A version of this FPIF commentary will also appear on the Triple Crisis Blog, global perspectives on finance, development, and the environment.

The Deepwater Horizon disaster has the familiar ingredients of deregulation, deception, and destruction that characterize the relations between governments and multinational corporations. It was a man-made disaster, like Chernobyl.

And like the global financial crisis, it all started with the explosion of a bubble, this time of methane gas.

The Wages of Deregulation

In 2008 the Bush-Cheney duo lifted the executive order banning offshore drilling, and the House of Representatives agreed to let a 26-year-old moratorium on offshore drilling expire. Deregulation was moving full speed ahead.

Monitoring agencies were unable to keep pace with British Petroleum’s (BP) operations. Marine biologist Rick Steiner, an expert on oil spills from the University of Alaska, has documented how BP cut corners in its hurry to disconnect and prepare for a production rig. In addition Steiner reveals the blowout preventer (BOP) was not built as designed, included some demonstration parts, and had a failed battery.

Offshore drilling operations in Norway and Brazil use acoustic triggers and remote control cut-off devices to enhance the capacity of BOPs to work adequately. But a report commissioned by the Minerals Management Service (MMS) stated “acoustic systems are not recommended because they tend to be very costly.” Was former vice president and oil man Dick Cheney behind the Department of Interior’s decision not to mandate the valve for off-shore oil rigs? Nor did the U.S. government mandate the simultaneous drilling of relief wells, as required in Canada’s Arctic. Only now, with the failure of the “top kill” technique, is BP drilling these wells, and they won’t be functional before August.

The MMS also routinely overruled its staff of biologists and engineers, who had raised concerns about the safety and environmental impact of certain drilling proposals in the Gulf and in Alaska. The U.S. government permitted BP and other oil companies to drill with cutting-edge technologies without the usual permits.

Were the government regulators doing their job of regulating, or were they in bed with the industry?

Parallels to Financial Crisis

British Petroleum bragged about being at the frontier of technology. Goldman Sachs and the other behemoths of the financial world also claimed to be at the cutting edge of financial innovation. They all lied, hid information, and speculated behind a facade of corporate professionalism built through their advertising campaigns.

Just like the derivatives that took junk assets into every balance sheet of financial institutions, the Deepwater Horizon disaster has no frontiers. The gushing oil will eventually threaten not only Cuba and Mexico, but it will end up reaching the Gulf Stream. It might even make it to England and several world financial centers.

Many are the scams concocted in the financial world, from structured investment vehicles carrying subprime mortgages to credit default swaps and short-selling. They call it business on Wall Street, but it’s really weapons of mass financial destruction. British Petroleum also has a long list of accidents and incidents, all leading to the loss of life and oil spills (including the explosion in its refinery in Texas City in 2005 that cost 15 lives). There will probably be no bailout for BP, but there already exists a liability cap of $75 million.

That cap is invalid in cases where criminal negligence exists. The U.S. Attorney General has already launched a criminal investigation. Already there is circumstantial evidence that BP’s technicians altered the sequence of events and ordered the removal of drilling mud before the cement cap was put in place in order to gain time. This was done in spite of the fact that BP was already working with a damaged blow-out preventer. If this is confirmed, BP will have a hard time convincing authorities that this was just an accident.

Who’s in Charge?

BP has used more than 800,000 gallons of oil dispersant Corexit on the surface and underwater. Corexit is manufactured by Nalco, whose board includes at least one BP executive. Because Corexit is less efficient and more toxic than other dispersants, the Environmental Protection Agency requested that BP use another dispersant. BP quickly overruled this request, showing who’s in charge.

As he came into the White House, Obama became a hostage of the financial system and essentially gave Wall Street a free hand in solving “its” problems. For weeks after the rig exploded, BP appeared to be the main entity in charge of the response to the oil spill.

Obama’s lack of firm leadership has prompted comparisons with Katrina. But in fact, the similarities with Chernobyl are stronger. Katrina was a natural disaster, while the Deepwater Horizon is a man-made catastrophe related to greed and cost minimization.

Just as the global financial and economic crisis is entering its most dangerous phase, the oil spill is now developing into a catastrophe that will affect ecosystems and livelihoods for decades. It is more like Chernobyl than anything else.

When Unit 4 in Chernobyl exploded on April 26, 1986, it not only caused the worst disaster in the history of nuclear technology. It also shattered the technological prestige of the Soviet Union, boosted concerns about the nuclear safety of the remaining plants and forced Soviet authorities to be less cryptic. Ultimately, Chernobyl ushered in the demise of the Soviet Union. Perhaps the destruction of the Deepwater Horizon will open the way for a new era of accountability and the end of corporate capitalism in the United States.