BP, Black Swans, and Nuclear Energy

The Gulf oil spill is a black swan, not because swans have become covered with oil, but because it is something that happened which, until it did, seemed so unlikely. At least it seemed that way to most of us. Had we known how reckless and irresponsible BP management was, we might have thought differently.

In fact, the BP's management treated the odds of failure in each portion of their drilling as so remote that they consistently took the least expensive, least safe option in drilling their well. The problem with this is that if you have a choice between a method with a 5% likelihood of failure, and a 1% chance, it may seem far more cost effective to go with 5%, since removing all risk of failure in anything can be very expensive. But when you are doing this on choice after choice in something as complex as deep water drilling, where failure of any function can be catastrophic, you keep adding to the odds of the type of disaster that happened. Simple math: if you have one thing that can cause a disaster with the odds being 5%, it is not the same as having 2 things, each of which can cause a disaster and has odds of failure of 5%. In the second instance, the odds are now close to 10%.

If you look at the information that has come out about how BP treated risk management, they seem to have not understood this.

Now, let's talk about nuclear energy. As we look for ways to create more electricity while reducing carbon emissions, nuclear energy had to enter the conversation. It is a very clean way to produce energy, at least as far as climate change causing carbon emissions are concerned. However, in order for nuclear energy to be safe, it requires responsible risk management, as a BP-like failure at a nuclear plant could be far more of a disaster, ala Chernobyl. That would mean, if we were to choose to build more nuclear power plants, we would have to have extremely effective safety regulation by the government.

Now, assume we have a bunch of nuclear power plants, run by big energy companies friendly with a corrupt administration who hates government regulation, like the one we just had in Washington. Of course, we don't have to worry because the free market will ensure that the companies running the plants will make sure to do it safely, not in a way where incentives cause managers to cut corners to increase their bonuses, right? That's what the Bushies thought would happen on Wall St., and in our food supply, and in the "awl bidness", as they would pronounce it. (By the way, I am quite disappointed in the Obama administration for not un-doing every Bush policy, top to bottom, on day 1!)

See the problem. If we had a large nuclear power industry with a Bush-like administration, it wouldn't before we'd have the nuclear disaster in this country that we are so afraid that terrorists might create.

Which brings me to a funny thing about the conservatives: they were willing to trash the constitution to make the likelihood of another terrorist attack zero, but not even willing to do the jobs they were legally required to do to protect citizens from disasters caused by a reckless private sector.