Saturday, May 22, 2010
As part of California's Global Warming Solutions Act of 2006, aka AB 32, the Renewable Portfolio Standard (RPS) requires California to install sufficient renewable energy plants to provide 20 percent of all electricity sold in the state, and that is to be accomplished by 12/31/2010, only seven short months from now. This is supposed to reduce CO2 emissions into the Earth's atmosphere, and thereby stop global warming. More on that a bit later.
California finally has some data and graphics available (see below) to show the state's production of renewable energy. These are from http://caiso.com/outlook/SystemStatus.html. The first figure below (Figure 1) shows the amount of power (MW or mega-Watts) produced each hour for May 21, 2010. The figure is updated daily. Several important points are apparent from examination of this figure. First, the total MW from renewables is an average of around 3,000 MW. That is approximately 14 percent of the power sold in the state on that day. But, that was an excellent day for wind compared to many other days. Typically, the figure is about 10 to 11 percent of the total power sold. With the 20 percent deadline only 7 months away, it is not likely the state will reach the goal.
Second, California counts several types of power production as "renewable." The colored bands at the bottom of Figure 1 show relatively constant production from geothermal, biomass, biogas, and small hydro power. These four combine for approximately 1800 MW. The other two, solar and wind, are much more variable in their output. Solar, as is well-known, only provides power for a fraction of the day, slowly ramping up as the sun rises, and ramping down just before sunset.
Renewable Power Production 5/21/2010 in California
Figure 2, below, shows the power from wind generation in California for today's date, 5/22/2010 through approximately 8:30 p.m. This is an unusually windy day, with a strong wind offshore Southern California, which added to the wind generation. (wind speed at LAX, Los Angeles International Airport today, hourly starting at 3 p.m. was 15, 16, 20, 20, 21, 16, and 21 miles per hour). The statewide variation in wind output from hour to hour is readily apparent from Figure 2, as the green line "goes up" and then "goes down."
California Wind Generation 5/22/2010
The other interesting point from both charts is that wind installations in California are not expected to grow much, if any. The three areas with good wind are known, and nearly built out. Solar installations are expected to grow in the next few years, however. The increased production from solar plants will increase renewable production only during the daylight hours, and will require back-up power from natural-gas fired plants. The price of electricity must go up to pay for both types of plants: wind and solar renewables that are highly variable, plus natural gas-fired plants as back-up when the wind does not blow or the sun does not shine.
The pitiful thing about California's adventures in global warming mandates is that California intends to show the world how it is (and can be) done. AB 32 states specifically that California will
"exercis[e] a global leadership role, [and] California will also position
its economy, technology centers, financial institutions, and businesses to
benefit from national and international efforts to reduce emissions of
greenhouse gases. More importantly, investing in the development of
innovative and pioneering technologies will assist California in achieving
the 2020 statewide limit on emissions of greenhouse gases established by
this division and will provide an opportunity for the state to take a global
economic and technological leadership role in reducing emissions of
greenhouse gases." [bold emphasis added - Roger]
California is unlike other states, and other countries, in that there are large amounts of geothermal power available. There are also vast areas for solar power installations. Neither of these are true for many other states and countries. Also, there is not much ice or snow to foul the wind turbines in California, another big factor in other areas. It is therefore not very likely that any other states, or countries, will follow California's lead in these matters. The higher price of electricity in California may be attributed to the high renewable content of the power sold, at least in part. Another factor leading to higher power prices is the low consumption per capita with a large population. California presently has approximately 36 million people. The cost per kWh must increase when per capita usage is low, in order to have sufficient funds to pay for the infrastructure for transmission and distribution to all those customers.
As the climate refuses to warm as the IPCC insists that it will from man's emissions of CO2, and the world-wide recession refusing to end, plus unemployment remaining at historic highs, it will be interesting to see which states, or countries, are dumb enough to follow California's lead in renewable power requirements.
Roger E. Sowell, Esq.
Marina del Rey, California
A few months ago, I wrote on the question of whether global warming is a good investment. The conclusion was no, as the global fund GWO was underperforming the S&P 500, and by a wide margin. This post shows that a US-based global warming fund, PBW, is underperforming also. In fact, PBW is even worse than GWO. The first chart below shows the performance of PBW since January 2008, through May 21, 2010. The stock fund has declined almost 70 percent in value ($28 per share down to approximately $8.64 per share) see Figure 1 below. (more on the details and holdings of PBW may be found below).
PBW Performance since Jan 2008
A comparison of how PBW fared against the S&P 500 is shown below as Figure 2. The S&P 500 declined along with almost every stock in the crash of late 2008, and has recovered somewhat since then. Yet, the S&P 500 has lost only 25 percent of its value from January 2008, while PBW has lost 70 percent of its value.
As I wrote earlier, this is quite odd since, if the warmists are correct and the Earth must have massive and immediate changes to restrict or eliminate CO2 emissions from man's activities, then the companies represented by PBW should see zooming stock prices. These companies should enjoy rapid growth and investor confidence, as their customers purchase their products and services in a heroic effort to stem the flow of CO2, stop the polar ice from melting, halt the seas from rising, prevent the massive and frequent heat waves, and all the other horrific effects of global warming.
But, investors are a tough lot, with plenty of alternatives in which to place their hard-earned money. PBW is apparently not on that list.
PBW Compared to S&P 500
A description of PBW states "The Fund will invest at least 80% of its total assets in common stocks of companies engaged in the business of the advancement of cleaner energy and conservation." Also, the fund is made up entirely of approximately 52 U.S. stocks.PowerShares WilderHill Clean Energy Portfolio’s top 10 holdings include SunPower Corp., Class A, Echelon Corp., Cypress Semiconductor Corp., Cree, Inc., First Solar, Inc., OM Group, Inc., Universal Display Corp., KYOCERA Corp. ADR (Japan), Suntech Power Holdings Co., Ltd. ADR (Cayman Islands) and Applied Materials, Inc.
DISCLAIMER: I am an attorney, and not an investment broker. Nothing contained herein is legal advice, nor is it to be construed as such. If anyone requires legal advice, he or she should consult an attorney. The views expressed below are strictly my own, as allowed under the First Amendment to the U.S. Constitution. [end disclaimer]
Roger E. Sowell, Esq.
Marina del Rey, California
Sunday, May 16, 2010
Some ask me why I continue to do articles on California's monthly temperatures on a legal blog. My response is that politicians in California wrongly approved AB 32, the Global Warming Solutions Act of 2006. Their reasoning for passing that law was, in part, to protect the globe and California from the disastrous consequences of man-made global warming, in particular, the warming that is (supposedly) caused by man's emissions of CO2 into the atmosphere. I am convinced that the science does not support a link between CO2 concentration and global average temperature, as I have written about earlier.
Each of the past several months has shown that California is not heating, in fact, it is cooling. Droughts are not continuing, in fact, the Sierra snowpack is at more than 140 percent of normal as of April 30th. The lakes in California are full, and we are presently sending nearly 40 thousand cubic feet per second of fresh water down the streams and rivers into the Pacific. This does not include the water from the Colorado River, brought across the desert into Southern California. Heat waves and electric blackouts are not occurring as predicted by the authors of AB 32, in fact, the electric utilities are not stressed at all. Sea level off the coast is not rising as predicted, in fact, it is falling and has been falling for many years. None of the dire predictions that were foundational in AB 32's passing are true.
Fortunately, California has a provision for the voters to change bad laws, via the ballot initiative process. This year, for the November ballot, AB 32's fate will be decided. With the state's economy in shambles, unemployment at 12.6 percent and likely to climb much further with the recent group of high school and college graduates hitting the job market, and no prospect of the legislature cutting taxes to encourage economic activity, it is quite likely that AB 32 will be placed on hold for many years.
There is also the prospect of a federal law that will pre-empt all state laws on global warming, including California's AB 32. While the prospects of passing before November are slim, still, there is a slight chance.
Therefore, I once again refer to calclim.dri.edu, and the chart shown below. From NOAA's own data, California appears to be at least 4 degrees F colder than the "normal," and there is another week of cool weather approaching.
I'd like to be perfectly clear on my stance on environmental laws. I am in favor of reasonable, well-founded laws. I have seen polluted air, water, and land in many countries, and a few places here in the USA. I have worked overseas in some of that polluted air, and it is not at all good nor healthy. I am happy that the USA has the EPA, and state versions of the same. When our EPA bans or severely restricts emissions of toxic substances such as lead, mercury, benzene, and others, this is good in my view. I have choked for hours on diesel smoke in the tunnels connecting various parts of Rio de Janeiro, and am very glad we do not have that here. I have also held my breath or breathed through my sleeve to avoid inhaling car exhaust filled with unburned gasoline and oil. Our clean-burning engines with catalytic converters and oxygen sensors are a good thing. I have seen and worked in the orange air created by NOx plumes in industrial districts in certain countries. I have also worked in a country where no recovery systems were required to absorb chlorine gas leaks from a chlorine manufacturing plant. That was quite exciting when a leak occurred, which happened almost every day.
But the California legislature, and the US EPA, are very, very wrong in placing restrictions on CO2 emissions. The argument, the climate scientists say, is that CO2 triggers a follow-on mechanism of increased water vapor in the air, and that increases the earth's average temperature such that polar ice caps will melt. What the climate scientists fail to understand is that increased water vapor creates clouds, which in turn block the sun from ever hitting the earth. The net effect is one of cooling, not warming.
Roger E. Sowell, Esq.
Marina del Rey, California
Monday, May 10, 2010
Spring has sprung, or has it? As the chart (from NOAA) below shows, there is a snowstorm (winter storm watch and winter storm warning) for tonight and tomorrow in the California Sierras and northwest corner of the state. More of the same in the northern Rockies, and freezing with some snow in New England and New York and parts of Pennsylvania.
These types of events are supposedly not uncommon over a long period, but it does seem odd that global warming has not made such late Spring snow and freezes a thing of the past. After all, the increased CO2 in the atmosphere due to man's burning of fossil fuels, and methane production from cattle and sheep, has created an unstoppable global warming, according to climate scientists. The CO2 is supposed to be creating devastating heat waves, and allow horrible tropical diseases to spread northward, and cause sea levels to rise as the polar ice caps melt away under the blazing heat.
Apparently the Sierras and the Rockies and the New England states did not get the memo. Throw another log on the fire. Somehow, I just can't imagine the tropical bugs are too eager to march into Northern California tonight.
Also, that blue-purple area in the California northwest is where Eureka is sited. Eureka is having a very cold trend lately, as I wrote about here. The cooling trend there is 15.6 degrees C per century. Winter storms such as this one continue that trend. If this current trend continues, Eureka will have its own ice age within the next 67 years.
Roger E. Sowell, Esq.
Marina del Rey, California (where it is also unseasonably cool)
Sunday, May 9, 2010
As the greenies push for more and more bio-fuels, the weather is not cooperating. This weekend saw a freeze across much of the U.S. Midwest, which will likely reduce the corn crop this year. According to this report, the freeze "may stunt ... corn that has begun to emerge."
Farmers have made heroic efforts this year to plant their crops, and are ahead of the average pace in percent of total crops planted for this date. That is not all good, though, when a late freeze occurs and just-emerging plants are blasted by the cold air. Corn futures prices will likely increase as the extent of the damage is assessed.
The USA is not alone in having weather-related crop troubles, as this report states that China "may increase purchases from the U.S. as cold, wet weather delays planting in the Asian nation."
Meanwhile, yet another winter storm is blasting northern California, with another 6 to 7 inches of snow expected to fall. While this is excellent news for the ski resorts, and for water supplies in the state, it is not consistent with the dire warnings of heat waves and droughts that climate warmists claim are the result of increased amounts of CO2 in the atmosphere due to man's consumption of fossil fuels. California's AB 32 law requires more low-carbon fuels, e.g. ethanol, to be blended into gasoline. As corn prices rise, so does the price of ethanol and therefore, gasoline. Higher prices for gasoline hurt everyone.
One good thing about bad policy and bad laws, though, is that they can be changed when they are impossible to enforce, or when their actual results are obviously and painfully detrimental to a significant portion of the electorate. As farmers endure difficult growing conditions, the corn will not be there for making ethanol. The government mandates for ethanol will not be met, and the regulations will be changed.
Of course, we could always make ethanol out of ethylene, which is produced from oil. Anybody want to take bets on that?
Roger E. Sowell, Esq.
Marina del Rey, California
Saturday, May 8, 2010
After years of build-up, with government and pro-AB 32 factions crowing about how the Global Warming Solutions Act of 2006 will create jobs for Californians that will usher the state into the post-petroleum age, while the anti-AB 32 factions saying its draconian measures will cause businesses to fail, manufacturing to close and leave the state, and unemployment to skyrocket, it appears the issue will be on the November 2010 ballot as a California Proposition. There were far more than sufficient signatures gathered (approximately 800,000 gathered compared to 433,000 required) to place the issue on the ballot.
First, the pro-AB 32 factions' arguments, then the anti-AB 32.
Pro-AB 32 factions say that all its measures are worth doing because cutting CO2 emissions will stop global warming, and global warming in California causes the sea levels to rise and flood low-lying areas, the Sierra snowpack to melt or disappear, state-wide heat waves that cause deaths and illness, and many others. They also say that AB 32 will increase jobs and the economy. The way that AB 32 will increase jobs, they say, is by the net effect of all the requirements allowing each person to have an additional $5 per week for spending, or approximately $250 per year. The additional spending will go to purchases such as coffee at coffee shops, and retail sales. The increased demand for coffee shop baristas, and retail sales clerks will result in a surge in employment.
Pro-AB 32 factions say that private investors have pumped billions into California companies who will make revolutionary new products so that emissions of evil Carbon Dioxide, CO2, will no longer be necessary in beautiful California. The products will include smart-grid systems, home-generation of electrical power via solar panels, renewable power plants to supply one-third of utility grid power, advanced cars and trucks that consume about one-third less petroleum-derived fuel, and gasoline and diesel fuels that contain renewable components such as ethanol (for gasoline) and bio-diesel (for diesel, naturally).
There are many, many other aspects of AB 32, with 73 different line items in the Scoping Plan. Changes in the way people make choices are also part of the AB 32 Scoping Plan, with a significant change being scrapping the older and less-efficient home appliances for new and highly-efficient models. These include air conditioners. Proponents say that a home's electricity usage will decline 40 percent by installing new appliances, while the price for electricity will increase only by about 13 percent. The net effect, they say, is the consumer will have more disposable cash each month. Presumably, that extra cash will be used to pay the installment payments on all the new appliances. Similarly for the advanced cars and trucks, which will use less fuel. The reduced fuel consumed (35 mpg compared to 25) will more than offset the increased fuel cost.
Proponents developed a nifty plan to allow a homeowner to be able to afford to install solar panels on the roof. The plan involves increasing the property tax bill, with the annual increase paid to a bank or other financier who puts up all the money for the solar panels and installation. If the homeowner sells the home, the new buyer takes on the payment obligation as part of his tax bill. Presumably, the payments last for 15 to 20 years. Also, proponents argue, the solar panels add to the home's resale value.
Proponents also say that the cap and trade portion of AB 32 will not hurt businesses and industry, because they can actually make money if they just cooperate. Proponents maintain that a carbon credit will be worth $30, $50, even $100 per ton of CO2, so that if the business owners simply cut their CO2 emissions to a point below their government-mandated cap, they can sell the credits to others, thus enjoying a new revenue stream that will allow their business to grow and prosper. The idea is that one can either be a seller of these credits and prosper, or a buyer of these credits and not prosper.
There are many other pro-AB 32 arguments, such as more jobs created for solar panel installers, more construction jobs for renewable power plants, and the long-distance transmission lines to bring the power to the people, and factory jobs to fabricate solar panels and the smart grid components.
Implementing AB 32 will kill California by eliminating millions of jobs, causing massive bankruptcies, closing millions of small businesses and major corporations, and will do nothing to change the Earth's climate.
As more and more scrutiny is applied to the world-wide climate scientists' data, methods, peer-review system, and agenda, it is apparent that there is no cause for alarm over CO2 emissions, or any other so-called greenhouse gas emissions. The entire basis for CO2 causing the Earth to warm catastrophically is false. There are cities in California that show a pronounced cooling even while CO2 continues to rise - Eureka, Los Angeles, San Diego, and Sacramento. San Francisco shows a gradual increase in temperature that corresponds to population growth, but not to CO2 in the atmosphere. see this.
None of the dire predictions for California climate catastrophe have occurred since 1975, the period that climate scientists insist has shown an increase in Earth's average temperature due to increasing CO2. In fact, sea levels are decreasing off the coast. Also, the past 40 years have seen much more rainfall than occurred in the first 40 years of the 20th century, with a state-wide average of approximately 23 inches since 1970, but only 19 inches from 1900 to 1940. Presently, the state's lakes are full due to the recent rains and snow that is now beginning to melt. Heat waves have a long way to go to match, let alone exceed, the heat waves of the period 1920 to 1960.
On a more widespread or global basis, polar ice caps are not melting, but are growing. Sea level increases world-wide are at the same pace as far back as satellite records extend, even though CO2 continues to increase in the atmosphere. Hurricanes and tropical cyclones have not increased in intensity or frequency. In fact, ocean temperatures are decreasing, and hurricanes are decreasing too.
It is true that investors are pumping billions into California start-up companies, but as I wrote earlier, this is due to the increased price of oil. Such alternative energy, or renewable energy systems, ultimately must compete with oil. At the moment, these industries are incentivized with government subsidies, which can be removed at any time. Also, exchange traded funds (ETFs) that specialize in stocks worldwide that stand to benefit from global warming laws are under-performing the market, and by a wide margin. Investors know that global warming due to CO2 is on shaky grounds, and do not see any advantage in putting their money into such companies. see this and this.
The idea that the average homeowner in California will decrease his electric bill by 40 percent by installing new appliances and a new air conditioner is highly debatable, if not outright false. The largest consumers of electricity in a home are the refrigerator, electric stove and oven, clothes dryer, clothes washer, and automatic dishwasher. Of these, the electric stove and oven cannot be made much more efficient, if any. Homes built in the last 10 years (the 2000's) have high-efficiency appliances due to construction laws. Homes built in the decade prior (the 1990s) likely have had their appliances wear out and either replaced already, or will be replaced soon. My estimate is that, at best, appliance replacement will decrease electric power consumption per home by 10 percent. This will be overwhelmed by the increase in electric power prices, which will be 30 to 50 percent. The reality of high-priced renewable electricity, with its required back-up power plants that burn natural gas, is a large increase in electric power prices. Where Californians currently pay approximately 14 cents per kWh for the lowest-tier of residential power, by 2020 the price will be at least 20 cents, almost a 50 percent increase.
Similarly, the idea that the consumer will save money at the gas pump by purchasing a high-efficiency car just does not make sense. The additional cost for a hybrid car is approximately $3,000, or if one wants to buy a VW Jetta with the high-mileage diesel engine, the cost is more than $10,000 additional. Meanwhile, all drivers in California must pay the increased price of gasoline, but not all drivers will purchase a new car. Those drivers who never purchase a new car, but must by economic necessity buy a used car, must not only wait years before a more-efficient car hits the used car lots, but must pay the higher price of gasoline while they wait. They will not have more spending cash in their pocket.
The idea of putting solar panels on homes in California to reduce grid demand has been around for decades. The economics have never been favorable until recently, with the three-tiered pricing for domestic electricity use in California. As to having the solar panels financed 100 percent by a bank, but having the home's value increased, I'm not quite sure about that. It appears a homeowner could apply for the loan, have the bank pay for installing the solar panels, then sell the home at its enhanced value and walk away with an additional $20,000 or even $50,000 in his pocket, depending on the size of the solar panel system. The buyer would be obligated to pay the annual payments via his increased property tax bill. Hmmm....maybe I'll go into the home-flipping business - but only if I purchase a home without solar panels.
Also, it appears that only the wasteful are in a position to benefit from solar panels on their home. Many of my friends, and my own modest lifestyle, do not have utility bills that soar into the higher echelons of pricing due to excessive use (as determined solely by the price-setting entity, the PUC). Thus, we and similarly situated people will not likely ever install a solar PV system - it just makes zero sense when power price is at 13 cents per kWh. On the other hand, maybe we can simply install the system using the bank's money, then flip the house to a new owner.
The idea that Californians will be the ones manufacturing solar panels is highly suspect, given the manifold advantages of manufacturing overseas. Why would solar panels be manufactured here, when so many other products are made overseas where labor costs, and regulatory costs, are much lower? What is true is that solar panels will be installed using local labor. But after they are installed, what will those installers do? These are not sustainable jobs for the long run.
Cap and trade will dramatically increase the cost of doing business in California, to the detriment of in-state businesses. Arizona has already withdrawn from the regional cap and trade system, thus inviting California businesses to relocate to Arizona, hire people in Arizona, then ship their goods to California. The same is true of many, many other states where business conditions are much more favorable than are California's. We have already seen every automobile assembly plant close in California, due to burdensome regulations, high taxes, high labor costs, high power prices, and now AB 32 wants to impose additional burdens on remaining businesses. It will not take much for businesses, say for example oil refineries, to shut down their refining processes and simply import gasoline, jet fuel, and diesel from other states or from overseas. Most California refineries are on the coast, except for the handful around Bakersfield. A shutdown refinery does not employ as many people, as it takes only a few to run the tank farm. Out of work refinery employees will have a follow-on impact on local businesses, especially those who provided parts and services to the refineries. The same is true for other industries, especially cement manufacturers, and other heavy industry.
The choice seems abundantly clear: vote to keep AB 32 in place and hope that the government knows what they are doing and will keep their word (and has that ever been the case in the USA, and especially California?), and that each person will indeed get that precious $5 extra in their pocket every week, and electric power prices will only increase 13 percent, and every homeowner will rush out to replace all the appliances and install solar panels, and every driver will immediately purchase a new car that achieves 35 miles per gallon, and every business will find some way to reduce their CO2 emissions below their cap level and sell carbon credits.
Or, recognize what business schools around the world (including the prestigious Harvard Business School) have taught for years (because it is a fundamental truth), that reducing one's costs of doing business is the way to grow and prosper a business. Increasing the cost of utilities, and transportation for goods received and for goods shipped, when one's competitors are not burdened with similar costs, is not the way to grow and prosper. Instead, it is a recipe for bankruptcy. Recognize that few homeowners have the ready cash, or credit, to purchase new appliances, and then recognize that many residences in California are rentals such as apartments. Rental apartments will not usually allow the renter to install new appliances, indeed, the only appliance the renter can replace is his own refrigerator. Not the washer, the dryer, the dishwasher, and certainly not the stove or oven. If the landlord replaces these, then rents will go up to pay for them. That will certainly wipe out that $5 per week that California promises will appear in every person's pocket.
The issue will most likely be on the ballot in November, but it will be a tricky ballot. A Yes vote means AB 32 will be halted until the statewide unemployment reaches 5.5 percent for four consecutive quarters. Presently, California's unemployment rate is at 12.6 percent (for March, 2010).
Roger E. Sowell, Esq.
Marina del Rey, California
Monday, May 3, 2010
I have not written on the drilling rig explosion and fatalities, as this seems to me a horrible event with loss of lives, many people injured, hundreds of miles of shoreline potentially coated with oil, sea life also coated with oil, hundreds if not thousands of residents and businesses damaged economically, in short, quite a catastrophe. Yet today, an article on the oil spill caught my eye and I choose to write.
DISCLAIMER: BP is not a former nor current client of mine. All the material contained herein is from published sources, which may or may not be reliable. The opinions expressed herein are my own and do not reflect in any way those of my clients, current or previous employers, nor anyone else. [end disclaimer]
First, my heartfelt condolences to all those families, and friends, of those who lost their lives that day. And to those who suffered injuries, may you recover fully and return to happy and productive lives.
The article that caught my eye was written by Donna Brazile on CNN, (see here). Ms. Brazile, known for running Al Gore's unsuccessful presidential campaign, states that BP was greedy, and is guilty of negligence resulting in the oil spill. Ms. Brazile also wrote in her article that hurricane Katrina's devastation was a natural event, but BP's drilling disaster was man-made. Ms. Brazile should understand a few things before writing such as those.
One, BP is not greedy, they are a corporation whose business is to find and produce oil. They have obligations to millions of stockholders, plus thousands of employees and their families, to do their best to create a profit. Finding oil is the lifeblood of oil companies, and those that fail at that task fade into oblivion. BP invested many millions in that one drilling operation. They are not alone, as there are more than one thousand oil platforms in the Gulf of Mexico.
Drilling on Existing Leases
Two, Democrats have criticized oil companies for not drilling on oil leases they already own, when they request the US open up additional federal lands and offshore waters for oil leases. Yet here, BP was drilling for oil on a lease they already owned. Further, Obama has instructed the Minerals and Mining Service (MMS) to open US federal waters to drilling for oil, which instructions MMS followed in 2009 with a 5 Year Plan. Obama has lifted much of the ban on drilling in federal waters. BP is following what Democrats have requested oil companies do: drill for oil on existing leases, and in waters offshore.
Three, Brazile should understand the legal term "negligence." Her use of the term in her article shows a lack of understanding. First, negligence requires a duty on the part of the defendant, conduct by defendant that breaches that duty, harm to plaintiff, and that harm must be linked to defendant's conduct both actually and proximately. Further, the injured plaintiff must be one who could foreseeably be harmed by the defendant's conduct.
BP was drilling in very deep waters, approximately 5,000 feet. BP had a duty, or obligation, to conduct its drilling operations in a manner consistent with what a reasonably prudent person, or company in this case, would have done in a similar situation. There are higher standards of conduct, or duty, in certain situations, that do not apply here. Higher standards are required where an expert is conducting a task, such as a surgeon. The surgeon is held to a standard of what other competent surgeons would do in a similar situation. Higher standards are required when the activity is an ultra-hazardous activity, such as nuclear radiation, and blasting with explosives. But, drilling for oil is not in that category.
BP appears to have exercised due care, meeting its duty, by contracting the drilling to a world-renowned drilling company with a state-of-the-art semi-submersible drilling ship. This ship used GPS location technology, and advanced thrusters to maintain the ship's position above the well. BP also employed a blow out preventer (BOP) at the ocean floor. A BOP is a large valve, usually open so drilling can occur through the valve's hole, and can be shut off quickly when a well begins to flow too quickly. This is somewhat simplified, but the idea is that the BOP closes to prevent a blowout, or uncontrolled oil and gas flowing from a well. From reports to date, it appears that the BOP failed to activate, thus releasing the oil in an uncontrolled manner, which caused the fire.
There is no doubt that many people suffered harm, with eleven people reported as missing and presumed dead. Many others are injured but alive, as they escaped the burning ship. There is also no doubt that the harm was connected to the drilling activity, or at least to the blowout. But, in assessing whether BP's conduct fell below the standard of ordinary care, one asks, what else could they have done? We do not know at this point exactly what happened, and we may not know for a long time, if ever, because the drill ship sank. It may be possible to recover the drill ship or pertinent pieces of it to determine what went wrong. Reports state that there were several emergency stop buttons, but these did not activate the BOP. Also, it appears that BP used remote operated vehicles (unmanned submarines with arm-like attachments) to travel down to the BOP and attempt to activate it from close range. This also was unsuccessful.
We also do not know, at least from published reports, if the BOP was faulty, or was tested properly and passed those tests before being installed. It may have been tested after installation to ensure it closed then opened again, but this has not been mentioned in material I have read. I have no access to internal information, merely what is available on the news outlets. It could very well be that the BOP was properly designed and tested, therefore was not faulty. Perhaps the sudden pressure of the blowout was more than what the BOP was designed to withstand, in which case the designers may be at fault. However, one must ask how a BOP is selected. An analogy is that of a car's bumper. If a large, heavy car is to withstand an impact of 10 miles per hour, but a bumper is selected that is suitable for a small, light-weight car and an impact of 3 miles per hour, then that is a faulty design selection. Yet, how is a designer supposed to know what magnitude of blowout to design for? A blowout is usually due to drilling into a very high-pressure pocket of oil or gas or water, or a combination. But, how high is that pressure? And, how extensive is that pocket?
Drillers use a material called mud that accomplishes several things. First, drilling mud is not really mud in the common sense, but is a carefully designed mixture of materials that, when mixed with water, appears much like a mud made of clay. Drilling mud is pumped into the hole as it is drilled. One of the functions of drilling mud is to act as a heavy column of fluid, and keep oil and gas in the well by the pressure at the bottom of the column of drilling mud. If a pocket of oil or gas at high pressure is drilled into, and that high pressure pocket has greater pressure than the weight of the column of drilling mud, the mud begins to flow upward out of the well. The BOP is designed to close when this occurs. It seems clear that the column of drilling mud was not sufficient to keep the oil and gas in the well. Could BP, or rather, the driller, have used a different mud with greater density, which might have prevented the blowout? Perhaps. Such information is undoubtedly being sought and discussed at BP and its contractors.
Thus, at least at this time, we do not really know the precise cause of the blowout, the fire, and the injuries. BP may have done everything correctly, as did their contractors. For Brazile to accuse BP of negligence, when so little is known about the causes of the accident, is reckless and demonstrates a lack of understanding.
Four, the devastation caused by hurricane Katrina was not entirely natural, but had many influences from human actions or inactions. The hurricane itself was entirely natural, notwithstanding a judge who wrongly ruled that global warming made the hurricane stronger than it would have been otherwise. The devastation, loss of lives, and injuries were due in large part to incompetent local and state authorities in New Orleans and Louisiana. Flooding occurred, at least in part, because one or more levees failed. Yet funds to repair and strengthen the levees was diverted by local authorities into other avenues. Some reports indicate that riverboat gambling casinos were the target for those funds. Also, local authorities authorized building of homes and businesses in areas below sea level, protected by the levees. The wisdom of this has been questioned. Incompetence at the local disaster response level also contributed to the injuries and deaths.
Brazile implies that the drilling blowout and oil slick was not natural, likely because BP was drilling into the earth searching for oil. While that is true, oil has seeped naturally into the Gulf of Mexico for centuries. The only difference is one of degree.
Brazile goes on to praise Obama for his sending officials from Washington to look at the oil spill, and criticize Bush for his handling of the Katrina event. Yet the record is clear that Bush offered assistance to Louisiana but his offer was not accepted in a timely manner by the Louisiana Governor.
The oil spill in the Gulf continues, with clean up efforts underway, and stopping the well flowing a top priority of BP. BP has offered to pay for damages and to clean up the oil if and when it reaches shore. But to accuse BP of negligence is wrong.
Roger E. Sowell, Esq.
Marina del Rey, California