1. Drilling produces benefits, not just costs. As pictures of the spill appear nightly on television screens, it is easy to forget that oil has value.These points have been largely overlooked in much of the (over)reaction to the spill. Good analysis of the situation should take them into action.
2. Incidents like the Gulf spill, or the Exxon Valdez disaster in Prince William Sound, Alaska, are horrific but rare. Drilling has occurred for decades in locations around the world, with only a few incidents even approaching the harm of the current situation. This incident may show that deep-water drilling is too risky, but it might instead be just a perfect storm of ineffective regulation, poor decision-making, and bad luck, with minimal chance of recurrence.
3. The environmental damage caused by the spill, and the lost income from fishing, tourism, and so on, are enormous but finite. Eco-systems (such as Prince William Sound) recover from oil spills to a substantial degree, and within decades, not centuries. We should not understate the damages, but we should not overstate them either.
4. Even if the costs from drilling are much greater than was recognized pre-spill, that does not make Cap-and-Trade a good policy. The risks from drilling mean the social costs exceed the private costs, so policy should raise the private costs. One approach is less drilling, or more regulation, or increased liability for drillers; this discourages drilling relative to other sources of energy. A second approach is higher carbon taxes, which push markets to substitute away from oil.
Update: Bryce Edwards suggests this article: Let’s put the Gulf-spill crisis into perspective