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Number 574, June 13, 2010

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Who's to Blame for Spilt Oil?
by Rob Sandwell

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Attribute to The Libertarian Enterprise

By now you've all heard about the BP oil spill, formally called the "Deepwater Horizon Oil Spill." And no doubt, if you've been listening to the major media outlets, you've heard how this is just further proof of the inability of the private sector to properly police itself, and the inadequacies of private concerns with regards to safety and environmental husbandry.

So as usual, something horrible happens, and it's the fault of the private sector. And of course, the only solution is to have the government step in and, with a heavy heart and against it's wishes but only in the best interests of the people, take over and exert absolute authority over what was formerly the "private" industry.

But here's a few things many people won't know if they only listen to the story that the government and the mainstream press are telling.

First of all, a brief history of BP.

In 1901 William Knox D'Arcy, a British lawyer and land speculator, made a deal with the Shah of Iran to have exclusive rights to prospect for oil in the Iranian territories. In exchange he paid the Shah £20,000 pound sterling, shares in D'Arcy's company, and a promise of 16% of the company's future profits. The company he started was known as the Anglo-Iranian Oil Company. (AIOC)

Twenty years later the company that he had formed gave future prime minister Winston Churchill a bribe of another £5000 to lobby the British government to allow them a monopoly to exploit the Persian oil resources.

The company continued to grow until the mid fifties, when the Iranian government nationalized it. This prompted the British Government, with cooperation from the American government, to engage in a violent coup d'état, known as "Operation Ajax." This resulted in the overthrow of the democratically elected Iranian government, the autocratic rule of the Shah for nearly thirty years, and the return of the AIOC, who would soon change their name to the British Petroleum Company.

Then in 1979 the government of Iran was overthrown again and the Shah was replaced with the Ayatollah Khomeini, who broke all existing contracts with BP and signed new agreements under a new profit sharing structure which would give 90% of the profit to BP, and 10% to the Ayatollah and his supporters.

The British government would later sell it's controlling interest in the British Petroleum Company to nominally private interests, although they would exert intense pressure to block certain concerns, such as the investment arm of the Kuwaiti government, from purchasing those shares. In the mid nineties the company would be led by John Browne, a British engineer and businessman who would later be ennobled by the British crown and made Baron Browne of Madingley.

Ok, that's a little history, but there is even more behind the story.

You see, what we have here is a company which was founded on the premise that the Persian government of the time, in return for money, shares, and a percentage of the profits, would use their guns to prevent anyone else from competing with Mr. D'Arcy. Then, when he became successful, he paid the British government to use their guns to prevent anyone outside the country from competing with him, in return for controlling stock in the company. Then, when the company grew large enough to be worth looting, the Iranian government decided to steal it. Not entirely from private investors as you may have been told, but rather mostly from the British government who already owned fifty one percent of it. It wasn't being nationalized, it was being renationalized by a competing state.

This of course offended the British government. After all, where did the Iranians get off stealing what they had already accepted as a bribe? So they wanted the American government to help them steal it back. Of course the Americans wanted something out of the deal, so in return for their help in "Operation Ajax," they negotiated a contract where BP would no longer have a monopoly on exploiting the oil reserves in Iran. Instead, they'd have to share it out with major American oil companies as well. This was enough to buy the services of the Central Intelligence Agency, which did what it does best, and sowed the seeds of violence and terrorism which reverberate to this day.

As a part of that deal BP would also have to give smaller shares of the Iranian oil rights to the Royal Dutch Shell company, an oil company created in 1890 by a royal charter granted by King William III of the Netherlands, and to Compagnie Française des Pétroles, a French oil company nominally privately owned, but heavily supported by the French government and granted by that government a 23.75% stake in the Turkish Petroleum Company which was given to France by Germany following the first world war.

So we have a company originally backed by the guns of two different governments, then fought over by those governments and eventually shared out amongst the governments of several other countries, and then sold into private hands, only to have the executives in charge of the company made into Lords in the governments of their countries of origin. There are also currently two knights on the board of BP.

Now, which part of this sounds like private industry to you?

The part where they bribe governments to threaten death against any would be competitors? Or the part where they bribe governments to overthrow democratically elected leadership which is opposed to their continued operations?

How about the part where they spent 16 million dollars to lobby congress last year in order to have energy regulation written in their favor, even after Lord Browne said in 2002, "as a global policy...from now on we will make no political contributions from corporate funds anywhere in the world."

From where I'm standing, this doesn't look like a company that has very much at all to do with the "private sector." In fact, it seems to me that such a company could never come into being, nor enjoy anywhere near its current level of success as the fourth largest company in the world, in the absence of statism. Especially after it's history of "incidents," of which the current oil spill is only the most recent, and only arguably the worst.

And what about the property on which the oil spill, and indeed many of the past "incidents" took place? Several of those incidents have taken place on land owned by the United States government, including the Alaska North Slope and Prudhoe Bay. In this case it was the Gulf of Mexico.

The Gulf of Mexico is also owned by the United States government, and they sell limited use leases to private concerns for purposes such as drilling for oil. As Offshore magazine notes here, this year 77 companies put in 642 bids on 468 tracts totaling more than 2.4 million acres. The area where the current spill occurred was just such a tract.

But does the government really care about how that property is used, so long as they get their take? In his book, Democracy, The God that Failed, Hans-Hermann Hoppe proposed that democratic governments are less likely to carefully husband their resources than monarchic governments. That may or may not be the case, although I think he makes a strong argument, but I think we can certainly show that they are less likely to exercise carefully control over those resources than truly private concerns would.

If the government, democratic, monarchic, or otherwise, allows their land resources to be destroyed or misused, who can stand and hold them accountable? The people? History would seem to show us otherwise. Countries such as the U.S.S.R., which exerted absolute authority over environmental regulations, had some of the worst histories of pollution and waste. In a democratic state, the offending politicians might be removed from office, but they will simply be replaced and the system itself will continue in perpetuity. But politicians and their appointees are rarely held personally liable for their actions. How many Bush administration officials have been tried for torture, treason, or crimes against the constitution?

But in a free society, where the land is all privately owned, the owners of that land would have a strong vested interest in protecting their investment and preventing pollution from spilling onto their neighbors land. If they failed to prevent something like the "Deepwater Horizon Oil Spill," they would be held personally responsible. If they polluted their neighbor's land, they would have to make reparations for the damages. If they failed to do that, they might be unable to continue to engage in business.

The reality is that the oil spill is the result of a company which could only exist in its current form because of the violence of states. Now it's leasing land from states, and creating environmental disasters without historic precedent. And now the United States government is using its law enforcement arm to restrict access to the spill and its effects on the gulf to journalists, scientists, and the public in general.

They created BP. They leased them the land. And now their using guns to keep people from learning the true extent of the disaster. And on top of everything else, they're already making statements about who's to blame, and who's gonna pay, and who in BP should lose their jobs as a result, and how they're going to use the money they stole from you and I to "fix" the problem.

And they want you to think that the "private sector" is to blame. Absent the guns of the state, the private sector would never have created the company, never have created the disaster, and never have been brazen enough to try to hide the true extent of it from the public.

Every time something like this happens, the statists and their lackeys in the media want to blame the private sector and hold up the state as the noble hero who will ride in and save us all. They want to pretend they had nothing to do with creating the problem, it was all those greedy capitalists, and that they are only there to help.

Is anybody still falling for that crap?

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