News That Totally Disappeared from MSM: Gulf of Mexico Oil Spill

Remember that? Remember the company named BP, formerly British Petroleum?

Washington's Blog remembers (he also wrote extensively about the oil spill as it was unfolding), and has this post below. If you think all is now well in the Gulf, think again. In this country, important news tends to disappear very quickly while non-news is repeatedly paraded ad nauseum.


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Saturday, October 23, 2010 Washington's Blog
Gulf Oil Spill: Mission Accomplished or Ongoing Crisis?

The corporate media has almost entirely stopped covering the Gulf oil spill.

Many have tried to say that the effects of the spill are not nearly as bad as feared, and that everything is pretty much cleaned up and back to normal.

But today, it is widely being reported that there are currently massive stretches of weathered oil spotted in the Gulf of Mexico .

And websites like Florida Oil Spill Law (FOSL) have tirelessly been reporting on the Gulf oil spill this whole time.

To give an example of the ongoing crisis in the Gulf, here's a roundup of some of the top stories from FOSL from the past 3 days:

•Toxicologist now dealing with at least three autopsies in Gulf — “People who’s esophaguses are dissolving”

•Healthy teenager, 16, hospitalized after swimming in Gulf on AUGUST 30 — “Compromised lung” & “enlarged heart”

•Boat captain mentioned on NPR: “Internal bleeding — Very, very sick”

•Toxicologist: 4 to 5 MILLION people on Gulf Coast exposed to dangerous levels of oil — Going to have incredible health effect

•“We’re starving” — “There are no fish in the waters… and any fish we would see, we would not eat”

•Reporter STEPS onto beach, is then forced by private security to be “decontaminated” — “Yes” it’s about dispersants

•Boat captain “bleeding from her vagina” — “I’m bleeding from my anus, too… This thing is killing me”

•Oct. 19: “A seemingly unrelenting tide of oil” surprises pilot with “countless” flights over Gulf in last 6 months

•Report: Homeland Security agents want organizer to “shut up” — Told by BP to “back off”

•Captain: Mullet observed eating “dispersant as it gathered along the tide line”

•Massive SHELF of tar exposed on beach in Pensacola

•Not just the coast to be affected: “It is going to keep going further and further in”

•“Still so much oil and dispersant in the environment” says Gulf Restoration Network executive director

•“ALL” oyster beds are “dead or dying” says top oysterman — “Very pessimistic”

•Local Official: “The oil is not evaporating — it’s not dissipating, it’s sitting there”

•Florida woman: Oil found in batch of oysters while eating

•Scientists: Acceptable levels of toxic PAH in the Gulf raised simply for the BP disaster

•BP admits oil buried “30 inches under ground"

In related news, the government - always eager to immediately get to the bottom of what is really going on and then to fully publicize the results - has sent crucial Gulf samples to be analyzed in a lab . . . in Poland (all of the American labs are apparently busy testing the toxicity of hinky mortgages, mortgage backed securities, CDOs and naked CDSs). And the result will be shipped back by slow boat: NOAA isn't expecting results back until the end of the year.

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Obama's Pay Czar Is Paid by BP, and He Manages $20 billion BP Oil Spill Escrow Fund

Talk about "conflict of interest".

I have written about Kenneth Feinberg, President Obama's Pay Czar who has been put in charge of dispensing the BP's $20 billion escrow fund (which is still EMPTY, by the way), and wondered aloud why he seems to be more accommodating to BP than to the 'small people'.

Here's one guess: it is because he draws his salary from BP.

In the July 19, 2010 article, AP writer Frederic J. Frommer reports on the speech that Feinberg gave at the Economic Club of Washington D.C., in which Feinberg encouraged people in the Gulf region who have been negatively affected by the BP oil spill to settle. In the very last sentence, the writer throws in a piece of information I don't think I've seen anywhere else:

"Feinberg, who is being paid by BP, declined to provide his salary. "That's something between me and BP," he said."

Ummm, excuse me?

Mr. Feinberg, as Obama's Pay Czar ("Special Master for Executive Compensation", if you prefer), is being paid by the Treasury Department for his work of "regulating" executive compensation at big Wall Street banks and non-bank financial companies like AIG. (He doesn't seem to do any of that except for a few isolated cases, but that is for my later post.)

He was appointed by Obama to this Pay Czar position, in which he is only answerable to the president. But he has to be paid somehow for his service. So what did the administration do? Have Timmy Geithner hire him at the Treasury Department, of course. (That's how political appointees at the White House are paid, by the way - by creating 'positions' in the executive branch departments and agencies even if they only work for the White House.)

Mr. Feinberg's partner in his law office, Mr. Michael Rozen, has also been active in promoting the escrow fund. Wonder if Mr. Rosen also draws his salary from BP.

(H/T dovp2549)

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BP Oil Spill: Case of Altered Photos

BP was caught doing it again, photoshopping the photograph of a supposed aerial (albeit low-altitude) shot from a helicopter. Just like the previous "fake" photos of the command center (here and here), telltale signs of mediocre photoshop job were easily spotted by someone who quickly forwarded the info to Gawker.com. If you click the photos at their site (not the photo on the left), you can view the high-resolution version so you can join the "finding Waldo" game and test your eyes.

Why did they do it? Probably just to look good on PR, not really expecting the scrutiny by the netizens. No malicious intent. The pictures were probably good enough for the only segment of the population who are not literate enough in tech or the Internet: politicians on Capitol Hill.

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BP Oil Spill: Case of BOP Modified in China

It turns out the blowout preventer (BOP) originally manufactured by Cameron International was extensively modified under the order and instruction from BP. And that modification was done in China by a Chinese subcontractor to save money.

UK's Guardian reports:

BP oil spill: failed safety device on Deepwater Horizon rig was modified in China: Blow-out preventer was sent to Far East at BP's request rather than overhauled in US (Tim Webb, 7/18/2010 Guardian)

"BP ordered the owner of the Deepwater Horizon rig, whose explosion led to the worst environmental disaster in US history, to overhaul a crucial piece of the rig's safety equipment in China, the Observer has learnt. The blow-out preventer – the last line of defence against an out-of-control well – subsequently failed to activate and is at the centre of investigations into what caused the disaster.

"Experts say that the practice of having such engineering work carried out in China, rather than the US, saves money and is common in the industry.

"...There is no evidence that the significant modifications to the blowout preventer (BOP), which were carried out in China in 2005, caused the equipment to fail. But industry lawyers said BP could be made liable for any mistakes that a Chinese subcontractor made carrying out the work. It would be almost impossible to secure damages in China, where international law is barely recognised.

"It is understood that lawyers for Cameron International, the manufacturer of the BOP, will argue the device was so significantly modified in China that it no longer resembled the original component, and that Cameron should therefore not be held liable.

"Transocean, the owner of the Deepwater Horizon, which bought the BOP from Cameron, has already told congressional hearings into the disaster that the modifications were carried out at BP's request and "under its direction" as the lessee of the rig. BP and Cameron declined to comment this weekend." [Emphasis is mine. The article continues.]

Well, well. Then the cheap plastic seal made in China may have indeed been used in the BOP that was modified in China by a Chinese company...

It is the culture of BP, I'm afraid, fostered under the BP's previous CEO Lord Browne of Madingley, who also happened to be a director of Goldman Sachs until May 2007: to cut corners, to deceive, to pretend (that BP is a "green" company, for one), to suck up to the power that be, wherever they operate.

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Matt Simmons Is Still Saying the Same Things

that there is an open whole several miles away, from which oil is still gushing unchecked;
that this is a cover-up by BP and the administration on an unprecedented scale;
that the pressure gauge on the cap is a PR stunt;
that there's nothing we can do to stop it other than small nuke bomb;
that the cleanup cost (he doesn't seem to think we can clean it) will be over $1 trillion;
that the Gulf of Mexico is dead;
that BP's shares will go to $1.

Interview on Bloomberg TV on July 21:

Here's another interview he did with Kingworld News on July 17, 2010.

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Feinberg Wants to Protect BP, Not "Small People"

Or so it seems.

Obama's Pay Czar cum Oil Spill Escrow Fund Czar Kenneth Feinberg wants to subtract money that Gulf coast fishermen earn by working on the cleanup effort from any future damage claims against BP.

Dahr Jamail of Truthout reports:

BP's Scheme to Swindle the "Small People" (Dahr Jamail, 7/19/2010 Truthout)

"Gulf Coast fishermen and others with lost income claims against BP are outraged by a recent announcement that the $20 billion government-administered claim fund will subtract money they earn by working on the cleanup effort from any future damage claims against BP. This move, according to lawyers in Louisiana working on behalf of Louisiana fishermen and others affected by the BP oil disaster, contradicts an earlier BP statement in which the company promised it would do no such thing.

"Kenneth Feinberg, who was appointed by President Obama as the independent administrator of the Gulf Claims Facility for the $20 billion BP Deepwater Horizon oil disaster compensation fund, said yesterday that the wages earned by people working on BP's cleanup will be deducted from their claims against the company.

"He said the fund is designed to compensate fishermen and others for their lost income, and if BP is already paying someone to help skim oil and perform other cleanup work, those wages will be subtracted from the amount they're eligible to claim from the fund."

The article title is a bit misleading, because this would be news to BP, whose lawyer had formally written to the attorneys for cases pending in Lousiana:

"A.T. Chenault, a lawyer representing BP, responded in writing via letter stating, "We have no personal knowledge of the presentation of a Voluntary Waiver and Release to numerous people from Plaquemines Parish in Venice, Louisiana. However, it is the position of BP that any such documents will be rescinded and not binding on anyone signing same."

"Lastly, we confirm that BP will not offset payments to vessel owners or other volunteers against claims they might have," wrote Cheault, who is with the firm Fowler, Rodriguez, Valdes-Fauli." [The entire article at the link above.]

This blog already raised the question as to exactly whose interest Mr. Feinberg intends to represent in dispensing this fund.

But other questions beg answers, too.

1. Has anyone seen the actual signed agreement for the escrow fund?

2. What is in the agreement, exactly?

3. Who signed the agreement? BP and ....? Obama?

4. If Obama, who (or what) gave him the authority to demand and sign an agreement like that?

5. Where was Congress?

6. Where is Congress now?

7. Why isn't anyone demanding to know what is in the agreement?

8. Why isn't anyone asking why this private attorney (Feinberg) has any authority to dispense this fund? Just because Obama said so?

9. Is Mr. Feinberg's law firm set to benefit in any way? If so, in what way? (The article does mention that the attorneys with cases in Louisiana court are planning to meet Mr. Feinberg's law partner Michael K. Rozen.)

Interestingly, Mr. Rozen was seen speaking to attorneys, insurance companies, government agencies and answering questions in Oil in the Gulf Conference, explaining this escrow fund. He was addressing himself as "we", indicating he is a part of the official team. (So if Obama appoints Feinberg, his partner is also automatically in??)

This escrow fund (if there's any money in it) smells more and more like the settlement of a big class action lawsuit, except the settlement is already at hand without the lawsuit. Just like any class action lawsuit settlement, likely winners are the attorneys representing the 'small people' who will receive pittance. If that.

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Mirror UK: Tony Blair to Become BP Chairman?

The UK's tabloid newspaper Daily Mirror relates the rumor that Tony Blair, ex-British Prime Minister, is tipped to replace the BP chairman.

Tony Blair tipped to take over as chairman of crisit-hit BP
(6/23/2010 Mirror UK)

"Tony Blair was yesterday being touted as the man to rescue stricken BP.

"City experts reckon appointing the ex Prime Minister as chairman is the first step to saving the company after the Gulf of Mexico oil spill disaster.

"They highlighted his huge popularity in America and his close links to BP as Premier.

"City expert Matthew Lynn said: "Anyone who watched chief executive Tony Hayward struggle to find a voice while being skewered by Congress last week would have realised the company needs to step up its debating skills by about 1,000%."

Yes, BP's problem is all about the lack of debating skills. Mr. Blair has excellent skills, which he used them well to goad his nation into the war with Iraq.

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US Express "Dismay" at the Sentencing of a US Geologist While Making It "Class D Felony" to Film Oil Cleanup in the Gulf

Irony is sweet. The Chinese-born US geologist's sentence is eerily similar to what the federal Class D felony charges may involve.

First, the geologist:

China Court Jails U.S. Geologist for Eight Years on State Secrets Charges (7/5/2010 Bloomberg)

"A U.S. geologist was sentenced to eight years in prison by a Chinese court after being convicted of violating the state secrets law by selling a database on the country’s oil industry.

"The U.S. said it was “dismayed” by the sentence given to Xue Feng and remains concerned about his rights to due process under Chinese law. Xue was also fined 200,000 yuan ($29,550) today by a Beijing court at a hearing that was attended by U.S. Ambassador to China Jon Huntsman, Richard Buangan, a spokesman for the U.S. Embassy said. Calls to Beijing No. 1 Intermediate People’s Court and the Foreign Ministry weren’t answered today." [Emphasis is mine. The article continues.]

Now, our own Class D felony charges:

BP plc And The Administration Replace First Amendment With $40,000 Fine And Class D Felony (Tyler Durden, 7/3/2010 Zero Hedge)

"CNN's Anderson Cooper, one of the few people who apparently hasn't or isn't leaving the troubled news network (surely Ted Turner has learned by now from CNBC that his female anchors should wear transparent body suits, show belly button deep cleavage, and install a stripper pole or seventeen for those ever more elusive Nielsen points), reports some troubling developments out of New Orleans. "The coast guard today announced new rules keeping photographers, reporters and anyone else from coming within 65 feet of any response vessel or booms, out on the water or on beaches. In order to get closer you need to get direct permission from the coast guard captain of the Port of New Orleans. Shots of oil on beaches with booms - stay 65 feet away. Pictures of oil soaked booms useless laying in the water because they haven't been collected like they should. You can't get close enough to see that. And believe me, that is out there. But you only know that if you get close to it, and now you can't without permission. Violators could face a fine of $40,000 and class D felony charges. The coast guard tried to make the exclusion zone 300 feet before scaling it down to 65 feet."" [Emphasis is mine. The article continues, and includes CNN's clip, which is linked below.]

Here's federal Class D Felony sentencing, according to Wikipedia.org:

Maximum prison term: Less than 10 years but 5 or more years
Maximum fine: $250,000
Maximum supervised release term: 3 years
Special assessment (to fund the federal Crime Victims Fund): $100

Listen particularly to the two Parish Presidents fighting against the feds to get the job done.

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Uh Oh... Bot Collided with Containment Cap...

From AFP via Breitbart:

"The containment system capturing oil from the Gulf of Mexico spill had to be removed Wednesday, leaving the gusher unchecked after a collision involving a robotic submarine, US officials said."

(UPDATE)

Two people died today in the cleanup operation. One is a boat captain who died of a gunshot wound.

(2nd Update)

Two people who died were part of the program called "Vessels of Opportunity", which is "designed and implemented to provide local boat operators an opportunity to assist with response activities, including transporting supplies, assisting wildlife rescue and deploying containment and sorbent boom" and is part of BP's effort to clean up the oil spill.

For more, visit the Deepwater Horizon Unified Command website.

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BP's $20 Billion "Escrow Fund" May Not Be What We've Been Told

If this was a "shakedown" by Obama, it was more like BP begging "Oh please shake me down, I'll give you all the money you want. It will make you look good, too. A strong leader. But in exchange..."

The Wall Street Journal article yesterday ("Feinberg Ramps Up $20 Billion Compensation Fund" by Neil King Jr., 6/21/2010) says the following about the $20 billion escrow account that Obama demanded and has been established, to be managed by Obama's Pay Czar Kenneth Feinberg:

- As soon as the Deepwater Horizon rig sank in April, Feinberg started to plan for administering the claims.

- It was BP who asked Feinberg to work for them in administering the claims two weeks ago.

- Last week Obama and BP announced the establishment of the escrow fund, without Congressional approval, without even the presidential executive order.

- Feinberg will have the sole and complete latitude to decide who will get how much.

As with other Czars surrounding Obama, Pay Czar is not accountable to Congress or the general public. He's only answerable to Obama, who has told him to "get the payment out quickly."

The article ends with indications on how Mr. Feinberg intends to proceed:

"In the end, one aim of the fund—and a prime reason BP agreed to it—will be to minimize lawsuits against the company. To do that, Mr. Feinberg will offer big lump-sum payments to workers and businesses as an enticement to stay out of court.

""At some point, I will have to make an offer—'You take this amount in full satisfaction of your claim, but only if you waive your right to future litigation,'" Mr. Feinberg said. "And if I package it right, people will see that it makes no sense to fight it out in court."" [Emphasis is mine.]

So the administration (not even the federal government) unilaterally decided to take the responsibility of compensating the oil spill victims from BP and assign it to a presidential appointee who is not accountable to Congress and who will have the sole power to decide who gets what, and the whole point of the exercise is to shield BP from lawsuits from the 'small people'.

That explains why investors have been buying BP's shares and bonds. They think the downside is covered by the administration.

Some 'small people' on a stock message board had an excellent idea the other day: Let's all move to the Gulf states immediately, and start filing claims!

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Will BP Trigger a 'Black Swan' Event?

in the world of structured finance?

Citing Moody's analysis, Zero Hedge reports that BP's bankruptcy would impair more than just the BP's debt holders and equity holders. The loss in CSOs (collateralized synthetic obligations, often using credit default swaps, or CDS) that reference BP and the companies that are involved in the Gulf oil spill - i.e. Transocean, Halliburton, Anadarko, and Cameron could be billions of dollars. If you include other oil and oil service companies that would be negatively affected by the spill, the amount could be hundreds of billions, as it would also involve companies totally unrelated to BP or oil industry but unfortunate enough to have their CDS packaged with BP's.

BP's Bankruptcy Would Impair 117 (18% Of Total) Collateralized Synthetic Obligations, Lead To Pervasive Losses (Tyler Durden, 6/21/2010 Zero Hedge)

"Even as increasingly desperate falling knife catchers try to convince someone, anyone to buy up some or all of their shares of BP stock, which is certainly on its way to a guaranteed doubling, tripling or more, the real investing community is ever more carefully looking at the worst case, and its implications. Said implications would be vast, and in addition to wiping out billions in capital from BPs direct counterparties which are already limiting their BP exposure, a topic we touched upon briefly previously, would also impair indirect holders of pre-packaged securitized BP exposure. Today Moody's provides an analysis of which CSOs (just like CDOs but packed purely with synthetic products - think Goldman's Abacus) would be impaired should BP go bankrupt. The rating agency does not stop there, and also analyzes what a bankruptcy of BP peers Halliburton, Anadarko Petroleum, Transocean Inc., and Cameron International would look like, and who would be wiped out. Below are the results, which upon further analysis will likely indicate total loss potential well beyond BP's total outstanding debt exposure.

"As the recent civil case involving Goldman and the Abacus (and soon potentially others) CDO showed, collateralized products have a special place in the heart of the regulators, due to their avalanche quality of blowing up seemingly completely unrelated entities, which share merely the stupidity of having invested in the same entity. BP, as a company with over $20 billion in debt outstanding, has over the years, seen many of its CDS packaged and repackaged in the form of many and increasingly more complex CSOs. Last week's blow out in BP spreads, in which the 1 Year CDS surged beyond 1,000 bps, has got many people concerned: the least of which are counterparties that are on the other side of the short risk trade. Others include investors in just such CSOs, and other companies whose CDS comprises various tranches in these synthetic obligations, as forced liquidations in any given CSO would result in the blow out spreads in even perfectly solvent companies who just have the displeasure of being packaged in one and the same CSO." [Emphasis is mine. The article continues.]

The whole point of structured finance is to transfer risk by securitization, tranching, credit enhancement and rating. But as we have seen in the past two years, instead of reducing the risk these CDOs seem to do the opposite and amplify the risk in times of acute financial stress. Zero Hedge article concludes:

"Should BP go down it will, on a diluted basis, wipe out many more pro rata billions in value once protection sellers scramble to cover margin and collateral calls. Add the other drilling usual suspects, and the losses could amount well into the hundreds of billions." [Emphasis is mine.]

I would love to know who wrote those protections. And the names of the unfortunate companies whose CDSs were packaged with those of BP.

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Sen. Shelby: BP CEO's "Height of Arrogance" for Yachting

or seeing his yacht take part in a race for few hours.

Oh please.

The Hill reports:

Top GOP senator slams BP CEO for 'height of arrogance' for yachting
(6/29/2010 The Hill)

"...Sen. Richard Shelby (R-Ala.), a senior GOP senator who serves as ranking member of the Senate Banking Committee, sharply criticized Hayward for reportedly participating in a yacht race off the southern coast of England.

"“That’s the height of arrogance," Shelby said during an appearance on Fox News. "He is the CEO OF B.P. and he testified in Washington before the Congressional Committee the other day.”

"The Associated Press reported that Hayward, who stepped aside from his role on Friday of supervising of day-to-day cleanup efforts of the Gulf oil spill, took a break from his official duties to compete in the J.P. Morgan Asset Management Round the Island Race.

"“Now he’s gone over to be on his yacht over in England," Shelby said. "I can tell you that yacht ought to be here skimming and cleaning up a lot of the oil.”

"Hayward's move drew quick rebuke on social networking sites and Twitter, where ABC White House correspondent Jake Tapper also relayed criticism from White House Chief of Staff Rahm Emanuel, as well.

""I think we can all conclude that Tony Hayward is not going to have a second career in PR consulting," Emanuel said in an interview to air Sunday on ABC's "This Week."

""This has just been part of a long line of PR gaffes and mistakes," Emanuel added.

"Shelby slammed Hayward for living in a "cocoon."

"“He ought to be down here seeing what is really going on, no in a cocoon somewhere," the Alabama Republican said."

I am just appalled by the hypocrisy of these politicians. What have they done in the past two months, other than declining the offers for help from foreign firms and countries and making speeches and photo-op visits, banning the means of earning decent living for the residents on the Gulf (oil drilling, fishing)?

The comment section of the article shows we the "small people" are not fooled:

"If Obama can go off and play golf so often during this, why can't Hayward go sailing once?"

"Who gives a flip what Hayward does? He is no longer overseeing the spill. Focus on our fearless leader's choice to attend galas, golf and play basketball at our expense. Meanwhile…tar balls are washing up in Florida. No thanks foreign nations, I will handle this as soon as I sink this putt."

"Where was Shelby blasting Obama's 'height of arrogance' while hitting the links 8 times during this crisis. Or his two vacations! Shelby is a former Dem. Don't forget it."

"I will say the same thing to the GOP as I say to the president…pot meet kettle. Why can't he have a day away when our own president has taken numerous days away? At least Hayward was working on from day one…you can't say that about Obama - in fact, he went hobnobbing with famous people in California during the 1st or 2nd week of the crisis to fund raise! Not much difference in my opinion."

"Note to Mr Shelby… most likely Tony Hayward's boat is unable to help with the oil cleanup for the same reason a lot of more suitable help has been refused. The Jones Act should have been waived within the first 24 hours after the rig blew up. Where is the Congress, and where is our President? Too busy posturing to do anything that might actually clean up some oil!"

The best comment so far:

"Our President is doing the best he can…If that doesn't scare you, I don't know what would"

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Russian Leaders Comment on BP's Fate

Reuters reports that BP's embattled CEO Tony Hayward's conspicuous absence from the annual business forum in Russia this week prompted speculations from Russia's political and industry leaders.

Frankly I do not know whether to read between the lines or take them at face value. But I do know that you don't necessarily want to be wished well by a Russian leader in your absence. The CEO of a large Russian steel company (Mechel Steel; stock symbol MTL) couldn't make it to the meeting with Prime Minister Vladimir Putin supposedly due to a sudden illness. Mr. Putin wished him a speedy recovery, and the company's shares plunged 38% in one day.

BP CEO the ghost at the feast as Russia fetes big oil
(Vladimir Soldatkin, 6/19/2010 Reuters)

"(Reuters) - The leaders of the global oil industry gathered as usual at Russia's top annual business forum this week but there was one ghost at the party.

"BP (BP.L) chief executive Tony Hayward, normally a regular, was conspicuous by his absence this year and his company's woes were a constant topic of discussion among those who did come." [The article continues.]

Here's what Reuters reports they said:

Russian President Dmitry Medvedev: the Kremlin was "not indifferent to their future" and adding: "Hopefully, they can absorb the losses."

[French oil major] Total CEO Christophe de Margerie: "I think we are all at stake and I do wish BP will survive"

Rosneft CEO Sergei Bogdanchikov: "We believe that a powerful company like BP can easily form the fund and asset sales will be minimal, if any"

Gazprom Neft's CEO Alexander Dyukov: "Big losses, but it will survive. In theory, a friendly takeover is possible"

LUKOIL President Vagit Alekperov: "We are not wolves", "We don't eat the weak."

Deputy Prime Minister Igor Sechin: the spill could affect key projects such as the giant Shtokman gas field in the Barents Sea. "Every time I think of the accident I break out in a cold sweat"; "The consequences are so grave and I understand the actions of the U.S. administration, which is focusing its attention on cleanup, but I also sympathize with BP."

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Judge Napolitano: That government is best which governs least

"...Here are the facts: After the Exxon Valdez disaster off Alaska in 1989 had been cleaned up and nearly paid for by Exxon, the oil companies lobbied the Congress for liability limits — maximum amounts that they could be held to pay for in the event of a disaster.

"A Republican Congress and President Clinton together made it the law that oil companies would be limited to pay $75 million for cleanups and the taxpayers — that would be you — would pay the rest. In return, the feds would be able to tell the oil companies where to drill.

"In the case of BP, it asked the state of Louisiana if it could drill in 500 feet of water and Louisiana said it could. The federal government vetoed that and told BP could only drill in 5,000 feet of water.

"Never mind that no oil company had ever cleaned up a broken well at that depth and never mind that the feds had never monitored a broken well at that depth and never mind that BP only needed to set aside $75 million in case something went wrong. The feds trumped BP's engineers and the feds trumped the wishes of the folks who live along the Gulf Coast and the feds decided where this oil well would be drilled.

"Disaster struck. The feds did nothing. Oil gushed out in an amount that is so great as to be immeasurable. Political pressure grew.

"The president eventually panicked because he believes that his federal government can right every wrong, regulate every activity and protect us from every catastrophe. He is wrong. Louisiana Governor Bobby Jindal was ready to build barriers to protect his state's coastline and the feds said no.

"The president even invoked powers that allow him to supervise the cleanup using BP personnel and equipment. And the oil still gushes. Last week, the president stopped all oil drilling in the Gulf putting thousands out of work. Last night he demanded billions from BP so his team could decide who gets it and today a terrified BP gave him all the cash he asked for.

"So, the government that foolishly limited BP's maximum liability, the government that claimed it knew where best to drill, the government that actually stopped locals from protecting their own shoreline — that would be that same government that bankrupted Social Security, Medicare, Medicaid, the Post Office, Amtrak and virtually everything it has managed — now wants to decide who gets BP's cash.

"The last time this government had this much private cash to give away, during the GM and Chrysler bankruptcies, it disregarded well-settled law and gave it to the labor unions. To whom will it give this cash — the innocent injured or its political friends?

"The government cannot protect us from every catastrophe, especially ones its rules have facilitated. How about this: That government is best which governs least."

Emphasis is mine. The entire article can be viewed here.

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Joe Barton Retracts Apology to BP

Geez that was quick.

From Politico:

"Rep. Joe Barton (R-Texas) is apologizing for his apology.

"After infuriating Democrats and Republicans alike with his public apology to BP and suggesting that a $20 billion escrow fund was a “shakedown” by the White House, Barton is now “retracting” his statement, made at a hearing with BP CEO Tony Hayward.

"“I apologize for using the term ‘shakedown’ with regard to yesterday’s actions at the White House in my opening statement this morning, and I retract my apology to BP,” Barton said. “As I told my colleagues yesterday and said again this morning, BP should bear the full financial responsibility for the accident on their lease in the Gulf of Mexico. BP should fully compensate those families and businesses that have been hurt by this accident.""

The moment I thought I heard the truthful speech from a politician, it was retracted.

Again, he was not denying that BP should fully compensate for the damage. He was saying the way the White House pressured BP into coughing up $20 billion fund to be managed by the Obama appointee (Pay Czar) was a shakedown and it shouldn't have happened.

But English comprehension is not practiced in the US, and people are conditioned to simply react to sound bites without context or meaning.

Good luck getting any money for the damage from this shakedown fund managed by the government. Already, the definition of "damage" is quickly broadening; one politician wants to use that money to provide health care to people who lost their jobs and lost their health care insurance coverage.

Why stop at health care? Why not food stamp program, child care program, unemployment checks, low-income housing? How about paying to retain public union workers - teachers, firefighters and policemen?

Who needs the government, if you have BP?

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BP Oil Spill: Case of Stopped Barges and Booms from Bahrain

Maybe it's not a good idea to have the government in charge, after all.

BP Oil Spill: Against Gov. Jindal's Wishes, Crude-Sucking Barges Stopped by Coast Guard (6/17/2010 ABC News)

"Eight days ago, Louisiana Gov. Bobby Jindal ordered barges to begin vacuuming crude oil out of his state's oil-soaked waters. Today, against the governor's wishes, those barges sat idle, even as more oil flowed toward the Louisiana shore.

""It's the most frustrating thing," the Republican governor said today in Buras, La. "Literally, yesterday morning we found out that they were halting all of these barges."

"Sixteen barges sat stationary today, although they were sucking up thousands of gallons of BP's oil as recently as Tuesday. Workers in hazmat suits and gas masks pumped the oil out of the Louisiana waters and into steel tanks. It was a homegrown idea that seemed to be effective at collecting the thick gunk."

So why was the operation stopped?

"The Coast Guard needed to confirm that there were fire extinguishers and life vests on board, and then it had trouble contacting the people who built the barges."

They needed to see the proper permit. Governor Jindal, a Republican, says he didn't have the authority to override the Coast Guard. After much wrangling, the operation finally resumed, 24 hours later.

Governor Riley of Alabama, another Republican, doesn't have much luck with the Coast Guard either.

"Riley, R-Ala., asked the Coast Guard to find ocean boom tall enough to handle strong waves and protect his shoreline. The Coast Guard went all the way to Bahrain to find it, but when it came time to deploy it?"

It went to Louisiana.

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BP Oil Spill: Case of "Toxic" Dispersant

Bloomberg reports that a class-action lawsuit has been filed in federal court in New Orleans against BP and Nalco, manufacturer of the chemical dispersant that BP has been using.

The suits claims that "is four times more toxic than the oil itself", and that "the dispersant has been sprayed over the Gulf of Mexico and has caused a toxic chemical to be a permanent part of the sea bed and food chain in the bio structure"; and the chemical causes "an even more dangerous condition to exist in the Gulf of Mexico than if the oil was allowed to float to the shoreline."

Ever distrustful of trial lawyers, I decided to check what exactly are these horrific toxic chemicals.

What is a dispersant? It is essentially a detergent made up of cleaning agent, emulsifier and surfactant.

Nalco, whose largest institutional investor is Warren Buffett of Berkshire Hathaway, has the chemical components of the dispersant, COREXIT, on its website:

CAS #	Name	Common Day-to-Day Use Examples
1338-43-8	Sorbitan, mono-(9Z)-9-octadecenoate	Skin cream, body shampoo, emulsifier in juice
9005-65-6	Sorbitan, mono-(9Z)-9-octadecenoate, poly(oxy-1,2-ethanediyl) derivs.	Baby bath, mouth wash, face lotion, emulsifier in food
9005-70-3	Sorbitan, tri-(9Z)-9-octadecenoate, poly(oxy-1,2-ethanediyl) derivs	Body/Face lotion, tanning lotions
577-11-7	* Butanedioic acid, 2-sulfo-, 1,4-bis(2-ethylhexyl) ester, sodium salt (1:1)	Wetting agent in cosmetic products, gelatin, beverages
29911-28-2	Propanol, 1-(2-butoxy-1-methylethoxy)	Household cleaning products
64742-47-8	Distillates (petroleum), hydrotreated light	Air freshener, cleaner
111-76-2	** Ethanol, 2-butoxy	Cleaners

* Contains 2-Propanediol

** This chemical component (Ethanol, 2-butoxy-) is NOT included in the composition of COREXIT 9500

What BP is using is COREXIT 9500, without 2-butoxy ethanol, which is used widely in household cleaning solutions (Windex, Simple Green, to name a few). It decomposes within a few days in the environment.

Hydrotreated light distillates is Mineral Oil, used as lubricant and cleaner.

Butanedioic acid is used in industrial hand cleaner, paint stripper, body soap, and as food additive. It is readily biodegradable.

Sorbitan is a surfactant used as an emulsifier (i.e. mixing two hard-to-mix substances like water and oil), and is widely used in cosmetics and personal care items like shampoo and soap.

1-Propanol is a primary alcohol used as solvent in pharmaceutical industry. It degrades rapidly in the environment, and has low aquatic toxicity.

And we are supposed to be so scared of these 'toxic' chemicals. Then we are beset with 'toxic' chemicals every day all around us, and we don't even need to dive in the Gulf of Mexico to get exposed.

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Ranking Republican Apologizes to BP's CEO

Good for him.

Republican apologizes to BP for 'shakedown' by government
(6/17/2010 The Hill)

"A top Republican lawmaker apologized to BP on Thursday for what he said was a "shakedown" by the government of the oil company in forcing it to create a $20 billion fund to pay out damages resulting from the Gulf of Mexico oil spill.

"“I am ashamed of what happened in the White House yesterday," said Rep. Joe Barton (R-Texas), apologizing to the oil company.

"Barton, the ranking member of the House Energy and Commerce, said that the relief fund BP created under pressure from President Barack Obama was, in essence, a "slush fund.""

The "thin-skinned, controlling" White House, along with the Congressional leaders of both GOP and Dems, immediately attacks Barton by mischaracterizing his remark. The Hill article continues:

"White House press secretary Robert Gibbs called on both parties to "repudiate" Barton's comments.

“What is shameful is that Joe Barton seems to have more concern for big corporations that caused this disaster than the fishermen, small business owners and communities whose lives have been devastated by the destruction," he said in a statement.

"Congressman Barton may think that a fund to compensate these Americans is a ‘tragedy’, but most Americans know that the real tragedy is what the men and women of the Gulf Coast are going through right now," Gibbs said."

Barton is not saying any of that. He is saying $20 billion escrow fund that BP was made to agree on by the White House amounts to nothing but a "slush fund" for the administration. If anyone thinks the money, all of it or close to it, will go to "fishermen, small business owners and communities", he/she is so naive.

Now let's look at what this $20 billion escrow fund is about. Below are some of the salient points from the announcement from the White House, with my interpretation:

- An independent claims facility will be created to process the claims, will be administered by none other than Kenneth Feinberg, Obama's Pay Czar who has been dictating the Wall Street pay in a peculiarly inconsistent manner (stripping Bank of America's Ken Lewis' salary to zero while giving the CEO of AIG, of all firms, more than $10 billion, and the Vampire Squid is free to pay its executives any amount they deserve for a great financial firm like theirs.).

- The facility will develop standards for claims. The facility is for "small people" (individuals and businesses) who are affected by the oil spill; local, state, tribal, and federal government claims will continue to be handled directly by BP. So the governments' claims are handled outside this escrow fund facility and directly by BP, assuring the speedy payout. (Good luck, "small people", filing documents after documents going through the process fighting the petty bureaucrats.)

- A panel of three judges will be appointed to hear appeals.

- BP will contribute $20 billion over 4 years to the escrow account ($5 billion each year). BP will set aside $20 billion US assets. In other words, the escrow account is secured by BP's real assets. If BP fails to contribute funds, therefore, the government will seize the collateral.

- $20 billion is not a floor, nor a ceiling on liabilities. So the amount BP will be forced to pay is essentially unlimited.

- BP will voluntarily contribute $100 million to support unemployed oil rig workers, who were made unemployed by the moratorium on drilling imposed by the government. Those jobs may not come back, as oil rigs are in demand elsewhere in the world, notably in Brazil. Oil companies are paying half a million dollars a day for a deepwater oil rig. They can't afford to have them floating idle.

It is a theft, from a private business, in the name of "small people", to empower and enrich the bureaucracy of the government.

BP has caused the world-class disaster; magnitude of which we haven't figure out yet. So the government butts in, and profits as go-between.

Never waste a crisis.

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BP Oil Spill: Case of Nitrogen-Infused Cement

The more I read, the more I'm convinced that BP is still hiding the vital information to assess the situation, let alone to devise plans to tackle the leak.

And the Obama admin is not too keen on seeking that information either, judging by Obama's speech last night, in which he talked about some "post-spill" policy actions. We are still in the middle of the spill, Mr. President, in case you haven't noticed.

Take this for example: the rumor is circulating that the well casing has been either severely damaged or destroyed, and that's why BP called off the "Top Kill" quickly.

Oil industry experts say if the well casing is destroyed, there is no way to seal off the well. (See this post on Washington's Blog.)

The well casing was sealed with a relatively new type of cement - light, quicker-curing nitrogen-infused cement offered by Halliburton. According to the testimony of Halliburton's cementer Christopher Haire, the new cement was used in the deepest casing, contradicting the testimony of Transocean's Jimmy Harrell, the top drilling official on the rig when it exploded in the Gulf on April 20, who testified that the rig had only used the nitrified cement on shallower casings.

From Halliburton's website, this type of cement, "Foam Systems", is promoted as a cost-saving alternative to conventional cementing.

Nitrogen-infused cement was known to have caused problems in other rigs. Nitrogen in the cement could get in the well hole; chemicals used in the cement for faster cure "create a lot of heat, which can thaw the methane hydrate into the gas that causes dangerous kicks". (Source: The Oil Drum)

Then there is this case of a cheap ($7) rubberized plastic seal that probably broke in the Blowout Preventer (BOP), rendering the BOP useless.

The last (and bottom) segment of the BP-designed well casing didn't have an O-ring seal.



Fluffy cement, a cheap plastic seal for the BOP, a missing O-ring - minor details that may have caused the blow-up and which could have easily, and cheaply been corrected.

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Obama-BP Meeting Went Overtime, Without Obama

After the speech from the Oval Office yesterday which had been much hyped by the administration and which fell flat on just about anyone, Obama met with BP officials at the White House.

For how long? It was scheduled to be 20 minutes.

20 minutes.

According to media reports, the meeting went overtime by several hours, but the "I'm in charge, I'm responsible" president had long left the meeting.

Left after 20 minutes?

No one knows.

This is the Presidential schedule for the day, courtesy of CBS.

10:15AM: President Obama and Vice President Biden attend a meeting with BP executives

10:35AM: President Obama and Vice President Biden receive the Presidential Daily Briefing

11:05AM: President Obama and Vice President Biden receive the Economic Daily Briefing

12:15PM: President Obama delivers a statement to the press

12:30PM: President Obama and Vice President Biden have lunch

1:45PM: President Obama meets with senior advisers

2:30PM: President Obama meets with Senator Scott Brown

5:35PM: President Obama delivers remarks at the American Nurses Association House of Delegates

(Meeting with Scott Brown? That's interesting.)

(He and VP Biden have lunch together almost every day.)

(What a light-weight schedule, but on other days it is even lighter. Wonder what the schedule of George Bush was like.)

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