Why the oil spill isn't BP's fault

No, the ultimate cause of the problem is something as basic as a lack of private property rights. Yep, that's right, a lack of private property rights over gulfs, oceans and shorelines is the direct and ultimate cause of the BP oil "disaster" and the Exxon Valdez oil "disaster", and any other oil disaster you can think of.

A few weeks ago Daily Reckoning Dan Denning referred to a term known as tragedy of the commons.

The gist of the argument is that property that is either owned communally or by no one in particular is cared for less than property that is freely owned by a private individual or organisation. You can see that in almost every instance in society. In most cases where property is privately owned and where the owner values the property, it is better taken care of than property that is publicly owned.

Which is exactly the reason why the oil spill in the Gulf of Mexico occurred.

A lack of private property rights over seas and oceans naturally means that individuals and organisations are less careful about what they do in it or to it.

As an aside, take for example the case of the young American lass who was trying to sail around the world and had to be rescued in the Indian Ocean at a cost of $300,000 to the Australian taxpayer. Do you really think that if the oceans were privately owned the owner would allow a 16-year-old to sail through unassisted, without paying a fee to do so, without insurance should an accident occur, or without paying the private owner an insurance fee in the event of a rescue being needed? Something not too dissimilar to the fees you pay to the RACV or NRMA I suppose!

Anyway, when nobody owns something then there's no recourse for compensation should you do any harm to it. Even if it's publicly owned property the quest for compensation will be less rigorous than if it's privately owned property.

Simply because of the lack of a profit motive and the lack of direct ownership. If oil washes ashore at a theme park located on a private beach and a public beach, odds are that the private owner will act faster to clear the mess as it could have an impact on revenues and profits.

But the public beach would have less of an incentive. The clean up process would probably need approval from committees or boards. It would need to be the "right" kind of cleaning process, not just any old process, and so on. The bureaucrats would be in their element. Looking busy doing nothing.

Then there's the matter of private ownership of the oceans. It's not such a crazy idea you know. It's no crazier than private ownership of land.

Of course we'll agree that it's harder to erect a fence in the middle of the Atlantic Ocean, but that's the beauty of technology that can simply and easily record boundaries electronically on maps. Just as national waters are recorded on maps today.

Consider the situation in the Gulf of Mexico right now if specific areas of the gulf were owned by the private sector. As an owner of a particular area you'd be keen to ensure that those using it took good care of it. Not only because it would make it more attractive for others to do business there - for example, other oil drillers or fishermen or tourist operators - but also because of the consequences of inappropriate actions by firms in your property could have on adjacent sea and land properties.