Risk Perception Gap Endangers U.S. Energy Policy, Economic Growth

Researchers with the U.S. Bureau of Labor collect and organize a great deal of data that serve as safety performance indicators. One of these metrics, the total recordable incidence rate (TRIR), details the number of significant work related injuries relative to hours worked. According to 2007 reports, America’s offshore industry boasts an impressive 1.4 TRIR, while our real estate and construction sectors weigh in at 3.3 and 5.1 respectively.

Despite the wealth of objective analysis that underscores the safety of U.S. oil and natural firms, politicians, environmental lobbies, and other “off oil” advocates (we’re looking at you, New York Times editorial board) continue to hype the risk of traditional energy sources and then use those risks to justify onerous regulations and outright bans. With so much at stake in drilling policy in terms of America’s economic and energy welfare, policymakers must careful weigh potential benefits against real costs.

President Obama recently announced a reversal in his intention to open up portions of the Eastern Gulf and the Atlantic coast to exploration and production of the nation’s vast natural resources. The tens of thousands of unrealized jobs and billions in economic activity which will likely not be realized as a result only add to the 20,000 Gulf jobs already lost as of September 2010 as a result of the deepwater drilling moratorium.

This kind of fallout could very well be part of the reason many respected scientists and experts refused to endorse the Interior’s ban. When the White House edited an agency drilling safety report to make it appear as if they had, several set the record straight, warning that the moratorium “will have immediate and long term economic effects” and “an argument can be made that the changes made in the wording are counterproductive to long term safety.”

If long term safety is our shared goal (and indeed, it should be), then isolated incidents — like BP’s April 20th explosion — should not disproportionately determine future policy. Risk analysts like David Ropiek warn against knee-jerk regulatory responses to catastrophes, since these events distort the way we perceive overall risk of a particular activity. Just as the FAA doesn’t halt all air travel after one tragic crash and local police wouldn’t shut down all travel after one car accident, fossil fuel regulators should not impose sweeping restrictions on all U.S. drillers due to the poor choices of a single actor.

To understand the magnitude with which risk perception affects our perceived reality, simply recall the panic surrounding the SARS epidemic of 2003. Despite outrageous amounts of media attention, not a single American died of this disease; it didn’t pose a serious risk to the country. The only real damage done was in Chinatowns across the U.S., where a sharp economic downturn was felt as nervous tourists unnecessarily avoided heavily populated Asian neighborhoods. Clearly, medical data rather than provocative headlines would have offered a more accurate risk assessment in this case.

Similarly, a group of individuals who possess thorough understanding of engineering, industry standards, and environmental science should carefully examine offshore drilling practices and any problems associated with them to determine how to mitigate risks in the future. These are the same kinds of individuals responsible for constantly improving the technology and operating practices that have enabled the industry enviable track record to date. Between 1969 and this spring, companies drilled over 14,000 deepwater wells around the globe without incident. And for shallow water, the number of successes tops 50,000 wells in the last 41 years.

As we emerge from the recession, it is important that policies work to enable, not restrict, economic growth. America’s oil and gas industry is an important part of our economy, supporting millions of jobs and providing a stable and affordable supply of energy upon which all other growth is made possible. Our politicians should not get caught up in the ‘perception gap’ to the detriment of good American jobs.