Energy policy and politics spill over into Capitol halls with first oil spill hearings

Sen. Amy Klobuchar
REUTERS/Jonathan Ernst
Sen. Amy Klobuchar

WASHINGTON — Everyone agrees that something needs to be done. Exactly what, well, that’s a trickier question.

“We all know that accidents happen, but some accidents are simply unacceptable,” Sen. Amy Klobuchar said at a Senate hearing Tuesday on the cause of — and response to — the massive April 20 oil spill in the Gulf of Mexico.

Tuesday saw the first two of many hearings to come on drilling. House Transportation Chairman Jim Oberstar, who toured the Gulf coast with Klobuchar over the weekend, has pledged to hold hearings on the issue as well.

BP America President Lamar McKay admitted responsibility for the spill and pledged to take every step necessary to make sure the Gulf coast was cleaned up.

“We know that we will be judged by our response to this crisis,” McKay said. “No resource available to this company will be spared. I can assure you that we and the entire industry will learn from this terrible event, and emerge from it stronger, smarter and safer.”

Of course, accepting responsibility doesn’t necessarily mean that McKay was accepting that the spill was BP’s fault exactly, per se. McKay wondered aloud about why the blowout preventer on the TransOcean Deepwater Horizons rig “failed to operate.”

TransOcean President and CEO Steven Newman noted that the rig operator — “in this case BP,” he helpfully added — developed the plans for where and how the drilling would take place. He said a subcontractor, Halliburton, oversaw the cementing process that was designed to prevent oil and gas gushing out of the ocean floor.

This screen shot depicts the size of the Deepwater Horizon oil spill (approximately 2500 square miles of ocean surface) in relation to the Twin Cities metro area.
paulrademacher.com
This screen shot depicts the size of the Deepwater Horizon oil spill (approx. 2500 square miles of ocean surface) in relation to the Twin Cities metro area.

Tim Probert, president of global business lines and chief health, safety and environmental officer for Halliburton, who in turn noted that had Halliburton done things its own way (rather than to the operator’s specification) things might have turned out differently.

Klobuchar compared their back-and-forth blame-placing efforts to a group of squabbling children who broke a window while playing baseball and then failing to own up to their mistake.

White House seeks changes
The White House rolled out legislation this morning aimed at responding to economic impacts of massive oil spills. The tab would be picked up by the party responsible for the spill.

Melody Barnes, director of the White House Policy Council, said the bill includes financial assistance for those out of work as a result of the oil spill, including commercial fishers and others, as well nutrition and food aid to those who might require it.

Money would be set aside for additional oil rig inspections and seafood safety testing for affected fisheries.

The bill also lifts the cap on damages retroactively in an effort to make sure tax dollars aren’t covering the costs of responding to this spill, and would increase a tax designated for cleaning up spills from 8 to 9 cents per barrel (One barrel of oil is 42 gallons).

Outside of that legislation, the White House on Tuesday confirmed plans to split in two the agency responsible for regulating drilling. One half would oversee drilling leases and handle revenues, and the other would be a solely regulatory agency, overseeing inspections and ensuring safety regulations are followed.

The future for ‘Drill, baby, drill‘?
Rep. Michele Bachmann is among those who have introduced legislation this session to dramatically expand coastal drilling rights. Her bill and others were already considered dead but, if such a thing is possible (and though the metaphor doesn’t allow), they’re even more dead now.

Rep. Michele Bachmann
MSNBC
Rep. Michele Bachmann

But while her legislative solution may not move this session, Bachmann said it’s important to not learn the wrong lessons from the Deepwater Horizons explosion and shut down drilling. An investigation into the accident should occur, Bachmann said, but abandoning drilling isn’t the answer.

“We need to access energy here on American soil — whether it’s through natural gas, nuclear, coal or wind or solar or bio[fuels], it doesn’t matter,” Bachmann said. “We have to access energy because before this incident occurred, the price of gas was going up and we knew it was going to get higher.”

“The rest of the world is drilling, Venezuela is drilling right now, and there are new wells going in all over. For the most part it’s been very safe — obviously something went tragically wrong, and that’s why it’s imperative that an investigation be done.

“More than ever, it shows that we have to embrace the ‘all of the above’ strategy where we access energy everywhere we can in the United States. Clearly, something went wrong here, and we have to find out what happened.”

Several Democrats, including Frank Lautenberg of New Jersey and Ben Cardin of Maryland, delivered exactly the opposite message, calling for an immediate and permanent halt to new drilling off any American coastline.

“Ultimately, what this spill shows is that offshore oil drilling simply cannot be done safely,” Lautenberg said. “If these three companies can’t get it right, no one can.”

“The bottom line is that if you drill in the ocean, oil will spill in the ocean. And all it takes is one major spill to destroy a coastline.”

Cardin agreed, worrying aloud that the Chesapeake Bay and beach resorts on his state’s Eastern Shore would be at risk. “I hope we’ll learn lessons from the Gulf and not put any additional American communities at risk.”

Comments (17)

  1. Submitted by Richard Schulze on 05/12/2010 - 12:37 pm.

    Distorted energy markets starts in the US tax code that provides a huge tax break: the depletion allowance which makes pumping fossils fuels the cheapest energy source in the USA. Without just this single tax break, other energy sources could compete in the USA.

    Plus the energy industry, along with its close cousins in the chemical and mining industries, are not forced to pay the true cost of cleaning up after their production. 10,000’s of acres are left as toxic waste sights by the energy, chemical and mining industries each year through the convenient method of spinning of these “assets” into separate firms that then go bust. That leaves the US and local governments footing the bills for clean up.

  2. Submitted by Karl Bremer on 05/12/2010 - 01:39 pm.

    The nuclear industry is the most heavily subsidized energy industry thanks in large part to the Price-Andeson Act, which limits the amount of liability insurance nuclear utilities must pay, and limits their liability for any nonmilitary nuclear accident to $10 billion. Everything beyond that gets picked up by the taxpayers. You can imagine how long it would take a nuclear accident to top $10 billion in damages. Yet I don’t hear Bachmann and the rest of the free marketeers out there calling for an end to goverment subsidized liability for nukes.

    http://en.wikipedia.org/wiki/Price%E2%80%93Anderson_Nuclear_Industries_Indemnity_Act

    http://www.citizen.org/documents/Price%20Anderson%20Factsheet.pdf

  3. Submitted by jim hughes on 05/12/2010 - 03:46 pm.

    Spill, baby, spill.

    And just send us the bill.

  4. Submitted by Greg Kapphahn on 05/12/2010 - 03:48 pm.

    It’s long past time to change the way we supply our energy needs in this country. The technology is already available for America to become energy independent, but implementing it would essentially dry up the very substantial incomes of some very well connected and very wealthy individuals and corporations who seem to believe that they have a right to our money and the profits they extract every day from the US economy.

    Our current oil and coal companies – the principal suppliers of energy in the US are profiting massively at our expense while, as commented above, leaving the US taxpayers holding the bag when it comes to cleaning up their toxic messes. They have such a sweetheart deal that it’s likely they’ll try to crash our national and the world’s economy rather than lose it. They may succeed.

    But the truth is, Prince William sound in Alaska has never and will never return to normal after the Exxon Valdez disaster. The US Gulf Coast, if not the entire Gulf of Mexico will NEVER be the same. There’s no way to turn back the clock when this type of damage is carelessly done in the stubborn pursuit of even more obscene profits, but all we can expect is far more of the same if we don’t change to other sources of energy.

  5. Submitted by myles spicer on 05/12/2010 - 04:00 pm.

    The operative word in the Bachmann response is…
    “soil”. The point is, this drilling is NOT on “soil”, it is 5000 ft below the ociean surface, then another 10-20,000 ft into the ocean floor. And that is where the trouble lies, technology (as proven by this disaster) has not been able to repair or manage drilling into the Gulf (or any other offshore area) with proven results. In the end, with 500 deep water drilling rigs working worldwide, it is almost a certainty that another disaster is not far off. At any rate the odds sugggest it. Let’s stop before it is too late.

  6. Submitted by rolf westgard on 05/12/2010 - 04:38 pm.

    The insurance and loan guarantees to nuclear reactors are guarantees not big payouts like those that go to the biofuel and wind farm scams. They were valued by the CBO at $70 million per reactor, not the billions that go to renewables.
    With its 1Q bills Xcel Energy listed all of its fuel sources by cost and reliability. Nuclear is the lowest cost here and everywhere else. Nuclear was also listed as the most reliable. All this is why China, South Korea, etc are building them like crazy. If you don’t like coal, nuclear is it with NG in the interim.

  7. Submitted by Karl Bremer on 05/12/2010 - 05:59 pm.

    So Rolf, are you volunteering your backyard to store the radioactive waste for the next 10,000 years or so? Or is that a big scam too? And what happens to those “guarantees” when a reactor melts down? They turn into huge payouts. And if you think $70 mil per reactor will cover the tab, maybe you better check back in on Chernobyl and Three Mile Island.

  8. Submitted by rolf westgard on 05/12/2010 - 06:14 pm.

    Unfortunately, Miles, oil is a product of the sea. Ocean algae settles into sea bottom mud and silt which cements into shale, the source rock for the world’s oil. If you find oil on land, it’s an area that was once under water.
    So, unless you are willing to get out the bicycle and do without the hundreds of products made from petroleum, you can expect to see more off shore drilling in the world.

  9. Submitted by Gregory Lang on 05/12/2010 - 07:18 pm.

    I am amazed at the way the media deemed Amy Klobuchar saying “A bridge should not fall down in America” “genius”. Like duhh! That used to be called “Monday morning quarterbacking” or closing the barn door after the horse got out.

    You might recall that British Petroleum (BP) spent a lot of money on the “beyond petroleum” ads. BP also put a lot of money into “alternative energy” schemes.

    We need to ask if BP got backup and safety waivers because they were “green”.

    I happen to be a fan of coal to oil conversion. The economic break even on that seems to be $50 crude. I don’t see us going below that.

  10. Submitted by rolf westgard on 05/12/2010 - 08:27 pm.

    Karl, I will be happy to store the spent fuel in my backyard. It and Yucca Mountain are perfectly safe places to store it.
    We should be reprocessing the spent fuel as the French do at La Hague. I’ll be speaking on nuclear in Woodbury in a week. I can arrange for you to attend.

  11. Submitted by Richard Schulze on 05/12/2010 - 08:54 pm.

    Dropping a cement coffer/casket on the well … the Chernobyl Solution still has legs!

    The one major problem all overlooked with regard to weaning the world off oil for energy is that the world’s chemical industry depends even more on oil for its raw materials than does the energy industry.

    Nothing that is nothing we do or buy or live on is free from oil based chemicals. Better solve this problem before fixing the fix on oil for energy.

  12. Submitted by Richard Schulze on 05/12/2010 - 09:03 pm.

    All of my complaints come from not being able to put a price on carbon. This is what happens when we confuse government with a doting aunt.

  13. Submitted by rolf westgard on 05/13/2010 - 06:09 am.

    Good point, Richard, reminding the world of the hundreds of products made from petroleum feed stock. There really is no effective substitute for oil and its lightest compounds, the natural gases.
    If the world’s car fleet suddenly became electric, it would save a lot of oil – substituting coal to make all that electric power.

  14. Submitted by Beryl John-Knudson on 05/13/2010 - 07:33 am.

    Missing and presumed dead…
    Aaron Dale Burkeen
    Jason Anderson,
    Donald Clark,
    Steven Curtis,
    Roy Wyatt Kemp,
    Karl Kleppinger,
    Gordon Jones (M-I Swaco),
    Blair Manuel (M-I Swaco),
    Dewey Revette,
    Shane Roshto,
    Adam Wiese

    Responsible for the deaths of the above:
    Halliburton, TransOcean, BP…represented by Steve Newman,
    Tim Probert,
    Lamar Mckay

    No Armani-tailored orange jumpsuits for these arrogant profiteers.

    Criminal Intent will do for starters…these are not ‘kids breaking windows’…

  15. Submitted by Richard Schulze on 05/13/2010 - 12:39 pm.

    We have oil. We like what oil does for us. We are running out of oil. We have nothing else that’s a tenth as good. We keep finding more and more great things to use oil for (like getting fresh Chilean raspberries in January).

    I’ll let others argue about whether the peak of production occurred in 2008 or won’t occur until 2040, which seems to be the maximum range of estimates, but by any measure, humans have already burned roughly half the oil and coal that is conceivably accessible. Presumably it will take a lot less time to burn the remaining half than it did to burn the first half.

    Re: waste/storage:

    We could dump the nuclear waste in a Thorium reactor and burn it for more fuel.

    The viewpoint of the Secretary of Energy is that this is the long-term solution for our waste problem, and that we are very likely to get this working within the next few decades. At the moment we are just keeping our waste at the reactors where it is made, and although this isn’t something that we can do indefinitely it does work well enough at the moment and can be maintained for a few decades.

    This is part of why the Obama administration finally let the Yucca mountain project die: because in the short to medium term keeping waste at the reactors works just fine, and by the time we start running into the long-term problems with this we should be able to get reactors online that can burn the waste. If this seems short-sighted, it is worth keeping in mind that it is arguably also short-sighted for us to seal this waste away in such a manner as to make it hard for us to burn it for fuel when we have the technology to do so later.

    I would like to deal with America’s energy future. I believe that it will be nuclear, as it will for the rest of the world.

  16. Submitted by david granneman on 05/13/2010 - 09:19 pm.

    after reading some of the posts – i got to thinking that what would the world be like if some of these posters where alive when the wright brothers crashed their wright flyer – we probably would not have global airtravel. what if they where around when three astronauts died in the fire at cape kennedy – man probably would not have set foot on the moon. in the past americans when faced with accidents and trajedies have instead of quiting, have determined a solution for the problem and have gone on to greater accomplishments.

  17. Submitted by Richard Schulze on 05/14/2010 - 06:46 am.

    A populist wave could revive cap & trade, which until last week, was thought dead on arrival. It didn’t help that BP was a notorious “green washer,” with its $300 million budget for alternative energy going entirely into advertising. The big oil companies have to be asking themselves if these ultra high risk, high return projects are really it. The industry really could have done without this. Companies like Transocean (RIG), which owned the Deepwater Horizon, will do alright, because they already lease the bulk of their rigs outside of the US. But for the rest of us, this will mean more expensive gas at the pump.

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