BP and the Macondo Spill: The Complete Story

236 Pages·2011·1.068 MB·English

by  Colin Read (auth.)

BP and the Macondo Spill
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BP and the Macondo Spill
The Complete Story
Colin Read
Professor of Economics and Finance, SUNY
College, Plattsburgh, USA
Palgrave
macmillan
© Colin Read 2011
Softcover reprint of the hardcover 1st edition 2011 978-0-230-29358-8
All rights reserved. No reproduction, copy or transmission of this
publication may be made without written permission.
No portion of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency,
Saffron House, 6-10 Kirby Street, London EC1N 8TS.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The author has asserted his right to be identified as the author of this work
in accordance with the Copyright, Designs and Patents Act 1988.
First published 2011 by
PALGRAVE MACMILLAN
Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills, Basingstoke,
Hampshire RG21 6XS.
Palgrave Macmillan in the US is a division of St Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN 978-1-349-33303-5 ISBN 978-0-230-30508-3 (eBook)
DOI 10.1057/9780230305083
A catalogue record for this book is available from the British Library.
A catalog record for this book is available from the Library of Congress.
10 9 8 7 6 5 4 3 2 1
20 19 18 17 16 15 14 13 12 11
Contents
List of Illustrations vii
About the Author ix
1 Timeline for the Deepwater Horizon Oil Spill 1
2 Introduction 5
Part I The Natural and Economic History of Oil
3 A Brief Natural History of Oil 11
4 The Science and Refining of Oil 15
5 Oil in Our Past and Present 21
6 Demand for Oil in Our Future 30
7 The Industry of Oil Extraction 37
Part II The Uneasy Mix of Oil in Our
Natural Environment
8 The Dirty Dozen before the Deepwater Horizon 47
9 The Case of the Exxon Valdez 64
10 A Brief History of Oil Rig Fires 75
11 Exploration, Drilling, and Extraction U.S. Environmental
and Safety Records 80
Part III The Macondo Prospect and
What Went Wrong
12 The Macondo Prospect 97
13 What Went Wrong – A Congressional Perspective 106
14 Lessons for BP from More Considered Reviews 124
15 The Principal–Agent Problem and Transocean 138
16 The Management of Risk 143
v
vi Contents
Part IV The Spectacle of the Spill
17 For All the World to See 153
18 Partners in the Problem 160
19 Engineering a Solution 165
20 The Toll on the Environment 174
Part V Politics, Courts, and Markets
21 The Politics of Oil 181
22 A Complicated Legal Quagmire 190
23 The Market Response 202
Part VI Where Do BP, Big Oil, and Energy-Starved
Consumers Go from Here?
24 Reform of Regulatory Oversight 209
25 What Do We Do with the World’s Insatiable
Need for Energy 214
26 Conclusion 218
Notes 220
Glossary 229
Index 233
Illustrations
Figures
4.1 Global energy consumption derived from U.S. Energy
Information Administration data 16
4.2 Numbering of alkanes and energy equivalents 19
5.1 The graph of a demand curve 22
5.2 Worldwide energy demand expectations by the Energy
Information Agency of the United States Government 23
5.3 The supply and demand for a commodity 25
6.1 Rate of growth of GDP and energy demand over the
development cycle 31
6.2 Population growth in three economic worlds 33
6.3 Marketed daily energy consumption in barrels of
oil equivalency 35
12.1 T ypes of offshore drilling platforms 101
20.1 D eepwater Horizon Oil budget courtesy of the
Flow Rate Technical Group 175
22.1 T he Consumer Sentiment Index in the U.S. in
the months following the spill 195
23.1 B P stock prices in the U.S. (New York) and England
(London) as a function of spill events 203
23.2 W eekly stock prices before the spill 204
23.3 W eekly stock prices since 2003 in London and New York 205
Tables
6.1 World Population 1750–2150 (millions) as projected by
the United Nations Population Division 32
6.2 Urbanization and global population 1950–2030 (millions) 34
10.1 F ires and Explosions in the Gulf of Mexico Oil and Gas
Extraction Industry, 2006–2009 75
11.1 E PA violations by oil exploration companies since
September 2003 83
11.2 O SHA violations by oil drilling companies 85
11.3 O ffshore oil production quantities among the various
major oil companies 86
11.4 O ffshore lease activity 87
vii
viii Illustrations
11.5 O ffshore oil spills by company 1964–2009 88
11.6 O il exploration company spills 2000–2009 90
11.7 W orker injuries in exploration by major oil exploration
companies 91
11.8 F our year fatality figures for oil exploration companies
2006–2009 92
22.1 V arious public estimates of flow rates over the timespan
of the spill 200
About the Author
Colin Read is Professor of Economics and Finance, former dean of the
School of Business and Economics at SUNY College, Plattsburgh, and a
columnist for the Plattsburgh (New York) Press-Republican newspaper. He
has a PhD in economics, a JD in law, an MBA, a masters in taxation, and
has taught environmental and energy economics and finance for 25
years. Colin’s recent books include Global Financial Meltdown: How We
Can Avoid the Next Economic Crisis, The Fear Factor, The Rise and Fall of an
Economic Empire, and a book on international taxation. He has written
dozens of papers on market failure and volatility, and housing markets.
He writes a weekly column in the Plattsburgh Press-Republican newspa-
per, and appears monthly on a local PBS television show to discuss the
regional and national economy. He has worked as a research associate
at the Harvard Joint Center for Housing Studies and served the Ministry
of Finance in Indonesia under contract from the Harvard Institute for
International Development. His consulting company can be found on
the Internet at www.economicinsights.net. In his spare time he enjoys
floatplane flying from his home on Lake Champlain that he shares with
his wife, Natalie, daughter, Blair, and dog, Albert.
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