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Peak Oil, Peak Debt, and the Concentration of Power

Gulf Oil Spill Far Worse Than Exxon Valdez Accident

COVINGTON, La. – An untested procedure to plug the blown-out oil well in the Gulf of Mexico seemed to be working, officials said Thursday, but new estimates showed the spill has already surpassed the Exxon Valdez as the worst in U.S. history.

A team of scientists trying to determine how much oil has been flowing since the offshore rig Deepwater Horizon exploded April 20 and sank two days later found the rate was more than twice and possibly up to five times as high as previously thought.

It’s Not Our Fault

WASHINGTON — BP PLC told Congress Tuesday its massive Gulf oil spill was caused by the failure of a key safety device made by another company.

In turn, that company says BP was in charge, and that a third company that poured concrete to plug the exploratory well didn’t do it right. The third company, which was plugging the well in anticipation of future production, says it was only following BP’s plan.

The blame game shot into the open Tuesday as the Senate began a hearing into the oil spill that has been contaminating water in the Gulf of Mexico for three weeks and threatens sensitive marshes and marine life from Louisiana to Texas.

Executives of the three companies, all scheduled to testify before the Senate Energy and Natural Resources Committee, are trying to shift responsibility for the environmental crisis to each other, according to prepared testimony.

Louisiana Fishing Capital Braces For Giant Oil Spill

VENICE, La.—Boat captains here boast that Venice, a remote outpost at the tip of the Mississippi Delta, is the fishing capital of the world. But a rapidly expanding oil slick from a leaking deepwater well could leave a permanent mark here.

Hundreds of shrimping boats sail from here, dragging their nets around the inland estuaries and the rich seabed of the Gulf, which teems with white, pink and brown shrimp. Fishermen, commercial and recreational, scour the area for kingfish, red snapper and marlin. The Gulf region accounts for about a fifth of total U.S. commercial seafood production and nearly three-quarters of the nation’s shrimp output, while nearly a third of all marine recreational fishing trips take place on Gulf waters, according to the Fisheries Service of the National Oceanographic and Atmospheric Administration.

“This is the Delta,” said Robert Cossé, the marine division commander of Plaquemines Parish Sheriff’s Office, while piloting a boat across the Pass-a-Loutre Wildlife Management Reserve. “Lots of life.”

The threat follows the explosion of a deepwater oil rig last week. Spill responders, who have so far failed to cap the flow of oil from the well, say the slick could hit shore before the weekend, prompting them to try to burn off the crude a few miles from shore.

Big Oil Bets on Sea

Chevron

Chevron is leasing the Clear Leader, which floats in 4,300 feet of water in the Gulf of Mexico, to drill for oil through nearly five miles of rock.

Big Oil never wanted to be here, in 4,300 feet of water far out in the Gulf of Mexico, drilling through nearly five miles of rock.

It is an expensive way to look for oil. Chevron Corp. is paying nearly $500,000 a day to the owner of the Clear Leader, one of the world’s newest and most powerful drilling rigs. The new well off the coast of Louisiana will connect to a huge platform floating nearby, which cost Chevron $650 million to build. The first phase of this oil-exploration project took more than 10 years and cost $2.7 billion — with no guarantee it would pay off.

For oil companies, the discoveries mean something more: After a decade of retreat, large Western energy companies are taking back the lead in the quest to find oil. “A lot of people can get the very easy oil,” says George Kirkland, Chevron’s vice chairman. “There’s just not a lot of it left.”

Crude Awakening

NEW YORK (MarketWatch) — Most of us can’t stockpile barrels of crude oil in the backyard, nor would we want to. Yet with oil prices soaring, many investors are eager to fill their portfolios with this precious fuel.

Accordingly, a specialized group of exchange-traded funds taps into oil rallies. But investors should be aware that while these funds have been posting solid gains, they are complex, risky instruments which don’t fully capture oil-price moves.

At best, these oil-linked ETFs, which trade on an exchange like stocks, are an indirect pipeline to oil. That’s because unlike some gold and precious metals funds, oil ETFs don’t hold the physical commodity. Instead, they trade oil futures contracts, and that can impact investment returns in ways unsophisticated buyers never expected.

“There is no way to directly invest in oil,” said Bradley Kay, an ETF analyst at Morningstar. “Indirect investments such as oil company stocks, futures, and oil ETFs tend to have a lot of complicated moving parts.”

Oil Fell Below $100 a Barrel on Friday Yet Gasoline Continues to Rise

NEW YORK (AP) – The worst oil shock since the 1970s has put a permanent mark on the American way of life that even a drop in oil’s price below $100 a barrel won’t erase.Public transportation is in. Hummers are out. Frugality is in. Wastefulness is out.

Although oil prices dipped beneath the $100 mark Friday for the first time in five months, it still isn’t cheap and Americans have long memories. They are saddled with debt, high food costs and home prices worth far less than two years ago.

Experts say some relief at the pump is probably coming within weeks after light, sweet crude fell to $99.99 before closing later at $101.18, up 31 cents. But the era of “staycations,” four-day work weeks, airline fuel surcharges and costly commutes could be here to stay.

“We’re not going back to $2-a-gallon gasoline,” said Stephen Schork, an analyst and energy trader in Villanova, Pa. “Consumers have to appreciate that the low prices we had before didn’t reflect the price of crude, so there will be a limit to how much prices will come down.”

And some more bad news: Food prices, plane tickets and plastic goods made from petrochemical products aren’t expected to get much cheaper either. The softening U.S. economy means food makers, airlines and manufacturers are unlikely to roll back recent price increases for goods and services anytime soon.

Although the hurricane is keeping gas prices high, it’s not doing the same for oil, as it has in the past. Neither are geopolitical flare-ups involving Russia and Venezuela.

Many analysts say that’s because speculative investors—not rising demand—pushed oil prices to record levels this summer.