Oil spills, workplace safety and firm size: Evidence from the U.S. Gulf of Mexico OCS

Abstract

Accidents on offshore oil and gas platforms have declined dramatically during the past decade, yet concern about safety and environmental damages from offshore operations seems to have intensified. In the U.S. Gulf of Mexico, some of this concern is premised on an offshore restructuring caused by major oil and gas companies investing more heavily in exploration and production (E&P) in foreign countries, leaving more domestic E&P to smaller 'independents' assumed to be less careful and capable than majors. Both industry and regulatory specialists believe this trend will increase the risk of accidents and oil spills. However, our analysis found no evidence that more independents would threaten workers' safety, or the marine environment. In fact, on average independents had a slightly better record than the majors. We also found that the Minerals Management Service's platform inspection program had a beneficial and statistically significant effect, decreasing both offshore accidents and oil spills.