BP and the Macondo Spill

COLIN READ is Professor of Economics and Finance at SUNY College at Plattsburgh, and a columnist for the Plattsburgh New York Press Republican newspaper. He has taught economics and finance for 25 years. His recent books include Global Financial Meltdown: How We Can Avoid the Next Economic Crisis, The Fear Factor and International Taxation Handbook (edited with G. Gregoriou). He has written dozens of papers on market failure, volatility, and housing markets, writes a monthly column in a business trade journal, and appears monthly on a local PBS television show to discuss the regional and national economy.

• PART I: HISTORY - A BRIEF HISTORY OF OIL SPILLS -Arabian Gulf -Ixtoc I -Atlantic Empress -Fergana Valley -ABT Summer -Nowruz Field Platform -Catillo de Bellver - Amoco Cadiz - MT Haven -Odyssey - Sea Star - Morris J. Berman - Irenes Serenade - Urquila - Torrey Canyon - Montara PART II: THE INDUSTRY - VARIOUS WAYS TO EXTRACT OIL - where does oil come from? - early extraction and shallow well - offshore drilling - deep sea drilling - the complication of combined oil and gas at pressure - the risks in perspective of drilling, transportation, refining, distribution, and consumption PART III: WHAT HAPPENED - THE MACONDO SPILL - history of the Macondo oil reservoir - events leading up to the fire and spill - partners in the spill - early BP response - U.S. Federal government response - the science of determining the spill rate PART IV: THE MEDIA - FOR ALL THE WORLD TO SEE - the first example of transparency at the ocean's floor - a spill in clear view - the role of the media - an assumption of moral responsibility - the public face of BP - 24 hour news cycle PART V: THE SCIENCE - ENGINEERING A SOLUTION - what went wrong - five contributing factors and their implications - the effectiveness of various solutions - deep sea dispersants - the new phenomenon of subsea plumes - when engineering meets politics PART VI: POLITICS - A PARALLEL POLITICAL AGENDA - a stalled U.S. energy bill - concessions to offshore drilling in return for a filibuster proof energy bill - a moratorium on drilling - finger pointing - Congress extracts a pound of flesh - time to talk tough, heads must role PART VII: BUSINESS - THE MARKET RESPONSE - loss of value of BP stock - exaggerated claims of cost and liability - promise to pay all legitimate claims - the $20B solution - a special master and his scope - talk of bankruptcy, merger and acquisition PART VIII:- THE FIX - CAPPING AND ABATING THE SPILL - a final solution - the cleanup effort - long term effects - direct and indirect costs - the human toll - the effectiveness of compensation PART IX: THE LAW - A COMPLICATED LEGAL LANDMINE - statutory liability - the Jones Act - Who's in charge - new laws in Congress can't be retroactive - maritime oil spill law - shareholder and class action suits PART X: OUR ROLE - THE WORLD'S INSATIABLE NEED FOR ENERGY AND HYDROCARBON BASED FUELS - we are all part of the problem - past consumption - demand from emerging nations - future prospects - all the easy oil has been tapped - the economics of alternatives to hydrocarbons PART XI: - CONCLUSION - WHERE TO GO FROM HERE