We have praised and condemned Arianna Huffington’s Huffington Post many times. Today the Web’s most influential blog erased all negativity with an exclusive report on the BP Gulf oil disaster. The Post reported NOAA Director Jane Lubchenco’s continued denial that what HP called “gargantuan oil plumes” lay beneath the surface, basically eclipsing estimates of just how severe the damage BP has done is. Why is BP stock all but worthless? Read on.
It is generally not acceptable to just come out in a news report and say people lie. We can, in complete confidence call BP’s leadership liars. Not only this, but given James Cameron’s statements of the other day, breaking tradition and decorum, and calling them morons, seem all too appropriate now too. The impact of what is going on in the Gulf will eventually be felt around the world. Looking at a worst case scenario, rather than BP’s legal jargon and cover up tactics, imagine the Gulf of Mexico, maybe even part of America (and Cuba’s) Atlantic coastline irrevocably damaged. For one thing, the Gulf of Mexico is not Alaska’s remote coastline (if you are thinking Exxon Valdez).
Huffington Times 10,000
Dan Froomkin’s report on the NOAA situation reveals what may be the biggest cover up since Watergate. We are painting a “worst case scenario” remember. Froomkin shows video and statements which indicate, not only does BP know about oil plumes from their studies of deep water oil/gas interaction, but that NOAA has had reports streaming in for some time about these “gargantuan oil plumes.” Froomkin does let NOAA of the hook a bit, suggesting the secrecy has to do with litigation, and gag orders have already been issued. However, what we are about to see is a catastrophe so far beyond litigation – well, the world needs to think about economic collapse and to a degree chaos. There is a bigger picture. Below is the live feed below the Gulf.
The BP oil debacle is not just about the 20 to 30 million people living on the Gulf coast after all. If we consider what drilling and energy expert Matt Simmons suggests, there may well be in excess of 230,000,000 gallons of oil already polluting Gulf waters, and based on the live camera feeds, plus his suggestion there is an even bigger leak off camera, literally no end in sight. We won’t go into too technical a discussion, but imagine the plumber not being able to stop your bathtub from flowing. Now let’s look at the longer range effects of a Gulf of Mexico virtually unusable. What will those 10,000 news stories read like?
Gulf Shores and the American Psyche
Let’s forget for a moment the fishing industry which is about to be ground to a halt. Don’t worry about your restaurant in NY running out of shrimp or red snapper just yet. Let’s talk about tourism. Already BP’s mess has washed ashore along the Mississippi, Louisianna, and Alabama coastline, but what is even more significant perhaps are the globs of oil and stench now rendering Pensacola’s beaches into a toxic mess. Pensacola’s lodging revenue alone in 2008 was over $130 million, and what do people go to Pensacola for? How many people and businesses rely on tourists?
A gull flies over a sea of oil near Gulf beaches
Restaurants, shops, bars, clubs, car rentals, hot dog stands, sunglasses, beach buckets, city revenues, the whole ball of wax depends on the beaches. And this is just Pensacola, not including nearby Fort Walton Beach, Destin, or the Panama City beaches – let alone those back west in Louisiana, Mississippi, and Alabama. And then BP’s oil gets another chance at estuaries in Appalachicola and beyond. Empty hotels and shops equal unemployment, reduced tax revenue, and something a little more impactful for BP, Obama, big business, and the status quo of politics. The attachment of people to the places in their lives – trends – livelong remembrances – childhood holidays of 100 million people.
Stopping Tidal Waves
Let’s pretend for a moment that politicians, government, have covered the proverbial asses of big business for some time. Just pretend. For instance, with the Exxon Valdez debacle the public was incensed at the idea a pristine wilderness was spoiled. But, in that case one few American’s had ever seen.
Take into account the statements of Exxon, their commitment to, as Exxon executive Don Cornett promised, ” to take care of everyone affected by the spill.” Or more precisely:
“You have my word we will make you whole again.”
Then, after the chips fell, the public opinion was redirected, Exxon basically had a windfall from US courts, including the Supreme one – effectively reducing Exxon’s liability from $5 billion down to $2.5 billion, and finally to $500 million. One tenth the sum courts awarded fishermen and those affected – throwing many into bankruptcy. Not only did the government help devastate 32,000 claimants, many of those were forced to pay taxes on money Exxon paid some to help clean up their mess.
You read that correctly. Fishermen solicited to gobble up Exxon’s goo went broke paying taxes for helping solve the problem. The image left is a NOAA simulation of where this oil will be 132 days hence the original event.
But this time it is different. The Gulf of Mexico is not some distant and exotic province of America. Sorry Alaska, but you know what I am driving at. If you are reading this from anywhere south of the Mason Dixon Line, chances are you and your family have traveled to the exquisite wonderland of endless white beaches.
When you were a child, nine chances out of ten, you made a sand castle as the blazing sun tanned your little body, reflecting aquamarine tones on the crystal waters of tropical Nirvana. Let’s call this memory, your life’s personal beach blanket fairy tale collective cognizant blissful memory, for lack of a better term. Let’s extrapolate.
100 million people slapped in the face with the idea a company destroyed something tangible of theirs. I feel this way. But then, there are the economic ramifications. Let’s only linger here so BP, Obama, big oil, crooked officials, lobbyists, sideways judges, vampire lawyers and anyone else stupid enough to think they are going to cover this up. I get an image of Tony Hayward and his lawyers, hands out, beckoning a 200 hundred foot wave to stop.
Pensacola's Website - those lazy days of Summer - gone
Beyond Litigation There Is Restitution
What is probably about to happen is not actually a hard picture to paint for you. BP’s lawyers, even Obama’s, are on their traditional “bean counter” quest to add dollars and cents – secret this and that intended to position one or the other correctly in a courtroom. What we have seen no sign of as of yet, is any real understanding of the impact of BP’s folly. The final nail in the coffin for the American way of life. That sound extreme I know, but 6 months ago your Gulf of Mexico was ready to send and receive more money than BP has into the American economy.
At what point do the courts and litigation become useless historically? During international emergencies perhaps? World War? When powerful nations are pressed into extreme acts? Always. The United States of America is teetering on the brink of economic collapse. This month there are 15 million people out of work, we won’t go into the reasons why. The US dept is currently at something over $13 trillion dollars. Let me type this number out for an idea of its enormity. $13,062,295,320,403.98, or 13 thousand billion dollars. If my calculator serves me correctly, that is $40,000 debt for every man, woman, and child in the country. You owe $40,000 you never even signed for right now.
Now let’s just think simply and logically. Play pretend another million people lose their jobs over this. Play pretend another 50 million are adversely affected. Hotels, suppliers, retail, wholesale, service industries, investments, the whole ball of wax takes another enormous hit. Your Walmart shopping spree next Friday may not reveal too much pain, the grass out back may still get mowed, the kids are still off to school and baseball practice, but in a few months, years?
A hurricane here, a Wall Street fumble there, BP cannot pay the bill? Movie tickets fall, Blockbuster looses on video rentals, Avis on the Gulf coast takes a multi million dollar hit, Delta cannot fill Gulf jet seats, the list is endless. International law will seem insignificant is the United States economy cannot take the stress. We have to face this dismal alternate or virtual reality. British Petroleum is more than likely done as a viable company if things get any worse, especially if the US economy starts to go under. There will be no litigation, BP will more than likely be forcibly sucked into the chasm of public outrage.
You Better Watch Out, You Better Start Crying
You do not have to be an economic advisor to the President to do simple tasks. Hurricane Katrina still has its effects on the Gulf coast. The tourism industry alone has yet to fully recover from the devastating transformation of New Orleans and the surrounding areas. Now the economic infrastructure of the entire Gulf coast region, its immediate surroundings, and industries in every state in the union are faced with a disaster far greater, and possibly longer lasting.
President Barack Obama at Gulf Friday - His concern reflected in the camera eye
As Internet readers, you no doubt have surfed and read conspiracy theories, sensationalist scribblings, watched far out video, been enthralled with celebrity gossip, and wondered which news is the real news, we all have. Tell a story like this one, enumerating gloom and doom is not as easy as you might think. I for one get tired of bad news. The fact still remains that the entire southern half of the United States could well be virtually crippled economically. And, at a time when Americans can least afford it. But this is not just an American disaster. We have seen that in the effects of the Wall Street crash. The world is hurting, and in some cases even worse that Americans. We are all inextricably linked to one another.
President Obama, the officials on site in the Gulf and in Washington, surely have some idea along the lines of what I have stated here. Perhaps this is why the true breadth of the story is not being revealed? Maybe they think covering up the spilled milk will make Mommy not notice? The problem here though is that the spilled milk is about to blanket the city, and it’s still spilling. When James Cameron, Hollywood’s most ingenious film maker, called BP a bunch of morons, don’t you think he took pause in making such a statement?
When top scientists suggest detonating a nuclear warhead off the sandy beaches of the Gulf, as the Russians have in successful plugging attempts, do you think the situation is a minor inconvenience? Despite BP CEO Tony Hayward’s posturing that BP can afford all this, there is evidence BP may already be planning to sell off some of its most valuable holdings to foot the bill.
One Possible Truth – The End for BP
The simple truth, when all is said and done, is that British Petroleum cannot pay for the damage it has done. No way in hell. This is my opinion, and I am not alone in suggesting it. BP has already lost one third of its value based just on the stock market. If the total costs exceed BP’s value, or even come close, liquidating the company could likely still not satisfy all the damage done. Especially if this oil continues for an extended period.
A Gulf fisherman's wife fills out forms for $100 in food - It has begun
Even under the law (which as stated never even been needed) BP faces a $1000 a barrel fine at the end of this debacle. At my last count oil revenues per barrel were about $71 per barrel according to Bloomberg. That means BP may have to sell 14 barrels from other wells just to cover the fines from what is believed to be a leak of at least $15 million dollars a day (conservative estimate). If oil expert Matt Simmons is correct, if the actual well casing is leaking too, if 120,000 barrels are really leaking per day? BP’s fine from the EPA and the US Federal government is already nearly $6 billion. Something like $120 million per day.
No oil company, not all the oil companies in the world, can afford these kinds of penalties, let alone the economic and environmental costs. Experts are already discussing these very issues. This is the reason for this story’s title. BP shareholders had better be worried, had better watch out about taking their dividends, and be more worried about dumping what may soon be worthless pieces of paper. It’s not like BP or politicians are trying to cover up some White House tapes this time. Crude oil has a way of being sticky, and rather smelly when our kids romp on the beach.
From the Editor: This article is an expression of opinion with some material facts inserted. Of course no reporter can either know the full impact of the Gulf oil spill at this moment, nor can any journalist or even economic expert predict company or national futures with a high degree of accuracy. As primarily an opinion piece, the story makes the simple statement; “Some cannot see how BP or any company can withstand the massive expenditures which may be involved in accounting for the Gulf oil disaster.” What is maybe true for the US economy, may be true for BP. The article is intended to provoke thought and conversation.
About Phil Butler
