The oil spill and agriculture

The tragedy of the massive oil leak in the Gulf of Mexico might seem to have a remote connection with agriculture, but the longer the oil spews from the BP well and the greater the damage done to the environment, the influence of this event increases.

It is a month since the BP-operated rig sank 52 miles offshore on April 22, after an explosion killed 11 employees. Disputes rage as to how much oil has flowed into the sea but at lowest estimates, more than six million gallons of crude has erupted. Last week, the drama escalated as the slick reached the coastline.

Residents of Louisiana think they are still offside with their Gods with this second massive impact on their shoreline after Hurricane Katrina blew in almost 5 years ago. The attention from Government has been stronger this time. So it should - the mounting ecological and economic damage will become a political liability for Obama before November's congressional elections unless he shows very strong leadership in the coming months.

The effect of this tragedy on hearts and minds of Americans will however depend on the extent of coastal damage, and what is on other TV channels when the news coverage of the mess reaches saturation. Not much of a toss was given about the flooding of New Orleans. Possibly less will be given for marshes and birdlife. The green movement will make the most of this disaster but there is much to compete with in the entrenchment of oil in modern lifestyles.

Obama has warned that the very future of the industry hinges on assurances such a disaster "never happens again". He has given a presidential inquiry six months to work out how the oil industry can prevent and mitigate the impact of any future spills.

But for us, there are two potential effects of this event (and its aftermath) on agriculture.

Firstly there is the effect on emissions trading. The spill came as US politicians were debating a climate change bill, affecting US energy sources in future. Timing was everything for Obama when he swept to office, and all timing since has been bad. In order to get opponents to climate change action across the line, Obama had talked up hopes of placing more dependence on off-shore Gulf drilling as a key part of addressing energy self-sufficiency.

The vagaries of the causes of climate change and the new complexities from this event could make it much harder for Barack Obama to sort out a policy response. If he fails, it weakens the political will for a strong Australian government response whoever wins the 2010 election.

The second potential effect is on the biofuel sector which will no doubt claim greener credentials, even though the same oil companies that drill offshore are processing and pumping ethanol into cars. Despite the illogical energy impacts of a biofuel mandate, this is America we are talking about and far crazier things are now possible.

But it’s not likely though that the BP brand will disappear from country servos over this mess. Exxon is bigger and stronger 20 years after its Valdez tanker ran aground and spilt its cargo onto the pristine Alaskan coast, but BP will at least have a bit of work to prove its clean and green logo has real meaning in future.