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Michael Economides

Michael Economides

Michael is among America's leading energy analysts. Back in 1999, Economides warned that oil prices, then at $11 a barrel, were about to surge. Within…

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Could There Be A Bright Side To the Gulf of Mexico Disaster

Although the US petroleum industry is understandably in a state of panic after the recent spill in the Gulf of Mexico and some, both friend and foe, have even resorted to outrageous speculation that the accident would mean “the end of offshore oil,” there is an optimistic take to the events.

Properly handled by the industry and credible experts, it may educate the American public – who, during the past few years, have become bigger and bigger victims of ideologically driven misinformation – on the realities of energy production.

The April 20 blowout of a BP well that was drilled by Transocean’s state-of-the-art Deepwater Horizon rig brought to the surface pent-up emotions, ideologies and, of course, the unassailable fact of the excruciating technical challenges that come with drilling in 5,000-foot waters. Even more important are the reminders that always must go along with the quest for oil and gas and, just recently in West Virginia, coal: There is no such thing as risk-free production of energy sources that are inherently volatile and explosive. What makes them such valuable and irreplaceable forms of energy also makes them dangerous.

In the ensuing political and environmental clamor, one tragic result that seems to be constantly forgotten by the press and pundits is that 11 people lost their lives in the accident. Then the “blame game” took on BP as the obvious target. After all, they had been involved with a number of previous disasters – from the Texas City refinery fire that killed 15 people in 2005 to the near sinking of their huge Thunder Horse platform in the Gulf of Mexico to the temporary shutdown of the Alaska pipeline. These incidents may signal a BP laxity but they may also be simply coincidences or bad luck, and nobody yet really knows what happened on April 20. But BP has become, for both the enemies of the oil industry and even for some of its friends, the poster boy of disaster and perhaps carelessness.

To be certain, the oil industry did not need this catastrophe and the cleanup will be long, arduous and expensive. It happened at a time of acrimonious debate over the future of oil and all fossil fuels. For some people, including key members of the Obama Administration and certainly many of his supporters, global climate change and other real or imagined dangers can be blamed squarely on oil. For the Left, the Gulf of Mexico disaster was a self-fulfilling prophecy, and from some of their statements one can glean an almost bizarre and macabre satisfaction. For them, the bigger the disaster the more it justifies their inherent position that oil is bad. To them it makes no difference how unrealistic or expensive alternative energy sources may be. Wind and solar, which to almost all knowledgeable people cannot even remotely replace a tiny portion of oil and gas anytime soon, if ever, are preferable to the prospect of a blowout and leaking well.

The predictable threat of shutting down all offshore drilling came next, and some environmentalists have called for a permanent ban on all offshore oil. Considering that the US already imports two-thirds of its 20 million barrels per day of oil use and that about half of US domestic oil production comes from offshore fields, such a policy would have a devastating impact on US oil supply. Imports would have to fill the gap. (Of course, for radical environmentalists the US should stop using any oil, period, no matter what the dire consequences may be.)

Despite the ideological overtones, a well blowout is in many ways similar to an airline accident. It can be due to pilot/operator error but it can also be because of basic physical problems, such as an unconsolidated formation, like the one in the Gulf of Mexico where the cement sheath may collapse, providing a huge conduit for a blowout. Such potential (and I am not saying that this is what happened but it is all too possible) has little to do with human actions, although safeguards are built exactly for those eventualities. A critical piece of the ongoing investigation is why the blowout preventer failed. It is possible that an entire sequence of problems and their chain reaction may never be known perfectly.

There is another analogy between this event and an airline accident. They are both quite rare. And similar to the fact that people do not stop flying after an accident, so too this disaster should not divert people and the government into ridiculous positions. But the Obama Administration is not exactly a friend of oil or the industry, and this may be just the event they need to tell everybody “I told you so.”

And of course there is always the scam of biofuels. It is no coincidence that just a week later, on April 28, Obama was saying “I believe in the potential of (ethanol) to contribute to our clean energy future, but also to our rural economies.”

But there may be a ray of hope and a semblance of sanity, thanks to the American public. Just two weeks before the accident, a Gallup poll for the first time showed that 50 percent of Americans want to develop US energy resources even if doing so will lead to environmental “suffering” of some kind. (That marks a 16-point increase from just three years ago.) Assuming that the leak is capped in a reasonably short period of time, the accident may actually work to the industry’s favor.

BP’s bad luck or even negligence notwithstanding, the offshore industry’s track record in environmental stewardship is actually exemplary. Solving the problem and cleaning up the mess will send a resounding message of the industry’s “can do” attitude. It would also serve to point out how rare these instances are in an industry that serves such a vital function in the US economy.

By. Michael J. Economides

Source: Energy Tribune




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  • Anonymous on May 20 2010 said:
    How about releasing to the public sector the advanced energy technology that has existed under wraps for decades? We could have been off petroleum products since the 1950's. Big oil and the military industrial complex is killing this planet for greed at our expense. We're running out of time people. Please wake up! :zzz
  • Anonymous on May 20 2010 said:
    James,As someone working full-time with advanced energy technology since 1973, your information is simply wrong.There is, as yet, no production ready advanced technology that can replace oil.That may begin to change within a year or two - faster with a 24/7 development effort.As a former Air Force officer, I assure you if the military had a way to power vehicles without petroleum, they would have been using it without delay. Fuel is the biggest drag on military operations as well as a huge expense.
  • Anonymous on May 20 2010 said:
    There is also a bunch of suppressed and mostly unused technology that's been around ( some of it for almost a hundred years) but actively,shall i say, discouraged by the powers that be.Two of them are HHO hydrolizer (using Browns' gas(dangerous but effective) and Stan Meyer's water fracturing.Another is Tesla's stuff, which would give free energy. But it will probably never come to the fore b/c well, "you can't put a meter on it." (J.P. Morgan).Certain people and entities have a very big interest ( money and otherwise) in keeping these things under wraps.Magnetic motors are probably the key. But every time someone builds a functional one, it either disappears or the people do.Like i said there's a lot of money at stake and until and if certain groups want to give up their bling bling, nothing will change. That's a pretty big if and not a likely outcome
  • Anonymous on May 21 2010 said:
    Similar to an airline accident in that they are rare? Tell me sir, when was the last airline accident that had the capacity to destroy an industry and an ecosystem?

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