011 Main Page

Summary

A new government mandate has been passed to reduce operation risk and human error. The Safety Environmental Management Systems, or known as the SEMS program, will be identifying problems in every division of operation in off shore drilling. With this new mandate, companies have to tweak their old programs in order to match with this new one. With Auditing beginning to find problems and defects, companies are asking for a transition period for them to adapt to the new program so they can avoid their fine. The SEMS program decided that they’d have close inspection to find problems, dispute it, and resolve them. Rather than kicking companies out of business with fines, the regulators should cooperate and create safe working environments during the transition period. In other cases, the conservation group Oceana says SEMS wont make much of a difference to the current off shore drilling industries. These companies probably adapted a program similar to SEMS after one of the drilling companies had a disaster happen. SEMS, in the conservative’s point of view, is an overregulation to most of the industry.

Analysis

This article shows that if companies had the choice of instituting a plan and increasing abatement costs and not doing that anything about a spill or wreck on a rig the company would simple do nothing. So the government has to step in and make sure that for the good of not only the environment but for the safety of the workers on such rigs. The only reason companies are now implementing these new safety procedures is because the US government is going to be auditing the companies that are drilling within US waters.

Prof's Comments

The big stick is important. You are right that the companies would not be doing much without it.

I would like to see this analysis developed more.

6/10