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07/04/2010

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Of course, to justify their poor preparation to combat such a large leak of oil, Hayward may have greatly understated its probability. As Posner emphasizes, it is very difficult to estimate with any precision what is the actual probability of highly infrequent events, and such a leak would fall within this class. So if the annual probability were really more like 1/10,000 rather than 1/1,000,000, the expected discounted cost would be about $200 million, a more considerable sum. These examples show that only when the annual probability of such a disaster was reasonably large would it have paid for BP to spend a lot to prevent such a leak from happening.

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Oil spills and oil leaks imposes a great danger to all of us. We must do our part so we can avoid disastrous things such as this one.

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