Deepwater drilling in the Gulf is extraordinarily expensive, $400K to 700K a day for the rigs, plus materials like pipe, mud, logging and competion, fuels, crew, etc, etc. The prospects are drawn up sometimes years in advance by expensive professionals, geologists, geophysicists, engineers, etc and that can take months or years too. You don’t just drill a single well to make the numbers work, an entire reservoir or field must be planned, leases and rigs contracted, completions performed, pipeline networks established to transport the oil, etc. All this must come together in a symphony of effort and produce as expected or you’ll go broke in a hurry. In other words offshore drilling is NOT a switch that can be turned on and off on a whim. If the numbers don’t work, if the potential is made too uncertain then the focus and rigs will move elsewhere and who knows how long it might be before they return.
While we might not yet be able to state with 100% certainty what the exact cause of the blowout was, we do have an overwhelming preponderance of evidence that points to bad procedures and worse decisions being made by a company known for unsafe practices. This is not how most other deep drillers operate. There is no reason every operator should be penalized for BP’s malfeasance, especially when these others have consistently demonstrated far more diligance, competence and concern in the past.
What the government needs to do is get off their ass and make these safer procedures that the upper tier companies employ mandatory for everyone else (You hear me, BP?). This can be accomplished quickly, really in weeks or months, to provide the same assurances a lengthy moratorium would without severly impacting upcoming operations and further penalizing a reeling population, industry and regional economy.
The moratorium was a kneejerk overaction. Thank goodness the Judge is showing some clarity in his assessment and decision making process.
The idea that we don’t know what happened is false. BP deliberately cut corners and proceeded to use faulty equipment. The moratorium can stay in place only instead of stopping the drilling they add government engineers with a checklist to ensure procedures are maintained and all safety equipment is certified. For an added level of safety they can add one more cement plug to the moratorium time-line until it is certified unnecessary.
Oops, barrels, gallons, it’s only a factor of 42, right?:smack:
Coast guard and navy are out there now, spending my tax dollars, NASA’s devoting satellite time etc. etc. This thing is decidedly not revenue neutral as far as the USG is concerned.
You bring up a very troubling point. No, I’m not aware of any tax dollars that have yet been directed toward the spill response. But if the Exxon Valdez is an indication it’s probable that BP will be able to write off all, or at least obscene amounts, of their US tax liability, thereby for all intents and purposes screwing the American taxpayer out of that due contribution. Lawmakers need to address this, rewrite it and make it law real quick.
A “reeling” industry? I presume you mean oil industry.
You paint a stark picture of the horrendous costs these companies bear.
But that “reeling” industry with insane overhead are among the most profitable companies in the world. Indeed the top two most profitable (note “profit” and not gross income) are oil companies.
Again, that is profit and willing to bet if you look at it over the past 10 years you will see big oil at or near the top of the list.
Hard to see how they are “reeling”. BP may be currently reeling but IIRC even now, with all this mess, BP is still turning a profit…just not as much as they would have without this mess.
Clearly Lieu was talking about the economic impact of the region and not specifically about oil companies. The economy is not improving despite trillions of dollars spent and this will make it worse in a localized area.
You are talking apples and oranges. You stated there were hundreds or thousands of rigs. Your map is producing platforms. Your numerator and denominator are not the same units so your post makes no sense.
Further, the Gulf of Mexico is effectively like a treadmill where you have to keep drilling in order to even maintain production. An extended drilling moratorium will result in a meaningful decrease in production as the existing production declines at a significant rate and generally has a very low reserves to production ratio compared to onshore fields.
You want BP to pay taxes on profit that they don’t make? That sounds a little absurd. The unemployed not paying income taxes has also reduced federal, state, and local tax revenue, do you also want to tax them?
All of this is sot of pointless anyways since no companies are going to start drilling now as a result of this court ruling. There is clearly still too much uncertainty about what the government is going to do. They can’t exactly quickly and cheaply start drilling again. Without an understanding that there won’t be any further moratorium, this is a legal victory but not a very meaningful one. Notice that neither drilling contractors nor oil and gas companies really received any boost in their stock price yesterday when the moratorium was lifted. The statement in the article posted by the OP is incorrect. The stocks received a small very short-lived bump and then ended up settling lower for the most part.
It’s not pointless that a judge intervened given the length of time involved. This can be resolved in days/weeks and not 6 months. That was just a number somebody pulled out of their ass.
Maybe I’m missing something, but it would seem that, otherwise, he just decided he didn’t like the moratorium. And I’m making one other assumption-- that he isn’t doing that.
Anyway, I’m open to being corrected. I read an article in the paper on this today, and it wasn’t terribly clear on how he came about his decision.
I think the point you are missing from the objectors to this decision is not knowing what exactly went wrong on this particular deep water oil rig precludes properly understanding the inherent risk and safety measures of the other deep water oil rigs. Hence, on this basis they conclude the 6 month moratorium is reasonable.
When some operation has the risk of substantially harming the environment and economy, and a lack of information precludes any determination as to the likelihood this risk may materialize, and if so, when can immediately be done to abate its effects, perhaps it is reasonable to not engage in the operation until such factors can be known?
BP has enjoyed profits from numerous other US ventures this year. Were it to have been by another producer those taxes would have been rightfully realized. Costs due to unusual business practices or possibly even criminal activity that go against the public good should not be allowed to offset those other profits. If BP makes a profit of 50Bn this year before adjusting for a spill writeoff, they should pay taxes on profits of 50Bn, not 30 Bn with 20 forgiven due to criminal misconduct or reckless mismanagement.
I’m not an accountant but it sure offends my sense of decency. Same with Exxon and Union Carbide.
If there was criminal act, then a fine is in order-- not taxes on non-existent profit. And, the fine might be more than the taxes would be. If it wasn’t criminal, then taxing non-existent profit is another way of saying you want to put them out of business.
I’m not making an obscure distinction here. There is a difference between a platform and a drilling rig. The moratorium affects drilling rigs and obviously not platforms. Further, no cite needed to state that the drilling rigs are for exploratory drilling. There’s not a whole lot of development drilling going on in the deepwater. It’s nearly a given that they are exploratory in nature. I don’t even understand what point you are trying to make by stating that they are exploratory. What possible relevance does that have on anything?
The rigs make a difference because, as I said, you need constant drilling to offset the declines in the existing production. Without new drilling you will see a drop off in production. New production in the Gulf of Mexico comes on at a high rate and then rapidly declines. Without drilling, we will see a noticeable difference in production. Further, the other big part is that a non-insignificant number of jobs will be affected. Offshore drilling is an industry of itself; clearly those jobs will no longer be needed when there is no drilling.