Wednesday, June 16, 2010


"...Leifer is a member of a team of experts deployed by US President Barack Obama to estimate the volume of oil currently flowing in the Gulf of Mexico. Just last week, the scientists almost doubled their estimate and now say that between 25,000 and 30,000 barrels of oil a day is gushing out of the well into the Gulf of Mexico. On Tuesday, they once again upped their estimate -- to between 35,000 and 60,000 barrels per day.

BP's most recent efforts to stop the flow of oil have only made the situation worse, says Leifer. The engineers' attempt to seal off the well from above, using a method known as "top kill," failed and only enlarged the borehole, according to Leifer. Now, he adds, there is almost nothing stopping the oil from flowing out of the well."
Der Spiegel

In the article above the topic is the effectiveness of the relief well , or "Bottom Kill", plan in the Gulf and the dangers and risks associated with it. In the course of the article Ira Leifer, a geochemist at the University of California in Santa Barbara, verifies what others in posts I posted yesterday have said; the well bore is wide open because the casing is destroyed. Those pictures we see of the oil blowing from the pipe are not of the well bore and so are just one part of the leak. BP and everyone else involved are basically out of options. They seem to be focused on the relief wells with no mention of the nuclear option except to say that it won't be considered.

I wonder if that lack of consideration is the truth? At this point my guess is that they'll say that for political reasons while at the same time preparing the bomb needed to get the job done, if that truly is the best or only option. At least, I hope that's the case. I hope that the government in general and the President in particular, have got their hands wrapped around this.

Based on the speech last night, I'm not so sure. It seemed that Obama was making a political speech, more focused on clean energy than the problem at hand. He had no clear solution nor did I get the impression he was overly concerned about finding one. His main concern seemed to be the people and industry affected and promoting some sort of ephemeral and imaginary new energy source. He talked about windmills and solar panels. WTF?

The President just doesn't seem to understand the possible impact of this blowout and its effects on not only the Gulf Coast area but the potential for massive, life altering disaster. It's like we just had Pearl Harbor attacked and the president runs out to play a round of golf. Obama was and is not prepared to lead in a crisis. His whole career, belief system and reason for existence is political in nature and professorial in application. He has lived in the world of academia and protests, places where real life experiences that would prepare a man for leadership never occur. Everything is theory.

He's in the real world now and he's floundering. His solutions are political solutions; create more commissions and panels, more regulations, more red tape. Instead he should clear the decks of everything that is standing in the way of stopping this thing. If we don't get it shut down, and now, all those new regulations will be meaningless because everything will have changed so dramatically.

And the thing he doesn't understand and probably wouldn't accept is that it's regulation that got us here in the first place. Yes, we need regulation of the oil drilling process, not the industry as a whole. It is the proper role of the government to insure that adequate precautions and good practice occur on the rigs because their failure can effect the entire nation and its energy supply.

The thing is that the government expanded its regulation well past the safety issues and got into the business of drilling itself. BP was drilling in deep water because the government forced them to. Regulations and rules have distorted the business of producing oil. Oil companies are not allowed to drill in areas that are far less prone to disaster such as in shallow water off the coast of Florida or California, or on land in places like ANWAR or Montana. Because of this, the only big reserves left to drill in America are in deep water.

Furthermore, government interference in the free market has distorted risk. A cap of $75 million dollars was placed on damage done by oil companies in the Gulf. The government established the cap, I'm sure with the help of their friends in the oil industry.

Risk is an essential component in pricing and in even deciding whether a company wants to take on a job. I've turned down a lot of work over the years because of risk aversion. I look at the price I can charge and weigh it against the potential costs the company would incur in case of failure. Every job I do goes through some sort of risk/benefit analysis. That's the way business works. If I had some outside agency from the government limiting my exposure, well I would definitely have taken some of those jobs. Why not? The risk/benefit formula has suddenly been tilted in my favor. The risk is now on the backs of the taxpayer. I keep the gain and socialize the downside.

This is what happened in the financial markets and we all know how that worked out. Why would it be any different in the oil business?

And of course, as we see happening in the oil blowout crisis, the same government that created the environment that forced the emergency to happen will then use the emergency to blame the company and to create even more regulation of the free market; more control of our lives. This is a wholly predictable pattern and exactly the reason to limit government in every aspect of our lives. It's never satisfied with a little power, it wants it all!

So the oil pours from the blown out casing while the administration focuses on how it can use the crisis to further its political agenda of ever increasing government control of our lives and destruction of our individual freedoms. One of the few legitimate powers the federal government has is to protect the country from harm in times of national emergency. This definitely fits the bill. While this same government has no problem shredding the Constitution to create national health care and will do it again with cap and trade, it just can't find the strength to take care of the blowout.

We're screwed.

Bookmark and Share

No comments:

Post a Comment