Category Archive 'BP Oil Spill'
13 Jun 2010

“A Blessing, Not an Addiction”

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Jeff Jacoby, in the Boston Globe, debunks the Puritan meme of an addiction to petroleum.

The explosion of BP’s oil rig in the Gulf has been a calamity in so many ways, above all the loss of 11 human lives. With hundreds of thousands of gallons of crude oil gushing daily from the crippled wellhead, the environmental impacts have been excruciating. BP is responsible for a dreadful mess, one that will take years and many millions of dollars to clean up.

Awful as the catastrophe has been, however, life without oil would be far, far worse.

Americans consume oil not because they are “addicted’’ to it, but because it enriches their lives, making possible prosperity, comfort, and mobility that would have been all but unimaginable just a few generations ago. Almost by definition, an addiction is something one is healthier without. But oil-based energy improves human health and reduces poverty — it makes life longer, safer, and better. Addictions debase life. Oil improves and expands it.

“Oil may be the single most flexible substance ever discovered,’’ writes the Manhattan Institute’s Robert Bryce in “Power Hungry,’’ a new book on the myths of “green’’ energy. “More than any other substance, oil helped to shrink the world. Indeed, thanks to its high energy density, oil is a nearly perfect fuel for use in all types of vehicles, from boats and planes to cars and motorcycles. Whether measured by weight or by volume, refined oil products provide more energy than practically any other commonly available substance, and they provide it in a form that’s easy to handle, relatively cheap, and relatively clean.’’ If oil didn’t exist, Bryce quips, we’d have to invent it.

Of course there are problems created by oil, as the Deepwater Horizon calamity so heartbreakingly demonstrates. But most things of great value come with downsides. There are 40,000 traffic fatalities in the United States each year, but no rational person suggests doing away with cars, trucks, and highways. Airplanes sometimes crash and boats sometimes sink, but air and sea travel are not derided as “addictions’’ we need to break. Deaths due to hospital infections, medication errors, or unnecessary surgery number in the scores of thousands annually, but who would recommend an end to medical care?

Someday there may be an energy source that is as abundant, efficient, clean, and economically viable as oil. But nothing today fits that bill — certainly not biofuels, wind farms, or solar power. Besides, it isn’t only energy products that we get from petroleum. Crude oil refining also makes possible plastics, synthetic fibers, lubricants, waxes, asphalt. “Other products made from petroleum,’’ notes the US Energy Information Administration, “include ink, crayons, bubble gum, dishwashing liquids, deodorant, eyeglasses, CDs and DVDs, tires, ammonia, [and] heart valves.’’

We are not “addicted” to oil. That is a metaphor based on the generally illusory notion of addiction, and it is wrong. We need petroleum or an equivalent source of energy to fuel our vehicles, heat and light our homes, and to operate our machines… to live. We also need food in pretty much the same way. Does it make sense to assert that we are addicted to food? We use petroleum because it is currently the cheapest fuel source. If there were not politicians backed by armed men with guns, at home and abroad, levying whopping extortion fees on any and all petroleum extracted from the ground, it would be really, really cheap.

The cost of the energy we use is not really a problem. We have so little difficulty affording it, that we let our own government attach huge taxes to every gallon we consume and we let primitives in far off lands squat on top of oil supplies and accumulate trillions by charging us for oil we discovered and extract for them. If the cost of petroleum really bothered anybody, we would insist on allowing oil drilling not only in the incredibly remote Arctic howling wilderness, but in everyone’s backyard. If the cost were a genuine problem, we’d have long ago sent the marines into a number of Middle Eastern countries and put all their rulers out of the oil business and back into the sheep herding/caravan ambushing business again.

11 Jun 2010

Ruling By Decree

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We live today in a country differing from the America of the past in which the rule of law prevailed, and increasingly resembling one of the Latin American republics in which a strong man takes power and proceeds to set aside the law and his country’s constitution in order to rule by decree.

Yesterday’s Wall Street Journal reported that Barack Obama simply ordered BP to pay the salaries of all the oil workers laid off as the result of the drilling moratorium he himself had decreed. No due process, no court action, just an edict.

The Obama Administration ratcheted up its demands on Wednesday that BP PLC cover all costs stemming from the Gulf of Mexico oil spill, including millions of dollars in salaries of oil-industry workers laid off because of the federal moratorium on deepwater drilling.

The sudden increase in BP’s potential liabilities—along with growing evidence that even more oil than expected is gushing from BP’s crippled well—helped send BP’s shares plummeting almost 16% in New York, to $29.20. The stock has lost close to half its value, more than $82 billion, in the seven weeks since the spill started.

A second WSJ article reported that a coast guard admiral additionally ordered BP to pay hundreds of millions of dollars to construct berms. Once again, no legal process whatsoever had occurred. There is clearly no rule of law in this country. Even coast guard officers get to rule by decree.

Construction is about to begin on miles of sand piles designed to block oil in the Gulf of Mexico from hitting the Louisiana coast, but documents show the Obama administration approved the building of sand berms despite concerns from some of its own environmental experts.

The U.S. Army Corps of Engineers authorized the berms. Thad Allen, the Coast Guard admiral overseeing the spill response, ordered BP PLC to pay the hundreds of millions of dollars that officials estimate it will cost to build the structures.

In announcing his decision June 2, Adm. Allen said the berms would “effectively stem potential damage to these fragile shorelines.”

It can be impossible to obtain redress for these kinds of wholly illegal actions by public officials, even ones many levels below the President of the United States.

During the aftermath of Hurricane Katrina, New Orleans Mayor Ray Nagin and Police Superintendent Eddie Compass simply ignored legal considerations and issued an order saying: “No one will be able to be armed. Guns will be taken. Only law enforcement will be allowed to have guns.” They then used both New Orleans police and National Guard troops to confiscate private firearms refusing even to issue receipts.

When, months later, all this reached federal court, New Orleans denied having seized private firearms, then later denied having any still in its possession, and generally simply stonewalled. Only after three years of litigation, which New Orleans lost, did the city admit seizing guns and promise to return whatever private property remained in its possession.

Barack Obama lectured for 12 years at the University of Chicago Law School before running for the presidency, but that did not prevent him last year from simply brushing aside the entire body of bankruptcy law to subordinate the claims of Chrysler bondholders in favor of the interest of the UAW.

Members of his administration then proceeded to intimidate the victims with threats of using allies in the press to destroy their reputation. Most bond-holding creditors knuckled under, but three Indiana pension funds did go to court. The US Supreme Court voided a Second Circuit Court of Appeals ruling upholding the illegal cramdown, but also referred the case back to the Second Circuit instructing the Appeals Court to hold the matter moot. Thus, the Supreme Court acted to prevent Barack Obama’s action a legal precedent, but refused to do justice and make the Indiana pension funds whole. The law was theoretically preserved intact, despite Obama’s violation, but not actually enforced in the Chrysler bankruptcy.

We are developing an alternative system of government by fiat fueled by press-reported crisis, in which government officials assume the powers of dictatorship. So far, the courts have proven to be not only slow, but ineffective, defenders of the rule of law.

09 Jun 2010

Obama Opening Up a Can

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The idea of Barack Obama taking Spike Lee’s advice predictably inspires ridicule.

1:50 video

09 Jun 2010

Next Time a President With Actual Executive Experience?

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Bill Hobbs: “If you think Sarah Palin would do better job than Obama re BP and the oil spill, you’re right. In fact she already has.”

As Governor of Alaska, I did everything in my power to hold oil companies accountable in order to prove to the federal government and to the nation that Alaska could be trusted to further develop energy rich land like ANWR and NPR-A. I hired conscientious Democrats and Republicans (because this sure shouldn’t be a partisan issue) to provide me with the best advice on how we could deal with what was a corrupt system of some lawmakers and administrators who were hesitant to play hardball with some in the oil field business. …

BP’s operation in Alaska would hurt our state and waste public resources if allowed to continue. That’s why my administration created the Petroleum Systems Integrity Office (PSIO) when we saw proof of improper maintenance of oil infrastructure in our state. We had to verify. And that’s why we instituted new oversight and held BP and other oil companies financially accountable for poor maintenance practices. We knew we could partner with them to develop resources without pussyfooting around with them. As a CEO, it was my job to look out for the interests of Alaskans with the same intensity and action as the oil company CEOs looked out for the interests of their shareholders.

06 Jun 2010

This Oil Spill Too Shall Pass

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Ixtoc Fire and Oil Spill

The BP Oil Spill is a lot like the Ixtoc I Oil Spill of 1979.

It took ten months to stop the oil flowing after a gas explosion. They stopped it by drilling three relief wells. It spilled 140 million gallons and coated 170 miles (275 kilometers) of U.S. beaches, in some cases a foot deep in oil.

Recovery was nonetheless rapid, and wildlife populations were back to normal in a couple of years.

Some News Agency
quotes a marine biologist who provides reasons for optimism.

The good news is the Ixtoc experience suggests the Gulf of Mexico has natural properties that help it cope with massive oil spills, scientists say. Warm waters and sunlight helped break down the oil faster than many expected. Weathering reduced much of the oil into tar balls by the time it reached Texas.

Two decades after the Ixtoc disaster, marine biologist Wes Tunnell sank his diving knife into an area where he had spotted a tar patch just after the spill. The blade came out black and tarry but the hardened surface of the patch was under sand, shells and algae that had completely covered it.

“No one else would know that it was anything other than a rock ledge,” said Tunnell of the Harte institute. “I think that the Gulf of Mexico is hugely resilient, or at least it was 30 years ago. We’ve insulted it a lot since then in various ways.”

The Gulf has also long dealt with oil that naturally seeps from the seafloor. Some experts estimate that tens of millions of gallons seep into the Gulf from natural up-wellings each year, fostering large populations of oil-eating bacteria and microorganisms.

05 Jun 2010

BP Should Simply Shrug

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Atlas sostiene la volta celeste, 2nd Century A.D., Collezione Farnese, National Archaeological Museum, Naples.

Claude Sandroff reacts with wholesome indignation to the ritual immolation of the corporate scapegoat by the High Priest of the Cult of the State and his media acolytes.

Obama and his team of thugs are dressed out in heavy boots aimed at BP’s neck. Apparently, oil booms and actionable emergency plans are in short supply in the government, but the Obama administration is buried under a glut of hard heels in a variety of men’s and women’s sizes. And they’re all ready to stomp on BP’s jugular.

Adding to BP’s public relations woes are some of Hollywood’s film geniuses, probably armed with decades of deep-water drilling experience, only too happy to dismiss the exhausted and skilled BP repair staff as a bunch of morons. My advice to the BP board of directors is that they simply accept the third-party assessments of their qualifications and tell Obama, his government, and his media acolytes that the time has come for them to take charge of capping the Deepwater Horizon riser. …

In the midst of this major ecological calamity, when BP can least cope with major distractions and vile recriminations, Obama’s clueless legal team has decided to threaten the company with a criminal probe. Tone-deaf Eric Holder is unable to pronounce the words “Islamic terrorist,” but he has already unleashed his justice department to cripple BP, essentially labeling it a criminal enterprise. Perhaps Obama and his band of goons need to hear from BP that they are stopping all capping efforts to concentrate on their legal defense.

As a BP shareholder, I wouldn’t be upset. Rather, I’d applaud BP’s actions and even buy more stock with full knowledge that its declaration of bankruptcy is all but guaranteed. It’s already rumored that some of BP’s valuable drilling assets in Alaska might have to be sold off to pay for the Gulf cleanup.

It’s a brilliant idea to sell those assets as quickly as possible. The environmental hit teams have no intention of letting anyone, anywhere, drill in the U.S. ever again. Not in Alaska, not in the Rockies, not in shallow water, and certainly not in deep water. Only the Brazilians and the Norwegians and the Mexicans, and the Chinese and the Indians and the British and the Angolans — only everyone else will be allowed to do that. …

BP must accept the reality that it is not GM. BO has no vast democrat union base of employees that must be protected at all costs and no mass vote-generating machine to deliver for Obama. They are expendable. They are not even GE, in complete control of a sycophantic media outlet always ready to sing the praises of Obama on broadcast and cable outlets, all day and all night.

BP might become Government Petroleum soon enough if they don’t act quickly. They should offer to sell off their expertise and assets to the Chinese, who at least will appreciate them and use them aggressively. While China’s state-owned oil exploration company, CNOOC, was denied the prize of Unocal in 2005, the United States is in a much weaker economic, military, and political position today with respect to China. Surely a BP sale would breeze through a regulatory review in today’s climate.

Assured access to a plentiful, long-term oil supply is the chief foreign policy concern of China. And BP could revel soon in the irony of drilling again in deep Gulf waters — only this time for the Chinese off the coast of Cuba.

02 Jun 2010

Worst Case Scenario

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Hat tip to Karen l. Myers.

29 May 2010

Regulation and the Oil Spill

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The BP Oil Spill produced throughout the echo chamber of the American left a familiar narrative featuring some nefarious corporation jeopardizing the public interest accompanied by hints of lax regulatory supervision all leading to the conclusion that, once again, what is vitally needed is beefed-up progressive government riding to the rescue to curb the excesses of unbridled free market capitalism.

Libertarian Sheldon Richman, in the Freeman, explains that the reality of the current situation is far more complex.

[T]his is not just a simple matter of regulation. More fundamentally it’s a matter of ownership. The government has proclaimed itself the owner of the offshore positions where oil companies drill. In a free market those positions would be homesteaded and managed privately with full liability. In the absence of a free market and private property, built-in incentives that protect the public are diminished if not eliminated. Bureaucrats and “political capitalists” are not as reliable as companies facing bankruptcy in a fully freed market. …

Negligent or not, BP is a player in a corporatist system that for generations has featured a close relationship between government and major business firms. (It wouldn’t have surprised Adam Smith.) Prominent companies have always been influential at all levels of government — and no industry more so than oil, which has long been a top concern of the national policy elite, most particularly the foreign-policy establishment. When state and federal governments failed in the 1920s to put a lid on unruly competition and low prices through wellhead production quotas (prorationing), the oil companies turned to Franklin Roosevelt and the federal government, winning the cartelizing Petroleum Code, significant parts of which were revived after the National Recovery Administration was declared unconstitutional. In the 1950s, when cheap imports depressed prices, the national government imposed quotas on foreign oil. Venezuela was the chief target at the time. (In 1960 OPEC, a “cartel to confront a cartel,” was founded.) Republican or Democratic, energy policy is not made without oil industry input.

In this context there’s less to the contrast between government regulation and corporate self-regulation than meets the eye. Self-regulation in a corporate state does not constitute the free market. When companies are sheltered in any substantial way from the competitive market’s disciplinary forces, incentives turn perverse. Moreover, “state capitalism” and the corporate form – with its agency problem – can produce the temptation to cut costs imprudently in order to make the next quarterly report look attractive to shareholders.

“Putting profits before people” is a feature of state, or crony, capitalism not the free market.

28 May 2010

Friday, May 28, 2010

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“I missed him even before he was gone.” Steve Bodio remembers long-time Audubon magazine editor Les Line, who evidently had a Weatherby cartridge board and a poster of a Smith & Wesson Model 29 in his Manhattan office.

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Progressive Amnesia: James E. Calfee responds to the attacks on Rand Paul for “not understanding” that state coercion of private businesses was necessary to end segregation by pointing out that the system of racial segregation in public accomodations known as “Jim Crow” was not created by the individual decisions of private business owners. It was put into effect by government through a series of laws passed by Progressive era legislators which were then upheld by the Supreme Court.

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NYT: White House Used Bill Clinton to Ask Sestak to Drop Out of Race.

18 USC Section 600: Whoever, directly or indirectly, promises any employment, position, compensation, contract, appointment, or other benefit, provided for or made possible in whole or in part by any Act of Congress, or any special consideration in obtaining any such benefit, to any person as consideration, favor, or reward for any political activity or for the support of or opposition to any candidate or any political party in connection with any general or special election to any political office, or in connection with any primary election or political convention or caucus held to select candidates for any political office, shall be fined under this title or imprisoned not more than one year, or both.

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Peggy Noonan:

I wonder if the president knows what a disaster this is not only for him but for his political assumptions. His philosophy is that it is appropriate for the federal government to occupy a more burly, significant and powerful place in America—confronting its problems of need, injustice, inequality. But in a way, and inevitably, this is always boiled down to a promise: “Trust us here in Washington, we will prove worthy of your trust.” Then the oil spill came and government could not do the job, could not meet need, in fact seemed faraway and incapable: “We pay so much for the government and it can’t cap an undersea oil well!”

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