Thursday, June 3, 2010

British Petroleum (BP)

Okay, let's jump right into the uncharted waters (sorry for the pun) and discuss British Petroleum (BP). This is center stage these days and let's face it... there are numerous issues at hand.

The environment is number one. The delicate balance between the ecosystem and the gulf coast region may be forever changed. Wild life, shorelines, jobs and all derivative related issues will be effected (ie. recreational activities, gas prices, etc.) for years to come.

A secondary issue pertains to energy costs & future drilling. I'll be the first to admit, it doesn't seem like BP had a back up plan for deep water drilling. As you can tell from the picture above, there are hundreds of oil rigs in the gulf coast between the Florida panhandle and Texas. This isn't new, they've been there for years. How many are deep water drilling platforms is unknown. Drilling more than 1 mile below sea level can be problematic in a number of different scenarios.

"People complain by nature." We've all heard this expression. We have to somehow find a balance between allowing oil companies to drill for oil while protecting the environment. According to the Financial Times, the Obama administration has apparently halted all dig water drilling until further notice and is seeking to prosecute BP on criminal and civil charges to the 'full extent of the law.' If laws were broken, there should be an investigation into wrong doings. No doubt. In the meantime though, isn't this more of a distraction that anything else? I'd prefer BP to focus on solving the problem and not getting a legal team in place to defend future litigation.

Should oil go back above $100 per barrel and gas prices skyrocket to $5.00 per gallon, the real complaining will start. The rhetoric of "Our government should better regulate big oil companies and the price of gasoline." Now that a drilling moratorium is in place, oil companies with platforms in US waters will see a reduction in earnings and will probably layoff idle workers until further notice. I wonder if Washington is helping these people???

In USA Today, some interesting statistics were revealed today as to the manpower and efforts taking place in the gulf of Mexico region. Here are a few statistics:

* 6.625 inches - Size of pipe leaking oil.

* 20,000+ - Number of government & private workers cleaning up coastline(s).

* 1,900+ - Vessels, aircraft, etc. involved in containment and cleanup of oil.

* 13.8 million - Gallons of oil/water recovered.

* 120+ - Controlled burns to reduce/eliminate oil from water.

* 993,000 - Gallons of chemicals used to treat contamination.

We may have a long road ahead of us. I just hope BP and our government have the manpower and financial resources to complete the job. BP may simply run out of money and at some point be forced into bankruptcy (they've allegedly already spent $1 billion on cleanup efforts). I hope this doesn't happen, but depending on the magnitude of what's to come, it's certainly possible.

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