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Saturday, May 1, 2010

End of an Age

We are looking at the beginning of the end of new off shore oil drilling. The current state of technology appears to have reached its limits. Arguments that spills from off shore oil rigs don't happen have been put to the lie. They happen. They are happening now. Oil will continue to pollute the Gulf of Mexico for some time to come. As I write this, little progress is being made to cap off the leak. Current projections are that it'll be several months before the leak can be stopped.

The oil is just starting to impact land. Shrimp fishermen are in a panic. The season has been opened early in an attempt to harvest some before they die anyway. Estuaries are some of the most productive real estate on the planet. Fish species need them to breed and survive. Oil destroys them and they may never recover to what they once were. Some things once broken cannot be fixed.

It will take billions of dollars to stop the leak. I've no idea how many people will be involved, but it must be considerable. All that money and personal will be unavailable for searching for new oil. No doubt some insurance company somewhere is going to take it on the chin. The insurance industry is already in trouble. Remember AIG? The ramifications spread outward.

Once the oil hits the beaches the resort communities will suffer greatly. Who wants to vacation at an oil slick? Officials in Florida claim their beaches are not threatened, but that's today. This oil slick could go on for months. The ever growing oil patch will have plenty of time to slosh around the Gulf. It could go anywhere. The uncertainly alone is enough to cause panic and economic loss.

Oil companies successfully lobbied the US government to prevent the requirement of acoustic shut off valves. Norway uses them. They are designed to be one more safety feature to prevent oil spills. They may not have worked in this case, but I know I feel cheated that the best available technology was not used. What if it did work?

Heroic efforts are being made to contain and clean up the spill. Some of it has been burned off and more burns will will be attempted. Air pollution is considered the lesser of two evils. Sad, isn't it? High waves wash oil right over containment booms. Imagine what an early hurricane would do. All efforts would have to be abandoned.

This may well be the end of deep water oil exploration. It's too expensive. As the world's financial markets contract, less money is available for risky ventures. This disaster demonstrates exactly how risky deep water drilling can be. If money is secured to finance more deep water adventures, how high will the interest rates be? How high will insurance rates be? Could such a project make money at all? If the bean counters decide it can't, it won't happed.

The environment risks are great. Oil is destroying productive fisheries at a time when the world is already experiencing food shortages. What's more important, driving your car or eating?
The political fallout is going to be interesting. Does anyone think those new off shore regions recently approved for oil exploration will ever get drilled?

Deep water drilling was the last hope for new domestic oil production. That hope's taken a huge hit. The US will have to deal with the fact that "Drill baby drill," is not a good idea. Now would be a good time for the country to get serious about conservations and alternative energy.

The wake up call came in the form of an explosion in the Gulf of Mexico, a burning oil rig, and a spreading oil slick. As a nation, can we afford to hit the snooze button one more time?

-Sixbears

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