Blue Marble - May 2010

Will Taxpayers Bail Out Big Oil?

| Wed May 5, 2010 7:00 AM EDT

The Obama administration has made it very clear that it intends to force BP to pay all of the costs associated with the massive spill in the Gulf of Mexico. But that might be easier said than done, thanks to a law passed by Congress in the aftermath of the Exxon Valdez spill that puts a $75 million cap on liability for spills.

The costs associated with the Deepwater Horizon spill are numerous. BP is already spending $6 million a day on clean-up efforts. The government is  expending millions as the Coast Guard and numerous state and federal agencies rush to provide back-up. The spill has halted local fishing, an industry that brings in $41 billion to the Gulf region every year. It also threatens to seriously harm the region's tourism industry, which brings in $100 billion for Gulf states annually. And then there are damages that are more difficult to measure. The blast killed 11 workers and injured 17 others, and hundreds of gallons of oil are still seeping into the Gulf every day, standing to destroy fragile coastal ecosystems. It's hard to put a dollar figure on such losses.

Not long after the Exxon Valdez spill of 1989, Congress passed the Oil Pollution Act of 1990, which imposed a fee on oil companies—currently  8 cents a barrel—to be paid into the Oil Spill Liability Trust Fund. The federal government uses the fund to cover losses from oil accidents—such as  the destruction of wildlife and fisheries—up to $1 billion per incident. It looks very likely that this particular incident will far exceed that limit; current estimates are as high as $8 billion. But the 1990 law also capped the liability of companies at just $75 million for all costs claimed by parties injured in an accident, including individuals, businesses and government agencies.

This means that it could be very hard for the government to force BP to pay for all the expenses stemming from the spill. A trio of anti-drilling senators on Monday introduced the "Big Oil Bailout Prevention Act," a measure that would raise the liability limit on spills to $10 billion per incident.

"Let's be honest, $75 million to BP, that earned $5.6 billion in the last quarter alone, is less than a drop in the bucket," said sponsor Sen. Robert Menendez (D-NJ) on Tuesday. Raising the cap to $10 billion, he said, "gives us real access to the type of money necessary and makes the polluter pay." Menendez also said it would instill more "discipline" on companies to "make sure they've got the safest technology and that it is working." Borrowing language from the debate over financial reform, Menendez said they hope to drive home the point that offshore drilling isn't "too safe to spill."

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Lieberman on Gulf Spill: "Accidents Happen"

| Wed May 5, 2010 6:00 AM EDT

With oil politics threatening to upend the already fraught Senate climate and energy negotiations, Joe Lieberman (I-Conn.) said Tuesday that senators aren't planning to scrap offshore drilling provisions in the measure.

"There were good reasons for us to put in offshore drilling, and this terrible accident is very rare in drilling," Lieberman told reporters (via National Journal). "I mean, accidents happen. You learn from them and you try to make sure they don't happen again."

Lieberman's nonchalance about the Gulf spill belies the increasing tensions among Democrats about over how climate and energy legislation should deal with drilling. Three coastal state Democrats have pledged to vote against anything that expands drilling. Bill Nelson (D-Fla.) said he would filibuster legislation if he has to, and has pushed John Kerry (D-Mass.), the bill's lead Democrat, to remove those provisions.

"I have explained my position in no uncertain terms," Nelson told reporters. He said that he has not gotten any commitment from Kerry that drilling would not be on the table. Yet the issue threatens to further delay the release of a bill that already faces an uncertain path forward in the Senate. The measure remains under wraps after the lone Republican co-author, Lindsey Graham (SC), walked away from negotiations after butting heads with Democratic leadership on the timing of the measure.

Majority Whip Dick Durbin (Ill.) acknowledged in remarks to reporters Tuesday (via The Hill) that the caucus is split on drilling: "The Senate and even our caucus goes in different directions on the drilling question ... With the spill in the Gulf of Mexico, it is front and center and may be a major element in this debate."

NYT Ignores Source's Oil Industry Ties

| Tue May 4, 2010 3:22 PM EDT

The New York Times had a page one story today quoting a source downplaying the impacts of the Gulf spill. "The sky is not falling," Quenton R. Dokken told the paper. They list Dokken as "a marine biologist and the executive director of the Gulf of Mexico Foundation, a conservation group in Corpus Christi, Tex."

But the Times failed to mention that the source and his innocuous sounding foundation have numerous ties to the oil industry, including those at fault in the Gulf spill. Mother Jones alum Marian Wang, now at ProPublica, has the scoop:

At least half of the 19 members of the group’s board of directors have direct ties to the offshore drilling industry. One of them is currently an executive at Transocean, the company that owns the Deepwater Horizon rig that exploded last month, causing millions of gallons of oil to spill into the Gulf of Mexico.
Seven other board members are currently employed at oil companies, or at companies that provide products and services “primarily” to the offshore oil and gas industry. Those companies include Shell, Conoco Phillips, LLOG Exploration Company, Devon Energy, Anadarko Petroleum Company and Oceaneering International.

Read the whole post at ProPublica.

Nelson Pledges to Filibuster Climate Bill With Drilling

| Tue May 4, 2010 1:49 PM EDT

Anti-drilling Democrats pledged on Tuesday to block any climate and energy bill that would pave the way for new oil and gas drilling off the coasts of the United States, stepping up the heat on what was already a contentious issue in the Senate debate.

"Any proposal for offshore drilling is dead on arrival," said Bill Nelson, a Florida Democrat and one of the most vocal opponents of plans to expand drilling. "If offshore drilling is a part of it, this legislation is not going anywhere."

"If I have to do a filibuster ... I will do so," said Nelson.

Nelson joined New Jersey Democrats Robert Menendez and Frank Lautenberg in a press conference on Tuesday calling for a halt to plans to expand drilling as proposed by the Obama administration, and also exploration of new regions for oil and gas development. They also called for the Senate climate and energy bill, which remains on hold amid political wrangling, to stop an expansion of drilling. What that bill may do to expand or incentivize more drilling is one of the more contentious issues among senators. Pro-drilling Democrats like Mary Landrieu have said that the incentives for drilling are crucial to getting their votes.

Menendez said Tuesday that the spill should be an impetus for the Senate to act on climate and energy, rather than an a barrier. "I would like to think that instead of hurting climate change, the spill has actually thrust into light why we in fact are demanding an end to dependence on fossil fuels, demanding an end to polluting our planet," said Menendez.

"If anything this spill should act as a rallying cry for comprehensive climate and energy legislation," he continued. "Instead of expanding drilling and doubling down on 19th century fuels, we should be investing in a new 21st century green economy."

What the Heck is BP Putting in the Gulf?

| Tue May 4, 2010 9:55 AM EDT

With the remains of the Deepwater Horizon rig still spewing hundreds of thousands of gallons of oil into the Gulf of Mexico every day, BP and federal response teams are scrambling for solutions. BP has bought up more than a third of the world's supply of dispersants, or chemical substances used to break up and sink oil to prevent it from hitting land. The problem is, we don't know what chemicals are in many of these dispersants or the impacts they may have on marine ecosystems.
Reports ProPublica:

On Thursday BP began using the chemical compounds to dissolve the crude oil, both on the surface and deep below, deploying an estimated 100,000 gallons. Dispersing the oil is considered one of the best ways to protect birds and keep the slick from making landfall. But the dispersants contain harmful toxins of their own and can concentrate leftover oil toxins in the water, where they can kill fish and migrate great distances.

The exact makeup of the dispersants is kept secret under competitive trade laws, but a worker safety sheet for one product, called Corexit, says it includes 2-butoxyethanol, a compound associated with headaches, vomiting and reproductive problems at high doses.

The dispersed oil tends to collect on the seabed, and eventually ends up in the food chain through shellfish and other sea life. And both the dispersants and the oil can kill fish eggs. The ProPublica piece also quotes a 2005 National Academy of Sciences report that notes that there isn't really all that much knowledge about how oil and the dispersants affect local ecosystems:

"One of the most difficult decisions that oil spill responders and natural resource managers face during a spill is evaluating the trade-offs associated with dispersant use," said the Academy report, titled Oil Spill Dispersants, Efficacy and Effects. "There is insufficient understanding of the fate of dispersed oil in aquatic ecosystems."

My friend Tom Philpott summed up the situatuation quite well:

Let me get this straight. A huge oil company is pumping massive amounts of oil directly into public waters, imperiling the health of some of the globe's most productive fisheries -- as well as communities around the coast. To try to minimize the effects of the ongoing spill, the company starts dumping chemicals into that same public water. And not just a little -- a third of the global supply is on hand. And we don't have the right to know what those chemicals are? That's a scandal.

BP is dumping hundreds of thousands of gallons of this stuff into the water every day to try to contain the hundreds of thousands of gallons of oil its rig is currently hemorrhaging. But might we yet another disaster on hand thanks to the "solution"?

Back to Petroleum

| Mon May 3, 2010 9:38 PM EDT

Over at Foreign Policy, I write about what the Gulf of Mexico spill means for BP's decade-old greenwashing campaign:

A decade ago, the company then known as British Petroleum launched a multimillion dollar advertising campaign to rebrand itself as the greenest of oil giants. Since then, it has gone only by the initials "BP" and has popularized a new slogan: "Beyond Petroleum." The campaign launched with a $200 million public relations and advertising budget and a new logo featuring the now-ubiquitous green-and-yellow sunburst. Ten years later, the company still spends big on advertising, dropping $76 million on radio and TV ads touting its image in the United States just last year.
The campaign has paid off for the company. A customer survey in 2007 found that BP had by far the most environmentally friendly image of any major oil company. That year, the "Beyond Petroleum" campaign also won the Gold Award from the American Marketing Association. The company reported that between 2000 and 2007, its brand awareness jumped from 4 percent to 67 percent and sales rose steadily.
But those hundreds of millions of dollars worth of green branding can't fortify the company against the environmental and public relations catastrophe unfolding in the Gulf of Mexico. At least 210,000 gallons of crude are hemorrhaging into the Gulf each day after the April 20 explosion and subsequent collapse of BP's Deepwater Horizon rig 50 miles off the Louisiana coast, a blast that killed 11 workers and injured 17 others. In a worst-case scenario for the spill, it could gush up to 6 million gallons per day. The spill is already well on its way to eclipsing the 1989 Exxon Valdez disaster, which dumped 10.8 million gallons into Alaska's Prince William Sound and stands as the worst environmental disaster in U.S. history.

Continue reading over at Foreign Policy.

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Greens Call on Senate to Take Drilling "Off the Table"

| Mon May 3, 2010 5:48 PM EDT

More than 70 state-based and national environmental groups called on the Senate Monday to keep any expansion of offshore oil and gas drilling out of energy and climate legislation. In light of the unfolding environmental catastrophe in the Gulf of Mexico, the groups write, more drilling "should be off the table":

Expanding exploration and drilling into previously protected and remote areas is unacceptable when it is clear that we are not capable of responding to oil spills in a timely manner. The Senate faces a choice between leading America forward in a new clean energy economy or holding America back by preserving the failed energy policies of the past.

The letter—signed by the Sierra Club, Natural Resources Defense Council, League of Conservation Voters, Friends of the Earth, and Environment America, among others—marks a shift in the stance of some green groups, which were initially willing to accept limited drilling as part of a broader climate and energy legislation. Language in the bill (a draft of which was supposed to be introduced last week before it got caught up in political wrangling) concerning drilling was a contentious issue even before the scale of the Gulf disaster became clear. But the spill has prompted even more outrage among environmentalits, pushing groups that were orginally open to drilling concessions to outight opposition. 

Notably absent from the letter were several major enviro groups, including the Environmental Defense Fund and the National Wildlife Federation. EDF spokesman Tony Kreindler said the group is focusing on how to handle the immeadiate crisis at hand in the Gulf. The group is calling for "full scale intervention and emergency response, funding to restore wetlands, funding for fisherman and livelihoods, and passage of the clean energy and climate bill so we can start to get ourselves off oil."

Joe Mendelson, director of global warming policy at the National Wildlife Federation, warned not to read to much into the fact that his group didn't sign on in support. "I wouldn't take our absence as a lack of comprehension or sympathy with that position," he said. "We don't know where the bill is at this point," he continued, noting that it's likely that the provisions that deal with offshore drilling and leasing "probably have to change to reflect the situation now."

With the spill still getting worse, the politics of drilling and how they will play into the Senate climate debate will only get more interesting in the coming weeks.

BP Told to Stop Buying Off Coastal Residents

| Mon May 3, 2010 4:09 PM EDT

BP is already taking plenty of heat for the disaster unfolding in the Gulf of Mexico. The company, meanwhile, doesn't seem to be doing itself any favors.

On Sunday, the National Oceanic and Atmospheric Administration shut down all commercial and recreational fishing in the affected region of the Gulf for at least 10 days, impacting an industry that brings in $41 billion dollars every year and maintains 300,000 jobs. How'd BP respond? Anticipating lawsuits, the company got to work trying to buy off local fisherman—offering a one-time payout of $5,000 in return for an agreement indemnifying the company from future damages.

Via Yahoo News:

The company, which owns the destroyed gulf oil rig that is pumping millions of gallons of crude oil into the waters off Louisiana, Mississippi and Alabama, has reportedly been pushing commercial fishermen pitching in with relief efforts to sign settlement agreements capping any claims against the oil giant at $5,000, and reining in future legal action arising from the spill.

The Globe and Mail reported that agreements circulated at an event in Venice, La. incliuded this line: "I hearby agree on behalf of myself and my representatives, to hold harmless and indemnify, and to release, waive, and forever discharge BP Exploration and Production Inc., its subsidiaries, affiliates, officers, directors, regular employees and independent contractors …"

The Mobile Press-Register reports that the Alabama attorney general Troy King has told BP representatives to stop circulating the settlement agreements. King cautioned that "people need to proceed with caution and understand the ramifications before signing something like that." A BP represenative now says that the line about waiving rights has been removed from the agreement, and would not be enforced on agreements that have already been signed.

What Was Halliburton's Role in the Gulf Spill?

| Mon May 3, 2010 11:11 AM EDT

The probe into what exactly caused the explosion on the Deepwater Horizon and the subsequent environmental catastrophe has expanded to Halliburton, which poured the cement for the drill hole. House investigators want to know what role the energy services giant may have played in the rig explosion.

The House Energy and Commerce Committee has requested that Halliburton president and CEO David J. Lesar "provide the Committee with any documents in your possession or that you have prepared that relate to the causes or potential causes of the Deepwater Horizon rig incident." Lesar has been called to testify at a May 12 hearing on the explosion. Also appearing at the hearing will be Lamar McKay of BP America Inc. and Steve Newman of Transocean Ltd.

"Halliburton continues to assist in efforts to identify the factors that may have lead up to the disaster, but it is premature and irresponsible to speculate on any specific causal issues," the company said in a statement. The company also said that "the cement slurry design was consistent with that utilized in other similar application" and that "tests demonstrating the integrity of the production casing string were completed."

Halliburton also poured the cement for a rig that caused a major spill into the Timor Sea off the coast of western Australia last August. That spill continued for months, and the rig eventually caught fire. Ultimately, 1.2 million gallons of oil seeped into the surrounding sea.

Is Steel-Cut Oatmeal Really Better?

| Mon May 3, 2010 5:30 AM EDT

All of a sudden, steel-cut oatmeal is everywhere. Within blocks of MoJo's San Francisco headquarters, it's sold at upscale touristy cafes and chain places like Starbucks and Jamba Juice. Hard to resist, since I a) am a sucker for fancy toppings (warm apple compote, anyone?) and b) find the texture and flavor of steel-cut oatmeal far superior to that of the boring quick oats I keep at my desk: Steel-cut oatmeal is chewier and, to my taste, slightly toastier than the instant stuff. The problem is that the prepared version is pricey and overpackaged: usually around $3 for a small paper container with a lid. Dry steel-cut oats are cheaper and require less packaging, but they take 20 minutes to cook, which isn't really feasible at the office. Looking for an excuse to indulge in the tasty stuff once in a while, I decided to do some research: Is there any evidence that steel-cut oatmeal is more nutritious and/or better for the planet than instant rolled oatmeal?