Oil Spill

British Petroleum’s shares have shed 40 percent of their value in the last six weeks, falling from $61 to a low yesterday of $36, but if sellers keep up the pace for just a few more days, the company could be trading at salvage prices by next week. Despairing news from the Gulf of Mexico over the holiday weekend set up the avalanche of selling that buried BP stock when it began to trade Tuesday morning.  Last Friday, the world had been transfixed by live images from the seabed that showed oil continuing to gush out-of-control from the broken well despite BP’s efforts to plug it with a “top kill.” We now know that that mud sealant that was injected into the drill hole didn’t build up the necessary pressure to resist the gusher because the wellbore itself was ruptured.  For all the good it did, the 1.2 million gallons of mud forced into the wellbore by a 30,000-horsepower piston might as well have been discharged directly into the sea. British Petroleum is facing criminal and civil charges as a result of the disaster, and it’s possible the company will not even be around in a year or two other than to pay claims.  Although the world will undoubtedly get along just fine if that happens, the loss of Louisiana’s wetlands and the catastrophic damage to the Gulf ecosystem will not be so easy to bear. An estimated 20 million gallons of crude have poured into the Gulf so far, but that number could go much higher if the leakage continues until August, when it is expected that a second and third well will be operating to take the pressure off the existing well. Alaska, 21 Years Later In the meantime, environmental reports from Louisiana have been heartbreaking. The slick has

This weekend,  I appeared on Al Korelin's The Korelin Report, where we discussed the responsibility of government in the BP disaster.

We may all be breathing a sigh of relief by the time you read this, but it remained uncertain at press time whether British Petroleum’s efforts to plug a massive oil leak in the Gulf of Mexico would succeed. Earlier in the day, the company began pumping a heavy fluid called “mud” into the damaged well, but the process was temporarily halted because the high-powered flow of oil and gas from the well was causing too much of the mud to escape.  BP said such delays had been expected but that they hoped to resume the sealing operation by late tonight.  The effort came amidst reports that oil has been gushing from the well at a rate much greater than what BP had first estimated. The company originally said that about 5,000 barrels of oil were escaping per day, but the latest estimates suggest that the true number is somewhere between 12,000 and 19,000 barrels. Converted into gallons, that implies that as much as 760,000 gallons of oil per day are flowing into the Gulf. Last week, we linked at Rick’s Picks a very scary article from rense.com that said the “top kill” procedure being used to plug the well was the world’s last hope to get the disaster under control.  The author, who sounded like he knew a thing or two about drilling platforms, explained that abrasive material contained in the gushing oil could eventually widen the well-hole so that virtually unlimited quantities of oil and explosive methane would be released into the water and atmosphere. We would strongly suggest that you read the article to understand what is at stake if BP’s effort fails. The only alternative at that point would be to drill an additional well to relieve the pressure.  This procedure is already under way, but

Now wasn’t that refreshing!  The Dow did a nearly 300-point dipsy-doodle yesterday, providing comic relief for millions of investors who might otherwise have spent the day fretting over the oil spill and North Korea’s quasi-declaration of war.  Earlier in the day, before NYSE stocks staged an epic recovery from abysmal lows, both of these developing news stories were cited by pundits as reasons why the broad averages had plummeted on the opening bell. How silly of us to think that Wall Street might actually have been concerned about Kim Jong-il’s next move, or about the mounting catastrophe that threatens to destroy the Gulf of Mexico’s ecosystem and shore-based economy, if not the economy of the entire U.S. Perhaps when globs of tar start washing up in the Hamptons, and the livelihoods of fisherman from Maine to Galveston are threatened, perhaps then stock-market speculators will act for once like they have a stake in the real world. In the meantime, it’s hard to tell which is more threatening:  a nuclear-armed, certified whack-job spoiling for a fight with his neighbor to the south, or an oil gusher that could turn most of America’s coastline hostile to humans and deadly to waterfowl and marine life.  We supposed we’d rather take our chances with Kim Jong-Il, since there’s always the remote possibility he’ll wind up like Mussolini and those lovely Ceausescus. But the oil-spill story seems to be getting worse by the hour, and it has the potential to replace “American Idol” as bozo-dom’s number one obsession if British Petroleum’s attempt to plug the leak with a “top kill” fails.  Failure was evidently a risk, since the oil may be gushing too hard for the tactic to work, according to some engineers. There were also rumors that the sea bed had collapsed and that