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Oil Spill's Ripple Effect

Interviewee: Michael A. Levi
Interviewer: Toni Johnson
May 4, 2010

The oil spill resulting from last week's explosion of the oil rig Deepwater Horizon (Nature) in the Gulf of Mexico has led to an environmental disaster unlike anything the United States has seen in the last twenty years, says Michael Levi, CFR senior fellow for energy and the environment. In a recent blog post, Levi examines the economic impact of previous oil spills. "What you see is that the impacts of oil spills are nonlinear," he further explains in his CFR.org interview. "We tend to try to find a per gallon impact of spills, but the bottom line is, when you have something of this size, the impact doesn't just scale with number of gallons or number of barrels spilled, it has to do with the impact on whole ecosystems and whole commercial enterprises."

The spill follows an Obama administration policy announcement in February that would have opened up large swaths of U.S. waters to new offshore oil and gas exploration in a push to improve the political chances of the impending climate legislation. For the oil industry, the spill means it is likely to be "very difficult to expand production in the United States any time soon," says Levi. But he says U.S. energy security does not hinge on increased offshore drilling. "Ultimately U.S. vulnerability because of oil consumption is only going to be addressed through large efforts on the consumption side," he argues.

He says on climate legislation, things are more complex. "Those attracted to the bill by the potential for expanded of oil and natural gas are probably still attracted to potential for expanded offshore oil and gas," Levi says, but notes the prospects for garnering support through drilling for climate legislation under these circumstances in the near term are small. However, he says the spill could increase interest in alternative technology for transportation, such as biofuels and natural gas for transportation.

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