On Tuesday night, the Ragin’ Cajun James Carville walked into his favorite New Orleans eatery and found BP CEO Tony Hayward and Coast Guard Admiral Thad Allen, the two men responsible for fixing the calamity in the Gulf, dining over presumably crude-free shrimp. Carville joined the two for a glass of Makers Mark; Tony mentioned that Carville had said some “harsh things.” He promised to make things right. “I’m really committed to this,” he told Carville.
That makes what happened yesterday all the more striking. With news that the oil spill could be soon approaching Atlantic beaches, Tony was flanked: Carville held the high ground in New Orleans, and the crude was approaching Virginia, just like the French fleet in 1781. BP CEO Tony Hayward had no choice but to surrender. The Guardian in London reported the historic news:
‘BP is to hive off its Gulf of Mexico oil spill operation to a separate in-house business to be run by an American in a bid to isolate the “toxic” side of the company and dilute some of the anti-British feeling aimed at chief executive Tony Hayward, the company said today. The surprise announcement was made during a teleconference with City and Wall Street analysts in which Hayward attempted to shrug off the personal criticism saying words “could not break his bones”.’
Apparently, Carville’s words could not break Tony’s bones, but they could send him packing for Mother England. Responsibility for the clean-up will now fall to Yank Bob Dudley, who was thrown out of Russia in 2008 in a shareholder battle.
Now that the British-CEO Tony Hayward has surrendered, the victorious American will be left to deal with the fleet of crude headed for Atlantic beaches near you.
Today we celebrate our 34th birthday, and so I sent the production team home to celebrate. Back soon… same Bat Time… same Bat Channel.
One quick note. In A Future Age was reformatted so you can now easily subscribe. Additionally, with the oil spill ongoing, it is easy to forget that this blog, along with the rest of society, runs on oil. How much? Well, the Macondo Prospect, where the Deepwater Horizon exploded, contains (according to BP estimates, for whatever they are worth) no more than 100 million barrels of oil, or only 5 days of U.S. consumption.
Last night, after a lovely birthday dinner at Salvation Café in Newport, I turned on the MLB Network to see some random baseball games before going to bed. I tuned in while the network was covering the ninth inning of a game between the Detroit Tigers and Cleveland Indians, where Tigers pitcher Armando Galarraga was three outs away from a perfect game. Now, for those uneducated in baseball, a perfect game is one of the most rare occurrences, when a pitcher records all 27 (or more) outs, without allowing a hit or a walk. Prior to the 2010 season, it had happened only 18 times in the 135 years of baseball history.
Last night, as Galarraga was set to join a distinguished club that includes Cy Young, Sandy Koufax, and Catfish Hunter. With one out, Austin Jackson made a behind-the-back catch in centerfield reminiscent of Willie Mays, and the perfect game seemed destined. Unfortunately, Umpire Jim Joyce made a bad call on what should have been the third out, a groundout to the first baseman. As you can see on the highlight above, the throw from the first baseman to the pitcher beat the runner. Joyce, regarded by many in baseball as one of the best umpires, including Curt Schilling, simply missed the call. Because of the impact of this bad call, critics are calling for increased use of instant replay in the game. Human judgment in this case robbed a promising young pitcher of a place in the record books.
Of course, Joyce apologized to Galarraga after the game:
“I just cost that kid a perfect game,” Joyce told reporters in Detroit. “I thought he beat the throw. I was convinced he beat the throw, until I saw the replay. It was the biggest call of my career.” Galarraga told reporters that Joyce apologized to him after the game, adding that he had no instinct to argue the call. “He probably felt more bad than me,” Galarraga said. Smiling, he added, “Nobody’s perfect.”
Joyce considered this the biggest call of his career. Now, this is only baseball, and while Detroit fans do not deserve one more serving of heartbreak, this is a lapse in judgment with little real effect.
What about the oil experts at British Petroleum? Days before the blast on the Deepwater Horizon, they opted for the cheaper cement casing, which provided only a single layer of protection to prevent gas from leaking into the well:
‘Workers on the rig and from BP have said that gas bubbled into the well and was a key factor in causing the April 20 blowout, which killed 11 people. BP described the approach to finishing the well as the “best economic case” in the document, which has appeared following Congressional hearings into the cause of the accident. News of the decision emerged as Douglas H. Brown, chief mechanic on the Deepwater Horizon rig, testified yesterday that a disagreement took place on the rig between one of the six BP engineers overseeing the operation and employees of Transocean, the owner of the rig, just a few hours before the blast took place. Mr. Brown told the hearing that the “skirmish” followed BP’s decision to withdraw heavy drilling mud from the well that was helping to control pressure inside it and to replace it with lighter saltwater before the well was capped with a final dollop of cement. “Well, this is how it’s going to be,” the BP official said, according to Mr. Brown.’
On the Deepwater Horizon, human judgment cost the lives of 11 rig workers, and the ongoing devastation of the Gulf of Mexico. No human is perfect, that is for sure. However, when the decisions of humans can have the huge impact that those of BP did, can we rely on market forces to ensure that caution and restraint are part of the decision making process? Unfortunately, instant replay cannot take us back to the days before the explosion, and BP’s call cannot be reversed.
Yesterday, as my wife and I were driving to a Memorial Day get-together, we noticed the heavy haze which uncharacteristically hung over Providence. Suddenly, Providence looked like Houston, Los Angeles, Hong Kong, and other cities with big air pollution problems. Apparently, the smoke was an import from Quebec, where 52 forest fires are consuming acres of forest. The NASA image above shows how far the smoke has spread. While the smoke is a temporary nuisance, this is a reminder that nothing is really local anymore. It is also a reminder of the disaster in the Gulf of Mexico, where the “top kill” attempt failed and oil continues to gush.
The epic failure of British Petroleum, TransOcean, and Halliburton to prepare for this kind of catastrophe resulted not only in a destroyed deep sea rig, but the pollution of the Gulf and the crucial wetlands of Louisiana. Rachel Maddow does a good job showing the impact so far. However, the oil continues to gush. The spreading oil is also a clear indication of another growing phenomenon, regulatory capture. To just look at the energy industry, oil companies write energy legislation. Oil company veterans staff the Mineral Management Service. British Petroleum’s former Chief Scientist is now the Department of Energy Undersecretary for Energy and Science. Critics of government say that the government has become too powerful; however, this oil spill is a clear indication of how far regulatory capture has spread, how much power corporations have in Washington, and how ineffective regulation can be when it is tailor made by the industry it is designed to regulate.
Can you imagine yourself in British Petroleum CEO Tony Hayward’s shoes? Well, they would be nice shoes, considering in 2009 he made $6 Million or so, a 40% increase from the previous year, while profits dropped 45% – but that’s another story. In my Communications, Persuasion, and Negotiation class, we are doing a simulation stakeholder dialogue exercise, and I represent British Petroleum; so you could say that I am trying to walk a day in Tony’s shoes.
This is a video of Tony interacting with the press on a Louisiana beach. Take a close look, you will see Tony avoiding the oily muck, and then yelling at a cameraman for filming him. This seems to be an ineffective communication strategy. How about some humility, how about acknowledging the concerns of Louisiana residents who are seeing their livelihoods buried in the oily muck?
BP’s Chairman, Carl-Henric Svanberg conveyed to the Financial Times his view of BP’s importance:
“The US is a big and important market for BP, and BP is also a big and important company for the US, with its contribution to drilling and oil and gas production. So the position goes both ways,” he said. Mr. Svanberg accepted BP’s reputation had been damaged by the accident but said that should not be long-lasting “if we do the right thing”.
OK, well what is the right thing? How about showing some concern for the workers that are being hired to clean up the mess? Apparently, fishermen that were hired by BP have fallen ill with severe headaches, dizziness, nausea and difficulty breathing. George Jackson, a 53-year-old fisherman, took a clean-up job after the closing of local fisheries left him unemployed. He was laying containment booms when his eyes started burning:
‘Like other cleanup workers, Jackson had attended a training class where he was told not to pick up oil-related waste. But he said he wasn’t provided with protective equipment and wore leather boots and regular clothes on his boat. “They [BP officials] told us if we ran into oil, it wasn’t supposed to bother us,” Jackson said. “As far as gloves, no, we haven’t been wearing any gloves.”’
Of course, the BP spokesman said he was unaware of any complaints. BP seemingly does not realize that public trust of business is at a low point after the Great Recession. Instead of being forced to show the underwater camera above the leak, why not willingly show it?
BP should be welcoming the press attention, and giving as much information as possible to stakeholders. Yelling at cameramen will only hurt you. With a crisis of this magnitude, and with the damage already done to BP’s reputation, an honest dialogue with the public is the one way to show that BP is accountable. Otherwise it just looks like they have something to hide.
Watch out, New Orleans. Watch out, Biloxi, Mobile. It looks like the risks of Hurricane season have increased as a result of the BP Oil Catastophe in the Gulf of Mexico. Apparently, if a hurricane encounters the oil slick now, the combination could be devastating, according to hurricane scientists. Not only could any hurricane increase the damage that oil does to coastal wetlands, but the presence of oil could lead to a more powerful hurricane. That is because the oil on the surface, because it is black, absorbs heat, and also prevents evaporation that typically helps to cool the Gulf in the summer. Of course, we have no precedent for this, because we have no record of a hurricane meeting an oil spill. I used to live on the Mississippi Gulf Coast, and can honestly say that this is the last thing the region needs. This is another clear illustration of how expensive a gallon of gas really is.
In Washington this week, South Carolina Republican Lindsay Graham pulled his support from the American Power Act, the Senate energy bill he created along with John Kerry and Independent Joe Lieberman. This bill was a compromise from the American Clean Energy and Security Act, passed by the House last June.
In light of the massive uncontrolled oil spill in the Gulf of Mexico, coming ashore in Louisiana right now, it is a good time to discuss our energy policy and the way forward. Oil, like coal and wood before it, used to be a plentiful source of energy. Where I grew up, in Oil City, Pennsylvania, the corporate headquarters for Quaker State and Pennzoil once stood. They moved to Texas once the oil was gone in Pennsylvania. Now, as domestic sources continue to diminish, we must obtain oil elsewhere. I deployed to the Persian Gulf in 2000 to defend access to Middle East oil, and I can assure you that the price we pay for the United States Fifth Fleet is quite expensive. The tar sands of Canada are a plentiful source of oil, but the process to extract it is very energy intensive, reducing the EROEI further. Then of course, we have potential deep-sea sources, but the hidden costs in those sources are becoming clear this week.
The concept of Peak Oil is often discussed, and debated, but consider that the oil, along with coal, uranium, and natural gas, were formed over a long period of time. These resources are not renewable. Sooner or later, we will have to find a way to keep our economy growing by other means. Hydrogen is an energy sink, and is not a fuel source. Right now the only viable renewable sources of energy we have are solar, hydro, and wind. Nuclear power is another source that with investment can meet a lot of our energy needs. However, our economy runs on oil. This oil is difficult to obtain and will only become more expensive.
Additionally, fossil fuels have external costs attached to them that we do not currently pay at the pump. Fossil fuels emit greenhouse gasses (GhG) like CO2 as a byproduct when they are burned, and those GhG build up in the atmosphere. Additionally, coal mining and burning results in adverse health impacts from fly ash as well as gasses emitted in the burning process.
Partisans now debate the science of global warming, but it is science, and the scientists who study it have overwhelmingly found that we are changing our planet for the worse. Even a group of retired Generals and Admirals came out in support of the bill, arguing that global warming is a national security issue. Skeptics will tell you that pieces of reports are incorrect, or that one glacier will not melt by 2040, but rather a few decades later. They look at the effect of volcanic eruptions and believe that this will forever mitigate the unprecedented concentration of GhG in the atmosphere. They are missing the forest for the trees. The past decade was the hottest on record, according to NASA. Ultimately, the emission of GhG is an externality that is not factored into fuel costs.
So, where do we go from here? It makes sense to invest as much as possible in new energy technology, right? What about our current energy waste? Do you think weatherization and vehicle efficiency are a waste of money? David Brooks argues that now is the time to pass the sensible energy bill, drafted by both Republicans and Democrats. Ezra Klein discusses how a climate bill could potentially pass through reconciliation.
The bill does not feature a Cap & Trade system, but it does help to set a price for carbon. Brooks receives assurances from the CEOs of the FPL group and NRG Energy that the bill would, by setting a predictable price for carbon, help the companies invest in new clean energy products.
Republicans opposed increased fuel efficiency standards in vehicles for years. Their mantra for energy is drill, baby, drill. Of course, Sarah Palin has said nothing about offshore drilling this week. Lindsay Graham went out on a limb, in fact the limb formerly occupied by ex-Maverick John McCain. He deserves credit. Unfortunately, moderates like him and Charlie Crist are increasingly being driven out of the Republican Party. Who is next, the two Republicans from Maine? Our energy policy is crucial right now. As Brooks eloquently points out:
“It’s clearly going to take legislative action to catalyze private investment and to increase federal research to where it should be — about $25 billion a year, according to Mark Muro of the Brookings Institution. It’s going to take some equivalent of the Pacific Railroad Acts to kick this into gear. “
The Democrats have a bill that is not perfect, but the right start. The Republicans have only silence. With all of the externalities, like Defense Spending, environmental and health costs, and GhG emissions, that are not currently included in the cost of a gallon of gas, as a society we do not grasp the cost of our economy and the path forward. The status quo is just not acceptable.