Editor’s Pick
MAY 17, 2010 7:45AM

Double Double Oil and Trouble!

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Deepwater Horizon

I was watching the news the other night when it was announced that John “I’m Not a Snob” Kerry and Joe “Droopy-Dog” Lieberman teamed up to unveil the American Power Act. Lindsey Graham was also working with them on the bill, but backed out because there are Mexicans in Arizona. I’m not sure what one has to do with the other, but then I’ve never understood GOP logic, so I won’t comment about that here.

The purpose of the new proposal (which will likely die a slow death in Congress with little or no GOP support) is to change the direction of our energy policies. There is much good in the bill, but what bothers me, is that it was reported that the bill is packed full of subsidies for Big Oil and Big Coal.

Those oil guys sure know how to squeeze the juice out of a Senator. I mean really. As a gaping hole in the bottom of the Gulf of Mexico caused by the negligence of BP (a.k.a. Bend over People) is spewing tens-of-thousands of gallons of crude per day into vital fishing grounds and a delicate marine habitat, these two guys are ready to hand over more money we don’t have to these multi-billion-dollar titans who have more than they can ever use.

That takes some stones to offer up something like that to the American public in the middle of an environmental oil spill of Biblical proportion and still keep a straight face.

Never mind that BP (a.k.a. Big Pork) may have destroyed the livelihoods of millions of hard-working people that depend on the gulf to make a living with their latest careless blunder.  Big Oil needs more of our money. Now the American taxpayer is supposed to pony up to help these environmental slayers pay to clean up their industry? Why are these special interest people allowed to sit in with our Congressmen and help write these bills? I thought Obama was supposed to put an end to crap like that.

How is it that the oil is “ours”, but our government leases the mineral rights to these industry giants (with little or no oversight), then they take the oil and sell it on the world market, while paying a pittance in royalties and leases (approx. $14 billion per annum)? BP (a.k.a. Big Profits) alone nets that much in profits every year. "We the people" assume the environmental risks and they walk off with all of the coin. Who comes up with this garbage? I want to renegotiate.

It's news like this that makes me want to run off to Crazyville, join the tea-baggers and give a swift boot to most of these so called “leaders” on both sides of the political aisle. If they no longer want to work for the American people, fine. They can take two years off and become a lobbyist. It will still be unethical work, but at least they can then be honest about who they really work for.

Anyway, I did a little digging and it seems this isn’t the first time there has been a huge spill in the Gulf of Mexico, though the powers in power would like us to think something like this has never happened before in the Gulf.

According to NOAA:

On June 3, 1979, the 2 mile deep exploratory well, IXTOC I, blew out in the Bahia de Campeche, 600 miles south of Texas in the Gulf of Mexico. The IXTOC I was being drilled by the SEDCO 135, a semi-submersible platform on lease to Petroleos Mexicanos (PEMEX). A loss of drilling mud circulation caused the blowout to occur. http://www.incidentnews.gov/incident/6250

This little incident is a near-mirror image of what has happened on the Deepwater Horizon catastrophe only on a smaller scale. The expanding gases escaped, exploded and sank the rig, only in much shallower water than the Deepwater Horizon sank in.

Their blowout preventer also failed and when they finally got it closed after sitting on the bottom for a couple of weeks, it almost ruptured so they had to open it again and let it free flow. They also tried the junk-shot (sounds dirty), trying to fill the blowout enhancer, (I mean blowout preventer) with lead and scrap metal. That idea also failed, though it did slow the flow.

Oil raced toward the surface of the Gulf for nine months at a rate of 10,000-30,000 barrels per day until two relief wells were eventually drilled, allowing them to cap the primary well. Sound familiar?

An estimated 4 million barrels eventually spewed into the Gulf. That was with a nine inch well head. The Deepwater Horizon used a twenty-one inch well head. In three weeks this spill has already surpassed that 1979 disaster. Wrap your mind around that for a moment.

It took two months for the oil from the Ixtoc I to finally reach Texas, but reach Texas it did and caused ruin to wildlife, tourism and livelihoods alike. Tourism dropped by sixty percent with untold damage to the environment and the economy. I fear the worst of this present spill is yet to come.

The Mexican Government refused to pay for the damage or the clean up, much like the response I expect from BP (a.k.a. Broken Pipes), regardless of what fodder they may be promising the cameras.

If history is any gauge, they will fight tooth and nail before they offer up anything of real substance to cover the damage. BP (a.k.a. Bend over Peons) has already tried to convince some shrimpers to sign waivers not to sue in exchange for a paltry sum and many of the families of the eleven that lost their lives in the disaster have been approached with pay-offs. It seems BP (a.k.a. Big Phonies) is big on oil, small on ethics.

I hope and pray that they get this thing plugged in a hurry, but judging by the above information, and the fact that this blowout will be exponentially more difficult to stop…well, let’s just say I’m not getting a fuzzy feeling that they’ve learned much about stopping underwater blowouts since the Intoc I debacle.

And we’ve been no help in that regard, either. Our government has turned their backs on regulating the industry for as long as these people have been poking holes in the sea floor with no idea of how to plug them when they blow. And we keep driving our land yachts like the oil is going to last forever and there are no consequences, so we must all share a portion of the blame. We have met the enemy and they are us.

If we only reap $14 billion per year through lease and royalty agreements, then subsidize the oil industry, what do we actually gain? Three or four cents per gallon if anything? That hardly seems worth the effort when a gallon of gas is three dollars.

We need to start thinking about why we are drilling in the gulf at all. The U.S. has only two percent of the world’s oil supply and we use about twenty-five percent of the world’s oil. The argument that we can drill our way out of a future energy shortage is ludicrous at best.

Gulf oil goes on the world markets the same as all oil goes on the world market. The oil is then sold to the highest bidder. In reality, we don’t know where our oil actually goes to or where it comes from and it makes no difference. We only need to know that we are contributing very little oil to the overall equation.

“Drill Baby, Drill” becomes a moot point when all of our oil is sold on a market we have little control over. We just turn around and buy it back at a marked up rate. We purchase from a pool and we have the biggest straw, so anyone who claims that we are funding Middle Eastern Nations that want to do us harm, by not drilling in off-shore waters, should understand that argument is hollow and pointless.

The only way we will ever get off the dinosaur tit and stop making harmful nations rich is to develop alternative energy sources. Period. We already have the technology; all we need is the will and a sweeping change in attitude.

Which brings me to my final point, I know that off-shore drilling generates jobs and we need jobs desperately, but why do we continue to kick all of these other industries (local fisheries, tourism, etc.) to the curb or destroy them, so that Big Oil can profit at the expense of all other livelihoods and our environment?

It is well past time that we rethink our position and develop energy policies that make sense for all Americans and not just the oil and coal industries. It will be difficult and we will have to make great sacrifices for that to happen, but those sacrifices will pale in comparison to what we will lose if we lose the Gulf of Mexico.

*****

Is the seriousness of this event being downplayed? I believe it is. To get an idea of what we are not being shown and get a feel for the real scope of this catastrophe, view these photos from the Boston Globe. They are haunting. http://www.boston.com/bigpicture/2010/05/disaster_unfolds_slowly_in_the.html 

 

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All great points Mike. You know BP made 6 billion in profits the last "quarter"? Yeah, three months. The Exxon-Valdez was fined 5 billion dollars. After 20 years of litigation, it was dropped to 511 million. What a load of crap. This will be tied up in courts forever, while the fishermen and the tourism people get squat. Glad you're back my man, now stay around awhile!
You the man, Michael. Nissan is coming out with an all-electric car soon, very timely, but in the end, that will only benefit Big Coal (notice all the image ads they're running lately?) But, anything to kill off oil drilling finally and forever.
Thanks, Scanner. I will likely be able to hang out with you guys all summer. Yay!

Ardee. These new electric cars could come with solar or wind generators that could be mounted at a persons house to off set the up-tick in your electric bill, thus making the car cheaper to run and less need for coal, all at the same time. At least that is what I think should happen. Of course special interests will try to kill what ever affects their bottom line.
I'm telling you Mike.. we need to toss those ultra-rich politicians out of office. Kerry is as big a whore as the rest, (I would have voted for him once upon a time.) I hear they were/are considering sealing the well with a small nuclear device but are concerned about whether of not it would set the oil slick on fire, (something they couldn't put out.)

The world is coming apart at the seams.
Balls of Steel.

Thank you for pointing this out, Mr Rodgers!
Just found **THIS** and thought I would share.
Good article. You have one typo:

"Oil raced toward the surface of the Gulf for nine months at a rate of 10,000-30,000 gallons per day"

Per your source, those are barrels, not gallons, so it is 42x higher in gallons.

You are right about the root cause. We (USA) use 21 million bbs/day. And we KNOW a percent or two is spilled on earth prior to being burned in the US. It's a little here and there, not a giant oil slick. But 1% is 200,000 bbs/day.

Exxon paid a few billion in out of court settlements. BP has already budgeted $450 million and will likely pay out $10 billion before it is all done.
The IXTOC was the biggest oil spill in history (except for the gulf war, which wasn't exactly an accident).

All other big spills were from tankers. The 'so what' of this is that the real issue is the demand side, not the suppliers. We could buy and ship it all, but ships sink.

Where did the demand for 21 million bbs/day come from? The oil companies can't create demand. They just feed out habit.
Good stuff Michael. But let's face it, Americans aren't willing to give up their internal combustion engines and neither the Leaf nor the Prius is the answer (for now). That will occur when we change our commuting and transportation patterns along with our means of transporting goods as well as when things like hydrogen technology finally comes to commercial reality in the automotive industry. And these things are a good 20-40 years away.

The cause of this most recent debacle is the classic "profit now" mentality of companies like BP. I'm appalled that apparently inadequete safeguardes and contingency plans were in place to respond to a "blow out" of a drilling rig of this size. As drilling has moved to deeper and deeper water, as wellhead size has increased it has been a miracle that there hasn't been an environmental disaster like this until now. And the capability of solving it is obviously not up to the ability to create the disaster in the first place.

I keep on thinking that movies like "Mad Max" were predictions and foreshadowing rather than entertainment.
Well done. I heard there was a fascinating piece on Sixty Minutes about the spill last night. Apparently, they interviewed one of the engineers who made it off the rig despite being left by the lifeboats. They talk about the other rig (Atlantis) they are drilling faster now in case it gets shut down, that has the same problems as the Deepwater Horizon.
Michael, this is great coverage on this. We are in the base, what I call, zero zero sum game. All lost, nothing gained, except for billions of pieces of paper we call money that rule over an entropic system. So, this is why I most especially value articles like this...you open the end, you reveal the game. Well done. xox
it's green power, doncha know -- if you got the green, you got the power
Gives a whole new meaning to the word "audacity", doesn't it?

Where have I heard that word before?
Great find on the website, Ric. You just can't trust any corporation anymore. Even when they screw up they can't be honest about the damages they are doing. It takes weeks to find out that they are low-balling figures as part of a PR campaign. Sickening.

Doug, Indeed balls of steel. All of them.

Nick, thanks for the correction on the typo. I've also heard that shipping does most of the spilling, but with a ship at least you know how much it holds and how much it can leak. Not so with these underwater blowouts. The sky's the limit until it's shut down.

I've heard that the spill the equivalent of the Exxon Valdez off the western coast of Africa every year because of lack of regulations and enforcement. Like you say, world wide, it can't be good.

Walter, I agree that's why somehow we need an attitude change, but I don't feel good about the odds.Mad Max looks more like an omen of things to come if we don't get a grip on things. It's all very disturbing to me. This well head is 500 miles from me as the crow flies, but people are already reporting slimy water and the smell of petroleum, so I don't believe they estimate of the size of Connecticut. I call BS.

Blue, I'll look up that 60 Minutes piece. Great thanks.Anothe blowout would likely be the end of the Gulf.

Thanks Robin, I spent some time on this, but still think most of it is common knowledge. I just wonder why a school teacher beating up a student warrants the same amount of coverage as this mess. But that's news in the 21st century for you.

Roy, you've got that right.

Cappy, Audacity indeed. I'm going to do some looking into Ken Salazar who Obama put in charge of the MMS to clean up that agency. I think he's another Texas oil man, but I'm not sure. More of putting the fox in charge of the sheep's company picnic. Either way, the has to go. He's the "heckuva job Brownie" in this thing.
Fantastic writing, Michael, even though you've depressed the hell out of me.
makes me feel dizzy and ill to think about. Well done article Michael.
Excellent, excellent post, Michael -- you've been woosheddin'. As for oily vulture capitalists, I'm having a go at them myself at the moment with a post I'm working on. Herewith a sample:

"These externalities allow producers of traditional energy products to claim a competitive advantage over renewable sources, based on the most common measure of energy – the cost per British Thermal Unit or btu. But factoring in social costs presents a much different picture of energy cost per btu. "
B P
i l
t u
c n
h d
e e
s r
Listening to the recent witness statements and hearings, I have to wonder if those clowns aren't descendants of the ones who were the geniuses behind the "Titanic".

There is the same combination of arrogance and stupidity.
Oh, and CONGRATS on the EP, you ol' dawg!
Great post, Michael, Great post, my friend. R
Hey, Mike, I am very late to this but just wanted you to know I dropped by. Your analysis is excellent and even the Editors agree, a rare event. So congrats.

Monte
Frankly, Michael, I don't know what all the fuss is about. You and the readers of this post don't seem to understand the upside to the oil spill. To wit: Salt water tends to dry my skin out when I wade around in it for too long. With the oil, I suspect essential emollients will be replaced to keep my skin silky smooth. Second, pelicans are obnoxious birds--ugly, too. The world ain't gonna miss 'em. And dolphins? Man, their weird noises drive me nuts. Sayonara, Flipper, and good riddance! Third, shrimp are a high-cholesterol food that should be avoided; the oil spill could well improve the nation's cardiac health. Finally, if the Gulf's beaches get fouled, it will keep silly people from sun bathing, which is a growing source of skin cancer in the country.

So, as you can see, there are two sides to every story. The liberal, pinko media in this country just want to whine. Gotta go now. I've got to go get the oil changed in my Hummer.

By the way, BP also stands for Beautiful People....
Michael, very well done. I came here via Nick Carrway's link to your post before he did his own, generous of him and great for us. I was following you well but sadly this is the kind of scientific subject in which I 'get' it, and then am back to feeling depressed about, in a matter of minutes. But you who understand oil and its effects, keep on posting. R
Nick, I think you've hit the nail right on the head. The oil companies are just the drug dealers. Without demand for their drug -- oil -- they won't supply it. And that means they won't need to drill in these very extreme conditions.

As long as we continue to use gas to get us around, we need to accept that these accidents will occur. Not every day, not every year, not even every decade. But they can and do occur.

I think that BP's reaction to the accident so far has been good. They've done about everything they can.

The people I'm steamed about are idiots like Murkowski and Vitter. They've actually gone on record as saying that lifting the cap on damages that oil companies have to pay if another accident occurs would put mom and pop drillers out of business.

You know what my response to that is? If they can't handle the repercussions of an accident, then they shouldn't be operating machinery that could cause that accident.

BP has the resources to address this. Joe's Drilling Service would not.
You do know that Sedco, the company that drilled the PEMEX well is now Transocean Sedco Forex or Transocean for short. And I disagree with you that drilling in the GOM is poitnless becasue it only supplies a small portion of our needs. What is important is the amount of dollars we are shipping overseas particularly the middle east. Every month we send tens of billions of dollars overseas when we buy foreign oil. Reducing it by 10% is $3 billon that stays in OUR economy. Banning O&G exploration in the GOM will have negative economic consequance to an already fragile economy. And you forget the jobs that domestic oil and gas activities provide.
And BTW you forgot BP, Blowout Petroleum
@Tony Wang

90% of lease in the GOM are operated by independents or mom and pop companies. Increasing the cap to $1 billion will steer them away from operating in the GOM. Most of these companies have market caps of less than 10 billion dollars and drill many wells a year. you do the math Tony. And you say you don't care but you would if your livelihood depended on it and you should because if that does happen, majors like BP, and EXXON will monopolize all that goes on or does not go on in the GOM.
english has many charms, but it doesn't distinguish between possesive 'my' and related 'my.'

so an english speaking sheep can say " this is my field," and the grazier can say "this is my field," both be right, and mean different things.

so too, with americans. the difference becomes apparent at shearing time every year, and the grazier might sell the field out from under you if he thinks there's an oil field under 'your' grass.

and they sing "usa! usa! usa! as they walk up the ramp into the abbatoir.
You are leaving out one simply fact, Obama is owed by the oil industry. This 100 million dollars that Candidate Obama took from Big Oil is a HUGE reason why Ken Salazar was picked to head the MMS and why B.P. was even drilling, plus even the Bush family (all oil people) love Obama, La Gov Jindal and Ms. Gov Haley Barbour. Progressives and pro-environment people do not want to admit this fact to themselves, which is irking