The impact of the explosion on the oil rig in the Gulf of Mexico, the subsequent environmental disaster due to the massive oil spill, and the US Governments tough stand on liability (Indians should take a leaf out of US in this regard, just compare our weak kneed response to Bhopal Gas Leak which killed more than 10,000 people, and the US's response of demanding billions of dollars when the death toll was a mere 11) has far reaching consequences.
While, on the one hand, this tough stand of US shall result in the Oil Industry becoming more socially responsible in the future, it is more likely that off shore drilling will cease to be less attractive in the years to come. Even today, many companies shy away from off shore drilling, considering it too risky. The risk for them on off shore drilling has just increased considerably. On the one hand more expensive equipments have to be purchased, additional safety measures implemented and the insurance companies shall demand higher premium - all of which leads to cost of production shooting up. No oil company is going to absorb this cost. And of course, this cost will be passed on to the ultimate consumers, that will push the oil prices up, which in turn can have a cascading effect on the inflation.
In the long run, this disaster could be the best thing that could have happened in the energy sector. With on-shore oil recovery becoming more expensive, due to non discovery of new assets and dwindling reserves in the existing wells, off-shore was considered to sustain the production levels. With off shore becoming riskier and more expensive, the world might just speed up the research on alternate fuels, which can't be that bad a proposition.
