Poor BP

The latest inanity coming from the BP oil spill fiasco was US Representative Joe Barton R-Tex apologizing to BP because of how unfairly the company has been treated by the US government. He called the $20 billion compensation fund demanded by Obama a shakedown, and said even if they were wrong, it wasn’t right for the government to demand the money. The Repug leadership quickly moved to disown his comments.

In the Exxon Valdez case, it took 20 years of legal wrangling to wrest a mere $500 million out of Exxon. A jury originally awarded damages of $5 billion but that judgment was easily overturned by a higher court. After all, five billion is practically 10% of one year’s profit. They did pay some compensation right from the beginning but nowhere, no how did it cover actual loses. There is no corporate weighing of right and wrong regarding legal culpability or claims against it, only a simple bottom line calculation. If the corpse thinks it can avoid a billion dollar judgment by spending $990 million on legal costs, that’s the track it works on.

David Cameron, UK Prime Minister, has cautioned Obama against bad-mouthing BP too seriously out of concern for the corpse’s stockholders and pension funds who hold its shares. Others are comparing it to Britain bashing even though BP is no longer officially British Petroleum, only BP.

I’m not totally without sympathy for pensioners who lose out as a result of BP’s reckless behavior and its casual, even malevolent, attitude toward safety regulations, but that’s the name of the game: investing is speculating, which is just barely, if at all, above gambling.

A lot of people have gotten the idea, from the corporate philosophy that’s been ingrained into the Western mindset that investing is fool-proof and as good as money in the bank. Conservatives have rightly understood that bringing lots of people into investing through pension funds and such, essentially tying them into the capitalist structure, would change their political attitude. What they didn’t count on was stocks going down; they’re only supposed to go up, you know.

It’s too bad so many large developed economies have lowered their interest rates to near zero in frantic attempts to stimulate growth, because that has left many people thinking they had no choice but to invest rather than just put it in the bank.

So why not invest in BP? It’s one of the world’s largest and most stable corporations, it’s always profitable and always pays good dividends. Well, if you were an astute investor, one not totally blinded by the hype, you’d look at BP’s safety record before you put your money into it. If you did, you’d find that BP not only has a sorry record of spills and explosions, but they’ve been cited by the US government for safety violations far more than any other oil company. In the last 3 years BP has received more than 700 citations for flagrant safety violations; all the other big oil companies combined received just 9. Moreover, many of those 700 also had the terms, ‘willful’ and ‘egregious’ attached to them.

The US supreme court has ruled that corporations are persons before the law with all the rights of individuals. Nowhere have they specifically ruled that corporate persons are allowed to get away with murder, but that’s the way it works. Flagrant, willful, egregious safety violations must be the corporate equivalent of drunk driving, yet a human person convicted of drunk driving causing death would be taken off the roads and imprisoned pretty damn quickly.

Not a corporate person, they just get paltry fines levied against them that are cheaper to pay than following safety rules and since the bottom line rules for them, they’ll break the rules as long as they can get away with it. It seems to me that the government in this case is almost as guilty as BP. Corporations are like young children: You can not expect a corporation to act responsibly without strong rules and serious consequences for not following the rules any more than you can expect a two-year-old to know right from wrong; they have to be taught, guided, restrained and disciplined.

Getting back to BP’s gusher, it’s still at least 2 months before one of the relief wells meets its target and the flow can be stopped. However, there’s no guarantee that will happen; both might miss the target. BP could have tried digging three or four relief wells at the same time for better odds but they cost $100 million each and the sea above the well might get quite crowded with that many drill ships working at the same time. So they’re crossing their fingers.

Meanwhile the worst case scenario is so terrifying it disheartens even a doomsdayer like myself. It postulates that BP may never be able to stop the gusher, but rather it’ll continue to flow until the reservoir is emptied of its billion plus barrels of crude. This comes partly from shoddy work to the point where the well was weak and vulnerable to begin with and is now losing its integrity. Leaks are appearing before the blowout preventer and in general the well is eroding quickly - because there are always abrasives in the crude - from the oil gushing out at very high speed and pressure. This scenario may be way off the mark but considering how little anybody really knows about these things, as good as a lot of other possibilities.

In order to stop the flow the relief well has to hit the gushing well far underground, very close to the reservoir, and it has to happen before the well totally degrades; that is, while the well is still intact, otherwise there’ll be no way to ever stop it and this spill will become a nightmare of biblical proportions – literally decades of oil spewing out and contaminating everything.

(If you want to delve into this fiasco on a more technical level I highly recommend adropofrain.net. For really technical stuff theoildrum.com is an excellent resource. I can understand the technical stuff, but only to a limit.)

It’s a race against time. If BP loses, it will certainly cease to exist and may well go down in the annals of corporate infamy as the worst of all time. You can bet that BP is already investigating splitting off its American operation so it can limit its liabilities and go bankrupt without taking the whole company down, which is why Obama’s extraction of $20 billion from BP was a very wise move.

If you are one of the shareholders of BP, pensioner or otherwise, who is due to lose your shirt, I’m sorry but that’s the way the game is played: You gambled, you lost. Which is nothing compared to what the Gulf has lost.

This ongoing eco-tragedy however has not stopped the US government from issuing deep

water drilling permits in spite of Obama mandating otherwise. It also has not stopped Republicans from demanding that Obama not enforce a moratorium on new drilling permits. What the heck, it can’t happen twice in the same area, can it? Those mendacious idiots can’t even wait until the full story is told and serious adjustments are made to drilling rules and procedures that might make another blowout less likely. Drill, baby, drill.

Oil Be Damned Update II

In British Petroleum’s latest gambit to try to stem the flow of oil out of its gusher in the Gulf, they successfully inserted a 4 inch (10 cm) pipe into the well, which looks to be at least a foot wide, to siphon off the oil. At first we heard they were getting 1000 barrels per day or 20% of the flow, then they upped that to 2000 barrels or 40%. Last word was they were up to 5000 barrels which should have completely stopped the flow since we’ve been told right along by BP (and parroted by the government) that that was the total amount being spewed into the Gulf.

Meanwhile, after three weeks of intense pressure on the part of congress and independent researchers for more information on the gusher, BP released a 30 second video of it, the first to the general public. By virtue of modern digital technology, researchers determined that the amount coming out of the well is at least 10 times and possibly 20 times the figure stated. That means somewhere between 2 million and 4 million gallons per day or a spill equivalent to the Exxon Valdez every 3 to 5 days.

Therefore it’s easy to understand why BP was desperate to withhold the video. They were probably hoping one of their magical cures would stop the flow before anyone found out the true extent of the damage. The fundamental problem is they have no idea what they’re doing or how to cope with a spill one mile down.

That, however, didn’t stop them from cutting corners to save a few bucks, like lobbying against the requirement to include a remote controlled switch on the blowout protector. Or, as has recently come to light, BP failed to do a required final inspection on the just installed concrete casing on the well. This in spite of the fact that failure of concrete casings was the cause of about half of all underwater spills.

Now they want to shove old shredded tires or heavy mud or some other such bulky, funky thing into the well to try to stop the flow. I’m not an engineer but that seems to me like trying to plug a high pressure fire hose by shoving a cork in it. LOL.

What’s remarkable to me is that the oil is coming out like a geyser even though pressure at that depth is about 2300 pounds per square inch or one metric ton per 6 square centimeters.

The only sure way to stem the flow, which could take another two months, is to drill a companion well into the original one and plug it from there. Meanwhile, they are using large amounts of chemical dispersants to try to prevent the oil from coming ashore. What this does is break up the oil, which otherwise would come right up to the surface in large coherent blobs, into tiny globules that hang below the surface.

While it’s probably a good idea to try to stop the oil from coming ashore, it’s hardly benign having millions of barrels of oil hovering below the surface, besides the fact that a million gallons of dispersant, which is basically a solvent, can’t be too good for the water either… so a lose-lose situation.

Meanwhile, the doomsday scenario, which has to put fear in the hearts of all involved, is a good strong hurricane which would coat everything inland for miles with a toxic mixture of oil and dispersant.

Meanwhile, in spite of the current disaster, oil companies are itchy to start drilling in the Arctic Sea. You can just image a blowout happening under a frozen sea with no way to get to it through the ice and absolutely nothing to be done about stemming the spill until next warm season.

But those are the kinds of places where the remaining oil is and we’re hungry for it (and the profits involved) 0so desperate measures are required and warranted.

Meanwhile, though BP has said it will take responsibility for the damage, you can bet they will spend the next couple of decades fighting proper compensation in the courts. So what if they spend a billion dollars on legal fees, they’ll still save billions in comp costs. The bottom line is what’s important.

The current fiasco is another reminder that corporations desperately need to be reined in. If I as an individual cause death and injury, even if unintended, I’ll serve time for it. When a corporation causes death and destruction on a scale we are now seeing in the Gulf, it should face the death penalty and the CEO’s and top managers who okayed cutting corners in spite of the danger should face jail time. The US cannot shut down BP because it’s a multinational corporation, but it can ban it from doing business in America. LOL again.

Oil Be Damned Update

From what I can glean, not being an expert on these matters, the cause of the explosion on the oil rig was the drill hitting a pocket of gas under high pressure. BP is digging the deepest wells in the Gulf, a possible reason they were surprised by the gas explosion event.


The regulatory strengthening which I mentioned in the first article, which the oil giants, including BP, fought successfully against, had to do with having the fail-safe mechanism, the blowout protector, operable by remote control. This is common practice in Europe. The ability to shut off the well in a few seconds rather than the time, maybe hours, it would take to get an unmanned submersible to the site, might have made all the difference. It’s also possible that the valve was damaged as a result of the explosion so that nothing would’ve gotten it to close.


If the lack of a remote operated valve was the difference then the Gulf of Mexico was sacrificed to save $500,000, the cost of the device. Latest estimates are that the oil is flowing at the rate of 25,000 barrels per day, which translates to about 1 million gallons per day. If by some miracle it is possible to shut off the flow of oil in the next couple of weeks then it will only be a major environmental disaster. The latest idea is a heavy steel dome that will be placed over the worst leak which will, in theory, allow the gushing oil to be contained and brought to the surface in a safe manner. Time will tell if it actually works.


If it goes on for months the cost will be almost incalculable. It will be an endless Sisyphean nightmare of futility in which no matter how hard you work, your efforts are quickly overwhelmed by more oil. Fisheries gone, wetlands destroyed, beaches tarnished.


While this particular spill is one of epic proportions, environmental disaster is going on in many facets of fossil fuel production on a daily basis. Extracting oil from the Alberta tar sands is an energy intensive, climate destructive and extremely dirty process. Producing gas through the process of hydraulic fracturing, or fracting, is destroying ground water in the Rocky Mountain states as well as upstate New York. The process involves injecting chemicals and water into the well under high pressure which forces the gas out.


A couple of years back when I did a nostalgia hitchhike from Portland to Denver I got picked up by people in Utah whose friends had experience with the impacts of fracting. Before gas extraction began they had high-quality ground water. After fracting their water was smelly and turned into a murky brown color. Their animals wouldn’t drink it, their crops died when they used it to irrigate. Their well had been permanently poisoned. The gas well wasn’t on their property so they enjoyed no monetary benefit that might’ve compensated a bit for their loss.


The price of crude oil is back up to around $85 per barrel. It is predicted to rise to $100 by the end of the year. After that the sky’s the limit, and with very high prices, companies and countries will take increasing chances drilling and extracting in more and more difficult places, with the inevitable consequences of occasional catastrophic failure. It doesn’t need to happen very often to make the entire process too dangerous to attempt.

Oil Be Damned

It now looks like the oil gushing out into the waters of the Gulf of Mexico from the ill-fated oil drilling platform will probably equal in environmental devastation that of the Exxon Valdez oil spill.

Details are a bit murky, similar to the waters one mile down where the oil is leaking from, but it seems the pipe is leaking in three places and dumping about 5000 barrels or 210,000 gallons a day – 1 barrel equals 42 gallons – into the Gulf. British Petroleum, owner of the oil, has sent down remote controlled submersibles to try to activate the shut off valve to no avail. It’s not easy working down there under the extreme pressure of a mile of water.

Too bad the oil giants, including BP, were just recently successful in preventing new regulations that would’ve strengthened fail-safe mechanisms designed to prevent such disaster scenarios. As for Obama, egg on his face for only one month ago opening up large areas of America’s coastline to drilling, saying the technology is now so advanced there’s little chance of environmental catastrophe.

I imagine everything, all the machinery and piping, is a bit twisted and askew as a result of the rig blowing up and sinking, so it may not be possible to turn off the well. If so the only alternative is to drill another well beside the existing one and use it to block off the one that’s gushing. That, unfortunately, will take at least 3 months at which time about 450,000 barrels of oil will have been fouling the sea and coast.

Meanwhile strong winds are currently hampering efforts to stem the flow of oil toward land and that area is entering storm season.

Barring a miracle a one billion dollar seafood industry is about to go down the tubes. The Exxon spill killed 3/4 of all sea life in the spill area, and many parts have still not fully recovered. The Exxon spill, in fact, was probably easier to handle since it all came at once. This is likely to go on for a long time.

All of the oil that’s still to be found and tapped in the world is in similarly difficult geology. The well in question actually goes down 3 miles below the sea floor. These oil spills will almost certainly become more frequent as drilling goes into more and more difficult circumstances.

One thing you can bet on is that mega-corpses like BP will go to great lengths to mold the rules to their profit margin no matter the potential harm to society or the environment. They’ll take big gambles - play the odds - in order to increase their profits. If they lose the bet, we, and our environment, pay.