Will British Petroleum Apologize For Ruining The Gulf Of Mexico From Greed

Right now the Gulf of Mexico oil spill may be spewing out at a rate of 25,000 barrels a day. This would be 5 times what the government estimated, according to industry experts. The 5,000-barrel figure was first estimated on Wednesday. Once experts took a closer look at the extent of the leak, the estimates went up dramatically. It may take another 3 months to control the leak. At this rate, the BP Gulf spill may exceed the 1969 Santa Barbara, Calif., and 1989 Exxon Valdez disasters. The question is, why did this happen. Louisiana and Alabama have already declared a state of emergency. Mississippi and Florida may be close on their heals.

What caused the oil spill? What has now been released is that this oil rig did not have a remote-control shut-off switch, commonly referred to as an acoustic switch. An acoustic switch is used as a last-resort protection against underwater leakage. Acoustic switches are required by other leading oil producing countries. But U.S. regulators still don't mandate their use on offshore rigs. For example, Norway has mandated acoustic switches on nearly all of its offshore rigs since 1993, that's nearly 2 decades ago.

The U.S. Interior Department's Minerals Management Service had considered requiring acoustic switches several years ago under the Bush administration. But once again, lobbyists who control the country said it would not be necessary because rigs had other back-up plans to cut off a well.

Offshore oil rigs, in theory, have a central switch for shutting off the oil. This switch is connected to a valve that can be closed. This valve is located at the bottom of the rig on the ocean floor. Rigs also, in theory, have an automatic system, known as a "dead man" switch, as additional backup. The dead man switch should be able to close the valve when it senses disaster. This is the theory behind the lobbyists' portrayal. Just don't tell this to the 11 people who lost their lives when the rig imploded.

How much does it cost to install an acoustic switch cost? The answer is $500,000. As it stands now, BP is spending well over $6 million a day to halt the spill that is out of control because they were cheap. The price of oil at the time they were investigating installing acoustic switches was roughly $50/barrel. Let's say for argument sake, that BP gets just half the oil price or $25/barrel. How many barrels of oil would it take to pay for the switch? Just 20,000 barrels. If their rig pumps 5,000 barrels per day, it would have taken BP only 5 days to pay for the switch. If BP is now having to pay $6 million / day to cleanup their mess, and if it takes 3 months for the mess to be cleaned, that will cost BP the princely sum of $540 million. Oh and yes, the rig is gone. It's replacement cost is $560 million. And it will require 3 months of down time to clean up the mess. At $125,000 / day lost revenue, there's more millions lost. Who can say how long it will take to replace the rig and get is certified (with an acoustic switch installed). This whole disaster, not to mention the tens of millions BP will need to spend in advertising to get back any kind of credibility with its customer base and the world), will cost BP in excess of $2 billion.

The questi on is...what did the lobbying cost them to ignore the acoustic switch? A lousy $500k that could have been installed in a few days of downtime. Isn't greed amazing. Here's the best part. BP's stock has plummeted 10 points. Considering the millions of shares outstanding, how much is this going to cost their executives in annual bonuses? Was it worth it? When will greed stop driving the stock market and common sense take its rightful place?