Sunday, December 18, 2011

Oil in Brazil

We hear a lot about the need to engage Brazil more, which is perfectly reasonable. Beyond the diplomacy of the United States government, however, U.S. companies also need to be on board. With the case of Brazil's fine of Chevron, this Forbes piece illustrates quite nicely what messages are being sent. In short, we are going to spill oil, and not only will you accept it, but you should be grateful we're even investing in the first place.

No doubt the headline amount of this suit is just for show and Brazilian regulators are pragmatic enough to appreciate the risks inherent in forging a new generation of ultradeep oil exploration. If Brazil scares off the best operators in the business it will be a very long time before Petrobras is able to build out these offshore oil fields on its own.

In addition:

And vitally, no one died in Chevron’s spill, versus the 11 killed when the Deepwater Horizon blew up.

So if nobody dies, then really there's no problem, is there? Further, if a spill isn't as bad as BP's, then it's not really bad at all. The hubris is disheartening, though of course is nothing new.


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