BP Oil - This Is Not Good

This is not good at all. It's difficult what impact this might have, not just on domestic oil / gas prices, but it also has obvious International political ramifications. Iran will at least think it has more power due to their ability to threaten the Strait of Hormuz. And that's only one factor. No doubt everyone will be discussing some of the others this week.

ANCHORAGE, Alaska (AP) - In a sudden blow to the nation's oil supply, half the production on Alaska's North Slope was being shut down Sunday after BP Exploration Alaska, Inc. discovered severe corrosion in a Prudhoe Bay oil transit line.

BP officials said they didn't know how long the Prudhoe Bay field would be off line. "I don't even know how long it's going to take to shut it down," said Tom Williams, BP's senior tax and royalty counsel.

Once the field is shut down, in a process expected to take days, BP said oil production will be reduced by 400,000 barrels a day. That's close to 8 percent of U.S. oil production as of May 2006 or about 2.6 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.

Comments

[Tom E Gunn]

Anyone ever see the movie Enron... Hummmmmmmm.... Sounds like BU@#SH!* to me.....

[Jess]

This is definitely not a good thing. Their 400,000 barrels per day is 8% of the US oil production. My husband is wondering--is there any "proof" of the corrosion or is this a ploy to drive prices up? Makes you wonder doesn't it?

[Rick]

Oh well, looks like we're going to pay once more for hugging trees.

[John]

If "oil from Alaska doesn't make a difference so we shouldn't drill in ANWR," then how come loss of the oil from Alaska makes prices go up?

Jess: Why would BP cut production when prices are already at record high levels? They would want to INCREASE production to take advantage of selling at high prices. How could they take advantage of slightly higher prices if they don't have oil to sell due to cutting production (I realize that BP has other sources for sale and that they could make more money if prices jumped so much that the price increase offsets the loss of revenue from non-production)?

There have been a couple of leaks/spills recently, and BP got hammered for lax inspections/maintenance of the pipeline. The discovery of this corrosion now is no surprise, it is the logical consequence of increased inspections. I do not "question the timing," because the timing makes perfect sense.

Occams' razor folks.

[K]

This is a good thing. Many will not face that.

The era of oil is ending. Don't like that? Too bad! No knows exactly how steep the decline will be or what will replace it. Big bets have been made and bigger ones will follow.

The events in today's news - such as this interuption in Alaska - are alarm clocks. The alarm irritates you, you want to sleep, but it is Monday and the job awaits. You can turn off the alarm and feel good for a short time. Or you can get up and conduct your life.

We will pay more for gasoline. It is not the end of the world, it is a change.

[Gotta Know]

Gee aren't you glad we didn't develop ANWR?

[rwilymz]

"It is not the end of the world, it is a change."

Very good, 'K'. Now what are some of the changes?

At the very least they include:

1] redistributing the population from suburbs to cities
2] penalizing non-agricultural use of AG-zoned land
3] severely restricting the rezoning of AG to R1/R2
4] more use of chemical fertilizers, insecticides and herbicides
4a] restructuring tort law pursuant to same
5] greater use of nuclear energy
6] greater use of [clean] coal energy

Others?

[K]

rw: we don't know. that is the entire point. some will not like the results but that will not make oil more available.

about your #, the verbatim text in my crystal ball says:
1)batteries will improve enough that electric cars become the norm. before that hybrids will have a large market share.
2)passive and semi-passive solar will become a common method of heating individual homes.
3) home photo-voltaic solar will be affordable and reduce AC loads on the grid.
4) PV will also be widely used by utilities. biomass fuels will not be very important because anything biomass can do will be done better by coal conversion.
5) the nuclear revival will be huge.
6) hydrogen, in large volume will cost too much, thus the H2 fuel cell will have limited use.
6) wind? its gonna blow. will supply less than 2% of power. new hydro - nada.
7) fusion, energy from satelites, tidal power. yeah, and NASA discovered life on Mars in 1996.
8) crystal balls often lie, and i lie more than most. 'why didn't you say that first'

nuclear generation is funny stuff. if you have a few reactors you may as well have many. that permits older plants to be down for overhaul. equipment in top shape, plus improving the product are the keys to nuclear safety. we have followed the opposite policy.

[Phoenix]

Rick,

Don't be insulting The Friends of Trees. Trees are good. They shade our houses in the summer and reduce our air-conditioning bills. That's a good thing, right? I'm conflicted. On the other side of my confliction, I'm thinking we should fine The Friends of Trees and donate the monies to Big Oil so they'll drop their prices.

rwilymyz,

Kind of scorched-earth aren't you? You seem to give zero credit to the entreprenuerial capacity of Americans in coming up with ingenious creations to solve problems outside the august aegis of the government. Gotta love a free society. Nothing like a little forced change to cause some short-term mis'ry to bring about innovation and a better way. It's America's story and I'm sticking to it.

[rwilymz]

Tort litigation is killing innovation in America, whether it's the ultra-nannying of "protect us from ourselves" to the "don't be disgusting" of the neo-luddites.

Batteries and photo-voltaics use heavy metals in huge boatloads. You can't even serve fish anymore without some customer getting a stomach ache and suing the restaurant for "knowing, or should have known" about the mercury in the fish.

We've already seen the first lawsuits on the harmful health effects of the batteries used in hybrids. Somebody got a tummy-ache a week after buying his Toyota Pious, or something. It's obviously the fault of the batteries, rather than, say, overeating, which we Americans never ever do.

Solar electric isn't going to be much good outside of the US southwest in any event, and if there are any powerful legislator from, say, AZ he'll do to widespread solar generation where it would be appropriate what the Kennedy clan did to wind generation where *it* is appropriate, off the New England coast: kill it kill it dead kill it twice and do it again.

Hybrids will undoubtedly gain market share, for there's nothing wrong with an electric golfcart for stop-n-go traffic.

In the meantime, though, we have millions of automobiles and 75% of our long-haul cargo transportation being run by the internal combustion engine, which runs on hydro-carbon fuel of some sort. Whether the hydro-carbon fuel is petroleum or ethanol, or diesel or bio-diesel, or some combination of those is the pertinent question.

The environmentalists who do not wish to see the world living in group-hug harmony with nature -- and thus scratching and slapping bugs while squatting in the mud on the descent to a 40-year life span -- but instead are realistic in their environmentalism are pointing everyone to E85 and bio-diesel. Well, fine. So move back to the city, plow under your 3,000 sq-ft homes in the suburbs, turn the land over to farmers, and quit crabbing when his RoundUp drifts in and kills your azaleas.

That's the price for what they want. They're fond of saying that the cost of this evolution in energy will be borne by "big oil" and the short-sighted consumer, that it will be "empowering" to the American Farmer® and that "big oil" will be reduced in stature... baloney.

"Big oil" has their fingers in bio-fuels already and has for decades, and the American Farmer® is beholden to ADM and Cargill and the American Farm Bureau. The most remarkable changes will be elevating ADM/Monsanto/Cargill/etc to "big oil" status, less mileage per gallon, and a need for significantly more corn and soybeans from existing cropland. ...which means that suburban sprawl == foreign oil, and therefore a controlled event. It'll be by government restriction, or by corporate farms buying verge land for suburban lot prices and raising the price of what they grow on it.

...or we make E85 from sugar cane, and turn Brazil and Dominican and Haiti and Jamaica and Cuba into the next Persian Gulf.

[Phoenix]

Oh.