Oil, Oil Everywhere
Courtesy of Karl Denninger at The Market Ticker
We’re now about a month into the BP Oil "blowout" incident in the Gulf.
We still don’t know exactly what caused the blowout, but that’s not the important factor from my point of view.
We know that a gas "bolus" got into the drill pipe and expanded as it rose, and that was the proximate cause of the blast and sinking of the Deepwater Horizon.
What we don’t know is why the blowout preventer failed to close.
There have been several theories and claims, among them:
- The Blowout Preventer’s hydraulic system has one or more leaks in it, and as such it couldn’t close. If this is true then the question becomes who knew of the leak, if anyone, as it would have caused the preventer to fail routine tests.
- There are also claims that the well failed a negative pressure test a few hours before the incident. That would imply that there was a problem with the casing integrity (or the cement job done to lock it in place) and work continued without addressing this first.
Let me provide some context here: I live in the Florida Panhandle and in a "worst case scenario" the value of my home is likely to be destroyed. On April 30th I wrote a piece called "Drill Baby Drill", and I stand behind it today, even with the increased knowledge we now have.
I want answers to the above two questions, and I want the firms and persons responsible for those two breaches of protocol and common sense (along with safety measures) tarred, feathered and bankrupted, in that order, with every penny they personally and corporately possess confiscated to perform whatever remediation we can.
What I do know is this: A deepwater rig like the Horizon costs about $500,000 per day to have on site and operate. There was obviously a decision taken by someone that halting operations to pull and repair or replace the blowout preventer stack would cost millions (such an operation would result in significant downtime, of course, during which the rig would be sitting idle) and thus it was not done.
But this does not change my base view, which is that we have no valid alternative to drilling in the Gulf and elsewhere – indeed, everywhere we can find oil and gas.
What alternative would you like?
Here’s a couple of inconvenient facts for those who say "shut it all down and hang ’em high":
It is rumored this weekend that Saudi Arabia’s government is trying to figure out who leaked a document that proves that they’ve been funding Al-Qaida in Iraq. This is the same nation we send tens of billions of dollars to every year in exchange for oil. If this proves to be factual then we are in fact funding the very people who blew up our own Twin Towers and killed 3,000 Americans, as well as those who are shooting at our men and women in Iraq right here, right now. Isn’t it awesome that when you stick that gas nozzle in your fuel tank you’re buying the ammunition, weapons and IED’s that are being used to kill our GIs?
Venezuela, of course, is run by a murderous madman. Beyond seizing property for grins and giggles he also likes killing people. You can fund him when you stick the nozzle in your tank, if paying for bullets to shoot our GIs doesn’t tickle your fancy.
Or we can simply crush all our cars. That’s an option too. But don’t forget that it’s not just cars, it’s trucks and trains that bring the goods to your local grocery store that you’d like to eat. They run on that same oil, and since you eat, you are (again) funding the murderous thugs either in Iraq or Venezuela – every time you shop for everything you buy.
These are facts folks, and no amount of "happy talk" changes them. Nor does the "environmental greenie weenie" stuff change these facts.
We have had and squandered nearly 40 years since the 1970s oil shocks during which we could have put in service hundreds of nuclear reactors and wired every rail line with overhead power, eliminating the need to use petroleum for rail transport and replacing a large number of our base load coal-fired power plants at the same time. We refused because we were afraid of a nuclear accident. In exchange for this we have hundreds of thousands of people who have died of asthma over those 40 years aggravated by the coal plant stack output and several oil spills, including the current one. France, which went the nuclear route, has not had one of their civilians die as a consequence over the same time frame.
This is called a decision to allocate risk; we went one direction, they went the other. You tell me: who made the better choice?
The facts are that about twice as much oil is used for gasoline (read: cars) as for the next two largest consumers: distillate (diesel fuel, 2/3rds of which is used for transport in trucks and trains, mostly) and industrial (plastics and other polymers mostly.) A decision taken 40 years ago to build nukes by the boatload could have replaced perhaps a third of the distillate consumption and some of the gasoline, but little beyond that. To eliminate our "foreign oil" dependence we would have to get rid of all of our distillate and gasoline consumption. Cutting industrial use means eliminating a lot of polymer (plastic) use – have a look around your home or office and tell me what it would look like without them.
Fat chance on that.
Oil leaks out of the seabed every year through entirely natural causes. This is not something we can stop and it has been going on for millions of years. Yes, this "volcano" is bad, and yes, it is now oiling marshes in Louisiana, but the fact remains that our options are to either drill for oil and gas here or send hundreds of billions of dollars overseas to people who then use that money to murder people – in many cases, our own soldiers.
I choose to drill here, even though doing so comes with risks. I also demand that the people responsible for violating known and necessary protocols hang for it and the companies they work for be bankrupted.
Those two demands are not incompatible.
I ask that people who are driven to emotional and irrational expectations and demands take a look in the mirror and around their homes first. Come talk to me about halting drilling here when you’re willing to go door-to-door with all the dead GIs that come home as a consequence of our shipping that money to Saudi Arabia, you’ve sent your cars to the crusher, you’re either riding horses or using a golf cart (plugged in of course) to get around, and have ceased buying anything that has plastic or rubber in it.
Then – and only then – do you have a case to make for what you want our nation to do.
Those are the facts, whether they’re inconvenient or not.
