Small Government ‘Hands Off’ Approach Fails Miserably In North Dakota Oil Boom

There’s a dark side to North Dakota’s oil boom, which mirrors larger, ongoing problems with the oil industry. Within the last ten years, there has been a huge boom in and around Williston, North Dakota, because advances in fracking technology allowed oil companies to open up the Bakken oil shale patch. North Dakota and the oil industry hail the boom as a great success, as it made North Dakota our largest oil producer aside from Texas. But there’s much more to the story, much of which has to do with the Republican state’s “small government” mindset.

The New York Times analyzed information from the North Dakota Industrial Commission, and found that more than 18 million gallons of oil and chemicals have spilled, leaked, or misted into the air, over the last eight years. That number does not include so-called “non-toxic” spills, which may include things like contaminated fresh water.

Trying a “more collaborative, less punitive” approach in North Dakota

North Dakota is trying to have a more collaborative and friendly relationship with the oil companies fracking there, according to the Times. They regularly only accept 10 percent of the total fine for a spill or other violation. The state feels that punishing these companies harshly will ultimately stick their residents with the bill, as companies bankrupted by heavy fines and cleanup costs will simply walk away.

Worse, North Dakota also lies to its residents. The Times spoke with Lynn D. Helms, director of the Department of Mineral Resources. Helms gave a speech to residents in the town of Antler, which is near the Bakken oil shale patch, telling them that spills per well were either steady or falling. In fact, the Times found that the number of spills had risen sharply.

When confronted with the actual statistics, and asked if he felt they were actually preventing spills, Helms said:

“We’re doing okay. We’re not doing great.”

North Dakota demonstrates why regulating industries is necessary

What’s happened on the Bakken oil shale patch is actually typical of the larger oil industry. They don’t care who they hurt, or what they contaminate. And the punishments currently assessed don’t work, because these things keep happening. North Dakota is a prime example of why regulation of the oil industry must be strict and harsh, rather than collaborative and lenient.

There’s a deeper problem that’s compounding these issues, too. North Dakota has, for a long time, been mired in economic decline. When the oil industry wanted to open up the Bakken oil shale patch for drilling, North Dakota saw the jobs, saw the dollars, and saw economic salvation.

That’s what prompted the state’s government to embrace the oil companies, instead of hound them with harsh oversight and regulation. They didn’t want the oil companies to decide to head to friendlier states with better weather and easier access to the markets.

The fines, even their full amounts, are a joke. The Times reports that, after oil waste ponds overflowed and their sludge badly contaminated neighboring farmland in 2011, the state assessed a fine against Hess Oil for a whopping $112,500 (Hess paid the whole fine). However, Continental Resources, which has the biggest operation on the Bakken oil shale patch, argued over its responsibility.

Oil companies in North Dakota are as bad as oil companies elsewhere, because they can be

In 2010, Forbes said that Harold Hamm, the CEO of Continental Resources, was a bright spot in an industry suffering from a severe public relations nightmare. Except that Continental’s spills have accelerated, and they deny responsibility for disasters like the overflowing waste pits. How is Hamm a bright spot when Continental Resources is as bad as everyone else?

That happens with many other oil spills, too. Exxon has tried to duck responsibility for the Mayflower pipeline spill in Arkansas last year. BP, Transocean and Halliburton all tried to duck blame, and then blame each other, for the Deepwater Horizon disaster in 2010. In other words, they have no reason to try and improve safety. Punishment means they won’t accept responsibility, but even a lack of sufficient punishment doesn’t work.

In fact, Sarah Vogel, who used to work for the Industrial Commission in North Dakota, summed it up beautifully, according to the Times piece:

“To me, announcing publicly that it is your practice to suspend the bulk of all fines makes a mockery of the whole enforcement system. Should we tell the general public that if they’re caught speeding, the fine is $100, but they only have to pay $10? It’s an invitation to violate the law.”

This is what happens when governments don’t police corrupt industries. It’s why Keystone XL is so likely to be a disaster. It’s why Deepwater Horizon blew. North Dakota is a shining example of what happens when governments are soft on companies worth billions of dollars. “Hands off” doesn’t work, or they will run roughshod over everyone they can.


Featured image by Joshua Doubek – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

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