Free Markets, Free People

Energy

Polling the oil spill

And unfortunately, as Gallup points out, the news isn’t good.  But I can’t say it is unexpected:

Between March and today, with the Gulf of Mexico oil spill intervening, Americans’ preferences for prioritizing between environmental protection and energy production have shifted from a somewhat pro-energy stance to an even stronger pro-environment stance.

And the shift isn’t subtle nor are we talking a bare majority:

While Republican voters remained precisely the same in regards to the percentage who gave energy production the nod over environmental protection, the oil spill saw a 13 point swing (for the environment) from independents (58 v 34) and a 15 point swing for Democrats.

The unfortunate thing is this doesn’t have to be an either/or situation. One of the problems faced by BP with this disaster was the fact that it is a deep water well and they had no practiced and tested method of dealing with a blow out in deep water. They’ve been dealing with similar problem in shallower water for deacades, quite successfully I might add.

However, 97% of the Outer Continental Shelf (OCS) is out of bounds, driving the producers of oil into deeper and deeper water. Although it may sound counter-intuitive, the best way to avoid problems like this in deep water is to open up more of the OCS. And no, I have no problem at all with requiring the oil industry to demonstrate their ability to quickly handle a similar situation in shallower water and the clean up as well as a condition of drilling in the OCS.

But at the moment, given the polls, BP and the oil industry in general have a hell of a public relations problem. The fact that the well appears to have been plugged doesn’t lessen the problem as now the massive clean up (and any fouled beaches and marshes) become the focus.

My guess is it will take quite some time to win public support back again. In the meantime, I’d further guess that an administration which has demonized Wall Street, health insurance companies, big Pharma and others, will use this swing in public opinion to go on the offensive against the oil industry as well – all in anticipation of a comprehensive energy bill which will see cap-and-trade as well as new and higher taxes on the oil industry to fund a “contingency fund” for any future problem like we’re experiencing today.

Hold on to your wallets

~McQ

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Top Kill works – thank goodness!

Short post on the good news from the Gulf:

Engineers have stopped the flow of oil and gas into the Gulf of Mexico from a gushing BP well, the federal government’s top oil-spill commander, U.S. Coast Guard Adm. Thad Allen, said Thursday morning.

The “top kill” effort, launched Wednesday afternoon by industry and government engineers, had pumped enough drilling fluid to block oil and gas spewing from the well, Allen said. The pressure from the well was very low, he said, but persisting.

Once engineers had reduced the well pressure to zero, they were to begin pumping cement into the hole to entomb the well. To help in that effort, he said, engineers also were pumping some debris into the blowout preventer at the top of the well.

Of course the huge clean-up continues so neither BP or the Federal government are off the hot-seat yet.  But hey, Obama said “plug the hole” and they did!

Who says that’s not leadership?

/sarc

Now he can spend the whole weekend in Chicago chillin’ instead of visiting the striken Gulf or honoring the fallen at Arlington National Cemetary as Commander-in-Chief in the midst of two wars.

No sarcasm intended there.

~McQ

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Is the oil spill becoming Obama’s “Katrina”?

Yes, yes,  I know the comparison isn’t perfect – loss of life and property, etc. – but I’m speaking of it in a political sense and not making a direct comparison.  What the administration essentially ignored and then became reluctantly involved in has now mushroomed into a major political (and environmental) problem for them.

Certainly, just as President Bush wasn’t responsible for the hurricane that hit New Orleans, President Obama isn’t responsible for the oil spill (Bush is – okay, I couldn’t resist).  The response to the disasters is what they are both graded upon.  Whether true or not, the federal response to Katrina was painted in the press as slow and lacking in urgency.  I can’t imagine, given this has been going on for 36 days or so, and the seeming lackadaisical attitude demonstrated until recently that the federal response to this has been much better in that regard.  In fact, some may claim it is worse.

People everywhere are really beginning to notice – out in flyover land and among his own party’s politicians.

Right now, all hope is of a quick resolution is centered on this attempted “top kill” procedure which, if it works, will fill the drill hole with mud and finally cement within 12 to 48 hours.  I, for one, hope like hell it works.  As one of BP’s techs said, we could know it won’t work within a few hours.  So the longer we go the better the chances are for success.  But that doesn’t end the problem for the administration.  It still is faced with a huge cleanup of what has already been pumped out of the well in the preceding days.

However, if the top kill doesn’t work, then we’re probably looking at August before a relief well will be able to take the pressure off this well and allow it to be capped.  Contemplating the damage that will do – politically as well as environmentally – is mind boggling.

That brings us to Senator Ben Nelson of Florida, who today suggested that if the top kill fails, Obama needs to just shove BP out of the way and take over the operation:

“If this thing is not fixed today, I think the president doesn’t have any choice and he better go in, completely take over, perhaps with the military in charge, not because the military can do this, but the military has the apparatus, the organization by which it can bring together the civilian agencies of government and to get this thing done,” Nelson said Wednesday morning during an appearance on CNN.

Of course doing that would remove BP as the main fall guy (which they are and should be) and Obama isn’t about to do that.  But practically, if Nelson had listened yesterday to a White House press conference in which Coast Guard Commandant Admiral Thad Allen was asked that same question, he’d have known better:

Yesterday may have been a day to remember in the White House Briefing Room on the BP oil leak in the Gulf of Mexico, because of a straightforward answer by the man in charge of the federal spill response, that it’s not time for the feds to take charge from the oil company.

“To push BP out of the way would raise a question; to replace them with what?” said Coast Guard Commandant Thad Allen.

That, basically, is the problem the Obama Administration faces.  They have the authority, but neither the equipment or the expertice to “push BP out of the way”.  Of course no one expects the Ben Nelson’s of this world to do their homework (or realize that the Coast Guard is an armed service that is running the federal response).

In the meantime, it’s not just Republicans complaining of the poor response.  Even James Carville has had his fill.

The “political stupidity is unbelievable,” Democratic strategist James Carville said on “Good Morning America” today. “The president doesn’t get down here in the middle of this. … I have no idea of why they didn’t seize this thing. I have no idea of why their attitude was so hands off …”

Uh, it’s a leadership thing, Mr. Carville. I think Frank J summed that problem up best today:

“Plug the damn hole!” That what Obama told people the other day. Because that’s what a leader does. He yells stuff and then stuff gets done. He’s seen it on TV.

GETTING STUFF DONE PLAN

STEP 1: Yell what you want done.
STEP 2: ???
STEP 3: Things get done.

I’m not sure step 2 is actually important.

I wonder why Obama hasn’t used this power before. Like everyone wants the economy to produce more jobs, so I don’t why Obama hasn’t stared the economy in the eye and said, “Create some damn jobs!” I guess he was do busy working on his damn health care.

Anyway, a lot of people thought Obama should be doing something about the oil leak, so this is him doing something. I don’t really get that though; I thought by now we learned that if we have something really important going on, keep him away from it.

~McQ

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Oil spill – Katrina II? Where is Obama?

Peter Daou has a piece in the Huffington Post discussing the on-going oil spill disaster and asking:

Where is the outrage? Where are the millions marching in the streets, where is the round-the-clock roadblock coverage tracking every moment of the crisis, every effort to plug the leak, every desperate attempt to mitigate the damage?

Where is the White House? Where are Republicans? Where are Democrats? Where is the left? Where is the right? Where is the “fierce urgency of now?”

Where’s Geraldo Rivera on a boat in the Gulf holding up an oily pelican and weeping in his whiskers? Where’s CNN and MSNBC covering every drop of oil gushing from the blown casing with ominous sounding music and an intro that says “Oil Catastrophe, Day 36 of the underwater BP disaster”?

And, where is the government? Of course they’re right where I figured they’d be, but then I don’t have the faith in the magic competence of government that others do seem to have.

Look, I’m on record being displeased with the response of BP specifically and the oil industry in general. I’ve been clear that I think what is going on now is a result of a lack of planning and testing a “go-to-hell” plan that addressed a deep water blowout. And because of that we continue into day whatever of oil gushing from a broken riser and polluting the Gulf of Mexico. There’s no way to play that down. There’s no way to “spin” that. Because of a failure to anticipate this sort of problem and be prepared to mitigate the results, we have anywhere for 5,000+ barrels a day pumping out into the waters of the Gulf.

But that said, where is the government? Well, lucky us, they’re setting up a commission. No, really. A commission.

US President Barack Obama signed an executive order on May 21 creating an independent commission to investigate the Gulf of Mexico crude oil spill and offshore exploration and production. He named former US Sen. Bob Graham (D-Fla.) and former US Environmental Protection Agency Administrator William K. Reilly as its co-chairmen.

“While there are a number of ongoing investigations, including an independent review by the National Academy of Engineering, the purpose of this commission is to consider both the root causes of the disaster and offer options on what safety and environmental precautions we need to take to prevent a similar disaster from happening again,” the president said on May 22 in his weekly radio address.

Meanwhile, in the Gulf, oil continues to spew, wetlands and marshes are endangered and the EPA is yelling about the toxicity of the dispersant – like the oil will be good for sea life. And Ken Salazar is making noises about “pushing BP out of the way.”

And then what?

Even Daou has picked up on the problem:

Leadership is virtually non-existent. Blaming BP for being greedy and destructive is the least we should do, not the only thing we do. We need to turn the tide once and for all against those whose ideological rigidity is ravaging the planet.

Of course, he and I differ on his plan of action, but we certainly agree on his contention that “leadership is virtually non-existent”. As it has been for 16 month. Instead we’ve gotten staged anger and finger pointing and blame shifting from the President and, mostly, other than the Coast Guard, almost nothing in terms of a reasonable and expected government response to the disaster. Daou is, rightfully I think, very unhappy with the response:

Lawmakers can say that the law mandates BP take responsibility for clean-up and costs; federal officials can list all the things they’re doing to fix the problem; President Obama can launch as many fact-finding commissions as he sees fit. But we shouldn’t be impressed that they are doing what we elected them to do – it’s their job to deal with emergencies promptly and effectively. Far more is called for in this uniquely cataclysmic circumstance: a level of outrage, alarm, intensity and focus worthy of the size and scope of the spill.

But he, and I, are not seeing it. As James Carville said, the administration is treating it as almost an annoyance, keeping them from other things they’d rather be doing.

Daou too believes that to be evident in the administration’s response:

The administration seems miffed and mystified that it is being criticized. After all, it can reel off dozens of swift actions taken in the aftermath of the spill. The White House’s defenders want the spotlight aimed exclusively at BP. But this is a situation where body language and words are just as important as actions. Scheduling an ‘angry’ presidential news conference weeks after oil started gushing into the Gulf waters is exactly the wrong thing to do. Authentic anger isn’t something you turn on for the cameras and leak to the press the previous day.

But this isn’t something new, although it appears that elements of the left are just now catching on to the act – and the lack of leadership. Daou wants to blame all of this on “Green-haters” who’ve managed, apparently, to desensitize politicians and the public to the dangers of those who would rape and destroy the planet. And he’s using this disaster to, as he says, “rise in righteous anger” in order to “salvage and protect our earth”.

It certainly seems he’s angry, and he aims at the usual suspects, but it is interesting to see his inclusion of the Obama administration as part of the problem instead of being part of the solution.

Daou is finally reduced to an emotional appeal after producing his list of those who are responsible for this travesty. Two of the bullets could have come from any green talking point list and were essentially boilerplate nonsense one-over-the-world generalizations. But three of them caught my attention:

# Democratic leaders have been blindsided by this spill, having just come out in favor of offshore drilling to appease Republicans.

# The press and punditry are busy chasing the story du jour.

# Defenders of the administration are loathe to critique it, out of a sense of loyalty.

The first has some substance to it, but it wasn’t “Democratic leaders” who came out in favor of offshore drilling (something I still support – but with the mother of all go-to-hell plans in place first), it was Barack Obama.

And that brings us perfectly to numbers 2 and 3. The reason 2 is occurring is because the media is as much a part of 3 as anyone.

Daou’s overwrought and overstated conclusion give an idea of the depth of damage the non-response may be doing to the Obama administration (remember Carville’s words) among the “green left”:

This isn’t Katrina II, it’s worse. As the oil keeps gushing and the damage keeps growing, we are squandering a rare chance to turn the tide against those whose laziness and greed and ignorance is imperiling every living thing on our wonderful and beautiful – and wounded – planet.

My guess is it will be worse unless BP has some success killing that thing tomorrow. But even then, you still have a huge battle for containment and clean up. Huge.

And where is government?

~McQ

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Cap-and-tax: The game plan to make it a reality

The Environmental Protection Agency (EPA) has decided it has waited long enough for Congress to do something about greenhouse gasses (GHG).  So the unelected bureaucracy has decided it will take matters into its own hands and regulate GHG itself:

Starting in July 2011, new sources of at least 100,000 tons of greenhouse gases a year and any existing plants that increase emissions by 75,000 tons will have to seek permits, the agency said.

In the first two years, the E.P.A. expects the rule to affect about 15,550 sources, including coal-fired plants, refineries, cement manufacturers, solid waste landfills and other large polluters, said Gina McCarthy, the agency’s assistant administrator.

She said the rule would apply to sites accounting for about 70 percent of the nation’s greenhouse gas emissions. “We think this is smart rule-making, and we think it’s good government,” she said.

Now you can call it “smart rule-making” or “permitting” or any of a number of nifty things, but in reality the cost of regulatory compliance and the cost of permitting will increase the cost of operation – a cost that will be passed on to the consumer.

Of course, EPA Administrator Lisa Jackson, the unelected administrator making this decision, is pretty sure that this is a wonderful way to “spark clean technology innovation” and save the planet “for the children”:

“After extensive study, debate and hundreds of thousands of public comments, EPA has set common-sense thresholds for greenhouse gases that will spark clean technology innovation and protect small businesses and farms,” said EPA Administrator Lisa P. Jackson. “There is no denying our responsibility to protect the planet for our children and grandchildren. It’s long past time we unleashed our American ingenuity and started building the efficient, prosperous clean energy economy of the future.”

Question: Does anyone think “American ingenuity” hasn’t been “unleashed” on the clean energy problem?  With the potential payoff, obviously it has.  Instead, what this does is what the President said he wanted to do prior to taking office during an interview – it begins the process of raising conventional power generation to a cost level that makes “clean power” seem less expensive by comparison.  And if Congress won’t do it, hey, that’s what activists turned “administrators” are for – interpret the Clean Air Act as it has never been interpreted before and serve the agenda.

Of course you don’t have to “question the timing” at all – consider it all part of the orchestration plan for providing the impetus necessary to pass the Kerry-Lieberman.  Manufacture a “crisis”, provide a government solution:

Senator John Kerry, a Massachusetts Democrat and one of the two sponsors of the climate bill, seized on Thursday’s announcement to argue for the urgency of passing it. “Today we went from ‘wake-up call’ to ‘last call,’ ” he warned in a statement.

Heh … nothing obvious about this at all. Make the case that the EPA is usurping the prerogative of Congress and you’re sure to attract bi-partisan support on that. But, of course, that can’t mean just passing simple legislation stripping the EPA of that power can it? Lisa Murkowski (R-AK), the ranking Republican on the Senate Energy and Natural Resources Committee has actually introduced a disapproval resolution to do that, but with 35 Republican and only 3 Democrats, it has little chance of passing.

Murkowski says this will cause “an economic train wreck” if allowed to go into effect. With it targeting what’s left of “big manufacturing” and, of course, the majority of conventional power generation – in the middle of a deep recession – it’s hard to argue she’s incorrect.

More of your government at work trying to lessen the economic impact of the recession and create more jobs. /sarc

~McQ

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John Kerry was for off-shore drilling before he was against it

Senator’s John Kerry and Joe Lieberman introduced their 1,000 page climate change bill yesterday.  Unfortunately, “The Hill” only deals with the political aspects of the bill and doesn’t tell us much about what it contains.  Of interest was this:

The bill has the support of the Edison Electric Institute, a large trade group that represents for-profit utilities, and encouraging statements also poured in from companies including GE, although, like many, the company hedged slightly and said it “supports the process” that Kerry and Lieberman initiated.

Oil giant Shell issued a supportive statement, and Kerry also cited support from BP and ConocoPhillips. The bill’s method for addressing transportation-sector emissions is more to the liking of some refiners, who bitterly opposed the House climate change bill that passed last year.

The point, of course, is these companies are settling for the lesser of two evils.  And, of course, there’s a bit of crony capitalism thrown in for good measure.  I, on the other hand,  oppose the imposition of any carbon buying scheme (tax) until I see a lot more conclusive science saying we have a warming problem caused by CO2.

Anyway, as to the title, IBD covers that:

The bill, authored by Sens. John Kerry, D-Mass., and Joe Lieberman, I-Conn., would let a state ban drilling within 75 miles of its coastline vs. 3 miles currently.

A state also would be able to veto neighbors’ drilling projects if a mandatory study indicated that an accident could harm the state’s economy or environment.

This is a major reversal from late ’09, when Kerry called for a bill that included “additional onshore and offshore oil and gas exploration.”

This is also not just something the John Kerry does.  This is the nature of the beast.  Reactive legislation done in hast and in the shadow of a current problem which usually ends up being poorly thought out and ends up actually doing more harm than good.  Unfortunately, that’s politics today.

The bill aims to cut carbon emissions by 17% below 2005 levels by 2020. It includes cap-and-trade programs for the manufacturing and power-generating sectors and a cap for the transportation sector.

The bill would affect about 70% of the economy, staffers said. They declined to estimate the total cost.

Of course they did – and we’ll all trust the CBO numbers when they come out too – or should we wait for V 2.0 before we agree to the cost?  Bottom line here is if the cap-and-trade program includes “manufacturing and power-generating sectors” the impact will be 100% unless you can point to a sector of our economy that doesn’t use power.

But again, this is the usual way this works – understate the impact, blow off the rebuttals and stick with your estimate hopefully bolstered by gaming the CBO.

Really though – the economy is the number one priority of the people and these yahoos are thinking it is a good idea to introduce a tax that will effect 100% of the economy based on dubious science?

There is some hope though:

A year ago, Reid said passing healthcare reform was simpler than moving an energy bill: “This may surprise some people, but I think healthcare reform is easier than all this global warming stuff.”

I sure as hell hope so.  It certainly would be fun to watch Democrats again ignore the priorities of the electorate (economy, jobs) and go after one of their favorite agenda items.  Fodder for Republicans in November – and frankly, I don’t think they have a chance of passing this before then, or, as a matter of fact, afterwards either.

So go for it Dems – you’ve hooked your electoral wagon to a team of wonderful horses – Kerry and Lieberman – and (tongue in cheek) you deserve everything this ends up getting you.

~McQ

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Majority still support off-shore drilling

Some polls out today.  Even with the on-going oil spill in the gulf, a majority polled said off-shore drilling is something they support:

Even after the recent — and highly publicized — oil spill in the Gulf Coast, that’s the overwhelming sentiment from the public, with six in 10 Americans supporting more offshore drilling, according to the latest NBC News/Wall Street Journal poll.In addition, a majority believes that the potential economic benefits of offshore drilling outweigh its potential harm to the environment.

“Highly publicized” doesn’t even begin to describe how the spill has been covered, yet Americans know that a) it will eventually be capped and b) drilling off-shore is vital to our economy and national interest (security).  Now that’s all said with the understanding that to this point the containment of the spill has been mostly successful and mother nature has cooperated weather-wise in keeping the spill off-shore.  My guess is those numbers might come down a bit if that changes.

Item 2 is the Arizona immigration law.

Nearly two-thirds of Americans back Arizona’s new controversial immigration law;

This is something that defies the claims of racism, bigotry and everything that the left tries to heap on Arizona. It signals a country dead tired of the status quo in immigration and if further signals an idea of how they want it handled. The left, as usual, is over reaching in their reaction and a backlash is most likely due and will come as the usual “complete surprise” to them.

Item 3 is the Times Square bombing attempt. 58% say they’re “worried this country will experience another terrorist attack”. Well duh. Of course it will – the only questions are when and how. Most likely what’s really bothering Americans is the fact that the last two attempts weren’t stopped by our designated protectors, but instead failed.

Here’s what bothered me about this part of the poll:

What’s more, a majority of Americans (52 percent) say they are willing to give up personal freedoms and civil liberties to prevent another terrorist attack.

You can’t live scared and you certainly don’t want to give up what you may not get back just to feel more secure. Again, as the last two attempts demonstrate, giving up more personal freedom and more civil liberties guarantees nothing.  And if you do the numbers, a lightning strike is probably more likely to get you than a terrorist bomb.

Last item on this particular poll? Successful demonization of Wall Street has led to a belief among the majority that financial regulation won’t go far enough to “rein in Wall Street’s excesses”.

Additionally 80% of those polled are dissatisfied with the economy, Obama’s job performance numbers are up slightly and Republicans still enjoy an “enthusiasm advantage” heading into the midterms.

~McQ

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To my friends in the oil industry

Almost everyone has heard of the infamous “Blackhawk down” incident in Somalia in which Army Rangers were ambushed while on a mission and 18 brave special operators died.  COL David Hackworth, one of the most decorated and outspoken field commanders during Viet Nam, blamed the fiasco on two of the generals there.  His words are harsh, but they tell the tale:

[The generals] made every basic error in the book, beginning with not understanding the enemy. They had bad intelligence, were overly dependent on firepower and technology and were arrogant. Nor did they bother to put a go-to-hell-plan in place in case the [stuff] hit the fan.

That “go-to-hell” plan Hackworth is talking about is something every operations officer in the military has learned about from history and experience.  Essentially a “go-to-hell” plan envisions the very worst case scenario one can imagine in an operation and that scenario is then planned for, staffed,  equipped and exercised (at least at a sand-table level) in case it has to be executed.  The point, of course, is that plans usually don’t survive first contact and commanders are faced with situations in which they have to modify orders and, in dire cases, enact the “go-to-hell” plan.  With such a plan in place, commanders have the chance of minimizing the losses they may be facing – in territory, casualties and effect -because they have planned for this eventuality.  Without it, however, they’re likely to be left in the situation that Hackworth describes in Somalia – nothing ready to go and trying to improvise everything at a critical moment.  That rarely, if ever works out well.

Anyone watching the situation in the gulf with the oil spill has to believe that they’re witnessing the very worst case scenario that can be imagined in that type of an environment – a cutting edge, deep water platform has an explosion, burns and sinks.  Tragically 11 lives are lost.  The riser to the surface is bent and the blow-out prevention device fails allowing 5,000 barrels of crude oil to escape from the well head daily 5,000 feet below the sea.  A true nightmare.

But seeing the reaction to the situation, I had to ask, where was the “go to hell” plan?

As anyone who reads this blog regularly knows I am a proponent of continued exploration and exploitation of petroleum reserves because the alternative fuels and technologies simply aren’t available yet or can’t be produced cost effectively.  They’re certainly the future, but not for some time to come.  Oil remains, and will remain, a critical component of any future energy plan.

I’ve been able, through trips paid for by the American Petroleum Institute, to educate myself on the petroleum industry and see first hand what they do and how they do it.  I’ve seen their intensive focus – bordering on the obsessive – on safety and the precautions they take to produce oil safely and in an environmentally friendly way.  I’m certainly not an expert, but I do know that this is an industry that deserves our support because they provide a critical product – the lifeblood of our nation – and they care about how they produce it.

Unfortunately, this spill and the inability to cap the well is reflecting on the industry in a way which will be detrimental in the long run to both the industry and our energy future.  Certainly they’ve reacted as well as they can given their resources and their effort has been mammoth in size and scope. But the bottom line is the problem for which they didn’t plan persists.  And each day the problem persists, the public’s confidence in the industry’s ability to produce oil off-shore in an environmentally responsible way wanes.  That’s reality.

That reality drove me to participate in an American Petroleum Institute conference call last week as an invited blogger. I posed the following question to the panel:

My question has more to do with the future, I guess.  My background is military plans and operations, and when we wrote plans and operations, we always had a “go to hell” plan, you know, in which the worst-case scenario was imagined and planned for.

I get the impression that what’s going on out there is definitely the worst-case scenario for the petroleum industry.  And my question is, why wasn’t there a “go to hell” plan, or if there was, did it envision this?  And in the future, will the industry address this type of a scenario and have teams and equipment available to address it more quickly?

Richard Ranger, who is an expert on Upstream/Industry Operations for API fielded the question and replied:

And I think really, the array of vessels, the number of personnel, the amount of equipment being deployed indicates that it is execution of what I think you could call the “go to hell” level of an oil spill contingency plan.  The plans that are developed – BP, other companies in the industry that have them are, you know, routinely re-examined and adjusted based on lessons learned, most usually from drills and exercises.

And the drills and exercise – because, you know, our record, certainly, up until this horrible incident has been a record where there have been very few spills of scale against which to test a plan.  So the drills and exercises themselves are carried out at different scales.  They’re carried out not simply by the companies, but in collaboration with government officials, be it – usually involving, for the OCS, the Coast Guard and Minerals Management Service.  There’s a tremendous transfer of knowledge throughout industry and between industry and government.

Now, so the question, in terms of scale here, was there access to equipment for an immediate response?  Yes, there was.  Was there access to additional, out-of-region equipment to cascade into the Gulf of Mexico to augment the initial response?  Yes, there was.  Has there been a scaling up of the government or public side of the response across Coast Guard districts and involving additional personnel from both federal and state agencies?  Yes, there has been.

This event has been moving at a very fast pace, but I think it would be mistaken to suggest that there hasn’t been, really, a very complete commitment, certainly, of the resources that BP has available, the resources that the key government agencies have available, and most importantly, the resources, the expertise and the personnel that the response organizations, like MSRC, have available.  So I would argue it’s been demonstrating scalability of the response plan.

While it is clear that the industry has responded as best it can it is also clear, at least to me, that the industry has no answer to the scenario which has unfolded before it with the Deepwater Horizon disaster.  In essence they relied on technology to be the failsafe and it failed them.  And when it failed, there was no real backup plan – a “go to hell” plan – to do what the failed technology hadn’t done.

As to the plan Richard talks about – it is a plan mostly geared toward oil spill containment, as he notes.  But the real problem isn’t just containment.  In fact the need for containment is a result of the real problem.  An unchecked deepwater blowout, albeit one caused by a catastrophic accident.  No planning, apparently, had been made to address a deepwater blowout in which all the technological failsafe devises didn’t do their job.  That was the point I was trying to make.  So I asked a follow-up question:

I guess what I’m getting at, Richard, is the fact that there’s been – it’s been almost a month fabricating this dome that’s going to be placed over the wellhead. And while I appreciate the fact that people have responded and are out there doing the best they can, and that we don’t know whether this dome is going to work or not, that kind of gets to my point. If this dome had been available at the time of the accident, and if it, in some way, had been tested or we knew more about it, wouldn’t that type of a response have been much more, I guess, impressive than what we’re seeing now?

Richard answered and, as you’ll see, eventually acknowledged that perhaps that particular scenario hadn’t been on the industry radar screen as perhaps it should have been:

Well, I guess, Bruce, in response to that, with your military background, I forget how the words go, but you’re probably familiar with the adage that you have a plan and once the gunfire starts, you throw the plan away.  And I think what there has not been before is this type of catastrophic event effecting a failure of the drilling rig.

The sinking of the rig, the consequent bending of the riser and the creation of a situation where you’ve got this, you know, significant leak of oil from below the sea floor and you have to put something over that leak – so this is kind of a serial number one effort that, I think with all of the anticipation and all of the forward planning, this particular scenario, perhaps, hadn’t been envisioned before.

So your question’s a good one.  There are things that are going to be learned about the performance and effectiveness of this particular piece of equipment, but I think it’s a significant achievement that, in the span of a very few days, this idea was conceived, this piece of equipment’s been fabricated and being brought to the location.  So yes, I would agree you’re partly right, but I think the response that BP and others have put together shows the adaptability of people and expertise when confronted with the kind of situation we have here.

Those are the words of an honest man realizing that perhaps, despite the heroic effort that BP and others have made, there was no real “go to hell” plan in place that envisioned this obvious (now) worst case scenario or how to defeat it.  Instead they are pretty much reduced to winging it at the moment.

And, of course, the failure of the first attempt to place the containment dome only strengthens the point.

My desire here isn’t the beat up on the petroleum industry.  As I’ve said I’m a huge supporter of what they do and how they do it.  I’ve also pointed out that another institution – the military – of which I’m a very big supporter has learned this lesson the hard way.  Instead this is intended to point out what I see as a deficiency the industry needs to address and address quickly because the policy implications of not doing so are profound.

We all know what will happen next.  There are obvious political ramifications to this. It will start with Congressional hearings and a battle over the safety of off-shore drilling.  The sides are well known.  Unfortunately, situations like this hand ammunition to those opposed to the oil industry and drilling that they’ll gladly use.  In fact, gleefully use.  This sort of on-going, constantly-in-the-news disaster is a political God send to them.

To begin to win back those who are now wavering about off-shore drilling, the petroleum industry has to be able to show Congress and the public that it understands the gravity of the problem,  accepts the worst case scenario as possible and is developing a plan to deal with it.  It will have the equipment necessary along with trained crews available in the future to cap something like this is days – not weeks or months.  The industry must also have a plan to  successfully manage the situation that develops after containment and until a more permanent solution can be implemented (such as a relief well).

For example, if the containment dome is found to be a workable solution and eventually successfully caps the well, such domes would be prefabricated and available in all areas where off-shore drilling is being done or planned, ready for immediate deployment if necessary.  That sort of plan would point to a proactive industry learning and applying lessons from this situation to prevent it from happening again to the extent this situation has developed.  The industry has already proven that it can deploy containment assets quickly to address a spill.  That’s both noteworthy and praiseworthy.  But everyone also understands that those assets are finite and the probability of continued containment success lessens each day that the spill builds and the surface area grows.

In order to regain the initiative in the policy realm, it is critical at this juncture that the industry begin an immediate analysis of this disaster and the formulation of a critical “go to hell” plan.  It may not answer all the mail when the inevitable political hearings begin, but it will demonstrate an engaged industry that has recognized the reality of the problem and is working proactively (and without Congress mandating solutions or increasing regulation) to provide a workable and timely solution should such a situation ever again occur.  And that may also help allay the fears of some and stiffen the spines of others that are ready to abandon the effort to drill off-shore.

Time is critical and off-shore drilling is vital to our national interest and national security. I’m sure the brilliant minds within the industry can come up with a contingency plan that will make the case for its continuance.

~McQ

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Clean, green and expensive as hell

Well, well, well – “green energy” costs strike again.  You remember the controversial off-shore wind turbine project that was proposed for an area off the coast of Cape Cod in Massachusetts?  Well it finally got approved.  And surprise – it’s revised costs has the project in “Big Dig” territory:

The controversial Cape Wind project will cost taxpayers and ratepayers more than $2 billion to build – three times its original estimate.

That colossal cost is the driving force behind the sky-high electric rates it plans to charge Massachusetts customers in coming years.

Cape Wind, which wants to build 130 wind turbines off the coast of Cape Cod, and National Grid announced yesterday that they’ve reached an agreement to start charging customers 20.7 cents per kilowatt hour in 2013 – more than double the current rate of electricity from conventional power plants and land-based wind farms.

Under the 15-year National Grid contract, the price of Cape Wind’s electricity would increase 3.5 percent each year, pushing the kilowatt price to about 34.7 cents by the time the contract ends.

The current price of National Grid’s non-wind electricity is now about 9 cents per kilowatt. That means the cost of fossil-fuel generated electricity would have to increase nearly four-fold just to keep pace with Cape Wind’s prices over the next 15 years.

This little doozy is now on the planning boards – another, in a long line of costly projects backed by government that will cost consumers more than it’s worth and not deliver that much in terms of increased energy – certainly not that much if  you look at the price.

“I’m glad it’s your electric bills and not mine,” said Robert McCullough, president of McCullough Research, an Oregon energy consulting firm, referring to Cape Wind’s prices.

He said Massachusetts would have been better off going with less costly land-based wind farms.

“Why are you spending billions (on offshore wind) when you can pay half that with traditional wind?” he asked.

You tell me?  And, by the way, how did the costs of building the system suddenly triple?  This was only discovered after approval had been granted?  Oh – wait a minute:

Three sources familiar with the Cape Wind-National Grid negotiations confirmed yesterday that Cape Wind’s final price tag will be above $2 billion.

Because of available federal tax credits, Cape Wind could reap about $600 million in taxpayer subsidies if the final cost is $2 billion, in addition to its higher power rates.

So the incentives are provided by government?  Does this make Cape Wind a “greedy utility?”

Oh, and I love this:

Cape Wind president Jim Gordon yesterday again refused to say how much construction will cost, citing competitive talks he’s now in with construction companies.

Cape Wind and National Grid, which is planning to buy half the energy the wind farm will produce, said their rate deal will add about $1.59 a month, or about 5 cents a day, to the current ratepayer’s bill in 2013.

“The question is whether folks are prepared to pay five cents a day for a better energy future,” said Gordon.

The answer should be “no, they’re not.  Either build the project at the original price, bring it on shore if that isn’t possible or forget it.”

The pricing has to be approved by Massachusetts Department of Public Utilities, but I don’t think there’s much of a question as to how that will go:

Ian Bowles, Gov.Deval Patrick’s secretary of energy and environmental affairs, said the National Grid prices are competitive if renewable energy credits are deducted.

Those who aren’t politicians interested in building a green energy legacy this say otherwise:

But energy experts said the proposed National Grid rates, especially with the annual inflation adjustments, add up to a very high price.

“This would seem to me to be a most unwelcome additional energy tax” on customers, said Peter Beutel, an energy analyst at Cameron Hanover in Connecticut.

And that’s precisely what this ends up being – a energy tax to build something that could be build cheaper on shore and which, in reality, won’t add that much energy to the national grid. A rather dubious recommendation for its continuance. I don’t know about you but if I were a citizen of Massachusetts, I’d be raising hell about this and demanding the project be shelved until it can be shown to deliver the promised “clean, green, renewable and cheaper energy” Greenies are always telling everyone these sorts of projects will deliver.

~McQ

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Top down bureaucratic rule may mean big bottom up problems

Despite the many problems cited with turning cereal grains into ethanol (price spikes, shortages, etc.) and a new study saying ethanol damages engines, the EPA is going ahead with plans to raise the amount of ethanol mandated in fuel mixes:

The Environmental Protection Agency is expected to issue a rule in the next few weeks that would permit oil companies to increase the percentage of ethanol in automotive fuel to 15 percent, up from the current level of 10 percent, so they can meet E.P.A. quotas for renewable fuels.

Like a true bureaucracy, the quota is much more important than the fact that increasing ethanol percentages could cause more pollution and damage car engines according to a new study:

But now the industry says it has conducted tests that confirm the higher-ethanol blend will cause problems in many cars.

Half of the engines tested so far have had some problems, said C. Coleman Jones, the biofuel implementation manager at General Motors, who spoke on behalf of the Alliance of Automobile Manufacturers.

More ethanol will confuse exhaust control systems and make engines run too hot, destroying catalytic converters, automakers say. It can also damage engine cylinders, they say.

For some car owners, “you will be walking, eventually,” Mr. Jones said. The industry is urging the E.P.A. to delay any changes to the fuel mix until after 2011, when more complete testing will be done.

The EPA’s answer?

An E.P.A. spokeswoman declined to discuss the E.P.A.’s specific plans beyond its November letter, in which the agency said it planned to make a decision by midyear. The agency said at that time that it was leaning toward allowing the change.

Bureaucratic inertia has set the ball in motion and facts simply don’t matter.   And I loved this:

While the change is intended to apply only to cars of the 2001 model year and newer, it’s unclear how it would be enforced at the pump.

Heh … yeah, are we going to have 2000 and below model gas pumps now?

The heavily subsidized ethanol industry says it’s just the oil companies trying to keep their share of the market:

The ethanol industry argues that the proposed rule is essential for reducing reliance on imported oil. Ethanol makers say that most cars will run just fine on 15 percent ethanol and oil companies are standing in the way only because they want to hold on to market share.

Bob Dinneen, president of the Renewable Fuels Association, said enough test data was available to approve the new blend. “You just see all this hand-wringing,” he said.

But it isn’t the oil industry objecting – it’s the auto industry saying such an increase will ruin engines.  In fact, it’s Government Motors.  And they have no particular skin in the game here – what is is.

I don’t know about you, but I’ve sunk a good bit on money in a new car recently.  If this goes through and I end up walking because of it, who do I go see to recover damages?

~McQ

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