(Also also: for some reason your blog keeps insisting that I fill out my name/mail/url each time despite it having apparently successfully saved them the first time.)

Which of course only leads to the question of why any company wants into the business. (And who knows, maybe none of them are going to henceforth?) I’d guess that it’s not a little bit of human perversity at work here: oilmen want to dig for oil, otherwise all of their lifelong investment in the skills of oil drilling is for naught. The ocean floor is a potentially new and large untapped source of oil, so Q.E.D.

More precisely: If it’s worth BP’s while to spend $X billion getting this project going (with its own funds), then i’d expect it to be worth $(X+1) billion to No-Name Inc. to take on the same project (with borrowed funds). So why does BP end up with the project?

Never get into an arms race with someone who already has nukes.

There presumably exists at any moment a shaky, not-well-defined detente between the state and any corporation capable of and likely to produce externalities that the state may have to clean up. Gambits like spinning your riskiest assets/projects into separate corporations to keep them off the mothership’s books get used all the time on a small scale, and everybody is happy with the arrangement: it’s a wink and a nod, but the state gets tax revenues from a thriving private sector, and investors get to tell themselves (sometimes even accurately) that they are managing their risk appropriately. Like many wink-and-nod arrangements, the trick to keeping it running is to not be seen abusing the privilege in public: do something stupid like, for instance, destroy the entire gulf coast fishing industry (just for a start), and the state might very reasonably decide that yesterday’s “prudent risk management” is in fact “conspiracy to evade justice” and void all of your clever contracts at gunpoint.

Perhaps more succinctly: in case of disaster, provably having some skin in the game is a helpful token of good faith.

Is there a subsidy that a smaller company could not fully exploit?