Caribbean Oil Spill – What if? By Eion Maison

The Caribbean economies would be adversely affected by the oil spill in the Gulf of Mexico should the prevailing winds and the uncapped orifice persist. The concern here is what if there should be an oil spill in the Caribbean, since the Caribbean sits far above possible oil bearing strata. What could we do? No, what should we do?
At present there is no active exploration of oil in the Caribbean, outside of Trinidad and Tobago, but the potential, and possibilities are likely. In the past there have been interest and geophysical research in countries such as Cuba, Guyana and Suriname, Barbados and Grenada, to name a few.
The risk of oil exploration in the Caribbean is exacerbated by the depth of the crude oil and the dearth of technology to manage such a project. The deep sea exploration possibilities work out to be over seventy five percent deeper than the 22,000 feet in the Gulf of Mexico presently.
The management of such a risk could be off set with an exploration fund in an escrow account supervised by the Caricom Secretariat and an experienced regulatory body. The conceptual and empirical issues should also be studied now, in preparation for yet another risk to our small Caribbean economies. Caribbean economists now have to examine through models and research, how much money should be kept in such a fund. There is a 1986 study entitled ‘Estimating the cost of Oil Spill from the Amoco Cadiz Incident’. This examines the principles of compensation and equivalent variation by Freeman, 1979 and Just et al.
To date, June 2010, the costs are quoted at $1.25 billion dollars in containment efforts and cleanup with a possibility of this cost tripling in the coming weeks and months. Caribbean states are now informed of the risks and response on yet another disaster that could affect all of us, should we not hedge it.