The price has already stabilized at a politically sustainable monopolistic premium. Previous monopolistic pricing jumps had been sort of temporary and the prices thereafter retreated significantly. Then we got a really big jump a couple years ago and it never fully retreated. The high monopolistic rent today has been normalized.

pdxnag...I don't agree. I think the price remains as it is for a while because it will keep us quiet for the summer. For these guys there is never a "premium" price, just what they can squeeze from us. The Gulf is dying slowly and the powers that be don't want any more attention/conflict.

Also looks to me like they know they can't cap it. The surrounding seabed floor is already infiltrated with cracks leaking oil, as you can see in some of their videos. The oil is exiting the well at 27,000 psi, by one account. I think it will go until the deposit is evacuated, which could be years.

Local and national law enforcement acting as BP goons to suppress media coverage proves they all have gigantic issues to hide.

Re: "But it may turn out to be the greatest man-made environmental disaster ever"

I can think of no single man-made event that outdistances what BP and MMS (left to us by James Watt) have wrought in the Gulf. Not even Chernobyl.

But this environmental disaster is also explicitly showing us what a political disaster our two-party form of representative democracy has become. The possibility that the GOP may retrieve the House in November, with Joe Barton (R-TX) atop the Energy Committee, leaves only the option of retaining current leadership, which does not include enough untainted members to achieve an effective response to this disaster and to avert other, similar events. Both parties are fully integrated into a petroleum culture that includes so much that it is hardly possible to imagine disentangling this society from it.

Yet by remaining beholden to an industry that is providing what the society has grown dependent upon, far greater deleterious consequences than even the disaster that is now only temporarily confined to the Gulf may soon become as evident as the images BP, with government assistance, has been trying so hard to suppress.

I think that all it's going to take is to remove a critical link in the web of life which supports humanity and a collapse which will devastate the entirety of humanity will be worse in scope than the Black Plague of the fourteenth century.

I suspect we are well beyond carrying capacity. A correction is imminent.

The loss of oil production from this one well, producing at a rate of 20 to 30 thousand barrels per day, is too small to make a significant effect on world oil supply. The World produces some 86 million barrels per day, and so this well probably represents less than .05% of daily oil production. Such outages at this time are easily compensated for because demand for oil is being significantly restrained by global economic malaise (oil consumption in the U.S has yet to fully recover from its 2007 peak rate, for instance). Momentum trading in oil, as opposed to gold bullion, has also subsided with the onset of the Great Recession.

Besides, I should think it easier to Blame George Bush II, rather than Paulson, for any problems we might encounter at anytime in our daily lives. Bush 2 actually seems to take criticism pretty well compared to hot air Bama. The best thing to come out of Bush II may be we can stop using Jesus as a swear word and substitute Bush 2 in its place. Ah, GW Bush!!!!!!

BP was one of Obama's biggest contridbuotrs. They'll come back just fine with Barack's help once this blows over. Either in oil or Beyond Petroleum type of stuff.

The $20B was significant gesture that'll go back to BP once the intial clean-up costs are paid and then they'll have the army of lawyers to run interference for 20+ years for the rest.

BTW - I don't see Exxon out of business yet.

One question I've always had is whether there is a second way crude oil is made besides from organic matter. Every time I bring this up I get the old, "We can tell microscopically that it was originally biological material so there's a limited supply." That's at the heart of the Peak Oil argument, right?
Then I read one article about Gulf oil fields that seemed to regenerate as if fed from an ongoing process below them. They had been played out and abandoned, but then the oil came back. Who knows if that article was reliable.
Seeing the amount of oil blasting out of this well and all the fields worldwide, doesn't it seem hard to imagine that this is the compressed remains of dinosaurs, etc...?
It's counterintuitive and ridiculous sounding, like saying the oceans were made out of dinosaur sweat.

While it's fair to consider this disaster a human one since the drilling is human, the material is not of human origin, as is Chernobyl. So, this oil field is a disaster waiting to happen, by any means human or natural. One significant earthquake enough to open many cracks would seal the fate.

This is no defense of BP or the other players, but a sober reminder that this planet, as comprised these last 100,000 years or so, is not stable. Humans, on the other hand, seem to want the cycle of life to stop at a particular moment of well being.

Nature is utterly unconcerned. Some day, the sun will go nova. What then?

We may well be at the beginning edge of a human cleansing, natural version, helped along by our hubris.

Bill, the Nazis produced a synthetic crude during WWII.

The relief well(s) may work, but only time will tell. I hope and pray that they do.

I used to fish down there all the time. My friend's family boat was down in Venice and we spent many hours fishing and having fun in the Gulf.

We also spent alot of time in Pensacola and Destin. Just sweet and wonderful memories, f'sure.

To see what is happening to the Gulf, New Orleans and those other locales makes me very sad. It is beyond terrible when you consider the region is just beginning to recover from Katrina and the levee failures.

Bill McD, the oil in the earth long predates dinosaurs. Its source is vast populations of very small marine creatures from eras prior to the big lizards:
http://www.associatedcontent.com/article/5500720/formation_of_petroleum.html?cat=58
On land, carboniferous forests left us coal.

The WA's Tri-Cities is actually a center for research and development of synthetic fuels made from biomass from various sources, as this item suggests:
http://www.tri-cityherald.com/2010/01/14/862016/pnnl-wsu-tc-get-stim-funds-for.html

We're not talking about the ethanol boondoggle to which a certain city commissioner has indentured us. "DOE is interested in biofuels that have more energy density than ethanol, can be used for applications such as gasoline, jet fuel and diesel for heavy trucking, and fit into the nation's current infrastructure." They have already made considerable progress in the lab developing fuels that are indistinguishable from petroleum and that do not compete with the food supply.

Of course, the problem with replacing petroleum fuels with biomass-derived fuels is that CO2 remains a cumulative, unbounded, deleterious waste product.

Lawrence, JMKeynes -- remember him, from pre-Supply Side? -- reminded us nearly a century ago that in the long run, we are all dead. Life is in the short run for individuals; even our species has been around a brief time compared to geological eras.

And dour Philip Larkin, another Brit, reminded us:

"Man hands on misery to man.
It deepens like a coastal shelf.
Get out as early as you can,
And don't have any kids yourself."

The big fuel thing that's being worked on that most of you non-tech geeks have never heard of is this:

www dot wired dot com slash wiredscience slash 2009 slash 03 slash coaltoliquids slash

Essentially, you turn coal into a liquid fuel. The Nazis were the first to show it could be done.

Besides the damage that would be caused by mining, the article points out:

"Glasser’s new production method allows them to set a lower limit on the amount of energy that would be needed to transform solid coal into fuel. The very best possible CTL process would require 350 megawatts of input to make 80,000 gallons of fuel; the current process uses more than 1,000
megawatts.

Even with the small efficiency gains, a large, domestic, carbon-intensive source of transportation fuel would throw a wrench into many plans to reduce emissions from vehicles."

Go by fossil fuel...

"Essentially, you turn coal into a liquid fuel."

The extra benefit if this can be made to work economically is that the US is essentially the Saudi Arabia of coal. We have more than 25% of the world's estimated coal reserves.

Sorry, keep repeating: fossil fuels are evil; fossil fuels are evil; fossil fuels are evil.

They seem to have the skill in capping this that I can muster fixing a toilet.

the reason for the 20 billion was because of the 1990 law saying the offending companies are liable for the oil spill which came, of course, 3 years after the exxon wreck.

I just read more on the alternate theory by searching for "oil inorganic." The field I was reading about is called Eugene Island. Here's a bit from the Wall Street Journal in 2008:

"Something mysterious is going on at Eugene Island 330. Production at the oil field, deep in the Gulf of Mexico off the coast of Louisiana, was supposed to have declined years ago. And for a while, it behaved like any normal field: Following its 1973 discovery, Eugene Island 330's output peaked at about 15,000 barrels a day. By 1989, production had slowed to about 4,000 barrels a day.

Then suddenly -- some say almost inexplicably -- Eugene Island's fortunes reversed. The field, operated by PennzEnergy Co., is now producing 13,000 barrels a day, and probable reserves have rocketed to more than 400 million barrels from 60 million. Stranger still, scientists studying the field say the crude coming out of the pipe is of a geological age quite different from the oil that gushed 10 years ago.

All of which has led some scientists to a radical theory: Eugene Island is rapidly refilling itself, perhaps from some continuous source miles below the Earth's surface. That, they say, raises the tantalizing possibility that oil may not be the limited resource it is assumed to be."

When I was young I listened to the Firesign Theater. They had an album called, "Everything You Know Is Wrong." In the last 10 years, I have finally realized the magnitude of the massive piles of BS we are fed every day. Some is innocently done - others is deliberate deception. Whatever. Now I tend to doubt every explanation for everything.

Could it be that there is a mechanism below the earth's crust that makes hydrocarbons? Could we - by drilling this hideous, satanic, runaway well - have tapped into something from the earth's mantle?

I now feel it will be a serious miracle if we get this thing stopped. If you thought you'd cry for joy if they found Kyron alive, you should sob for days if this well gets plugged. What a wound on the planet.

Dear Bill,
Your phrase "wound on the planet" is a good one!
Too bad this spewing forth of oil, is only one of many such woulds. We humans are generally a pretty evil and selfish bunch.

The loss of oil production from this one well, producing at a rate of 20 to 30 thousand barrels per day, is too small to make a significant effect on world oil supply.

Yes, but the billions in liability are going to be passed on to consumers -- either that, or BP goes under, which will definitely hurt gasoline supply in the short run. So why no price effect?

Bill, that's what the Russians have believed for years and years now. It's called the Abiotic Oil Theory. Peak Oil Cultists...especially their leader Y2Kunstler...hate this theory and vilify it's proponents with endless ad-hominems at every turn, as it totally undermines their entire reason for living. Imagine investing so much energy into hating a Theory. They remind me of fundamentalist Christians, really.

Personally...probably because I grew up next to several huge Universities...I happen to like the idea of theories and hypotheses. As in, like you said, the idea of what if everything we know is wrong.

The sick and scary thing is, if they are right, what if that disaster in the Gulf has tapped a hole into a nearly inexhaustible supply of oil ?

What then ?

I'm betting we turn to the Russians, who have used nukes several times to combat this very problem.

Now that I really ponder it, the whole Abiotic Oil Theory having so much traction in Russia makes perfect sense, in light of similar accidents with endless gushing oil in the Arctic, and the nuclear blasts they used to seal the holes.

ex-cabbie,
As I understand it the nuclear explosion would melt the well shut, plugging it with glass. Jesus, that sounds desperate but we're around a month from running out of other options.
There hasn't been that much public discussion of this plan, so who knows? They could be getting ready to try that now - without telling us.

You make a great comparison between scientific theories and religion. The theory becomes part of a scientist's identity and livelihood and next thing you know, it's personal. Then it just slows down the search for knowledge.

One tidbit I read today that supported the Abiotic Theory is the presence of large oil reserves in geologic formations that don't fit the organic oil norm. Why are they there?

Remember Sinclair Oil company? It even had a dinosaur as a corporate symbol. One time, I asked a scientist-type how far you could drive your car on a T-Rex and he said, "To the store." I just felt at that point that the whole thing seemed ridiculous.

The comparison of religion and science is discussed at length in Marilynne Robinson's new book "The Absence of Mind". she was on The Daily Show last week....fascinating.

I think I'm going to unearth my copy of "A Canticle for Leibowitz" from where it's stored and re-read it this summer. Been a long time.

http://en.wikipedia.org/wiki/A_Canticle_for_Leibowitz

The answer to all that oil?

Atlantis Rising!

The relationship, indeed the evolution of science from religion is discussed at length in Karl Popper's Open Universe.

He goes on to build a proof that scientific determinism and by extension, determinism, is false.

I know little about petroleum (literally "rock oil") but I know that liquids can travel great distances seeking their level. Perhaps a well that was thought to be tapped out by geologists could be "refilled" by oil migrating from elsewhere.

But from the sound of the article discussed above, I would expect it to be a common occurrence, not a rarity.

Bill, you are so right! Everything we know is Wrong! That just applies to Us. What I know is right, of course.

Why aren't gas prices going up? First, the oil industry has many players. The numerous large and small companies and countries in the industry are fierce competitors. Every attempt to cooperate has failed.

The reason gas prices are fairly stable is that we're in a period of serious deflation, which has been hidden by the massive amount of money created out of thin air by the Feds. We don't print it anymore. Paper is too expensive. The "dollars" of debt are all electronic entries in some supercomputer somewhere.

One reason unemployment is stuck in double-digits is that wages won't go down, while the price of almost every other good or service is stable or falling. Unemployment is just the endpoint that began with cutting hours, curtailing operations, and furloughing workers. This is how deflation that is happening to wages is hidden. Can't blame it on jobs going overseas, either, since they are going through the same thing. However, residential and commercial real estate prices are plunging, foreclosures are growing and bankruptcies are increasing - these are all signs of deflation.

My big question: where did the money supply created by the stimulus and other govt debt go? I had confidently predicted huge inflation by now, not realizing how serious the real estate problem is nationwide. Now I think I know. The stock market has almost recovered. Yes, it keeps sagging and getting propped up again, but Dow 10K is pretty far from the Dow 6K or so of March 2009.

I'm just skimming the surface here. My bigger point is that we are all interconnected and public officials can no longer pretend that economic crises only happen to other people. And that if they just tax and spend a little bit more everything will be okay.

Reasons why oil prices are not going up:

1. This is an exploratory well, not a production well. Otherwise, world supply of oil has not been impacted at all.

2. We have a world wide recession going on that helps keep oil prices down.

3. BP can't raise the price of oil all by theirselves they need the cooperation of the other oil companies to do so. Business is pretty nasty and if other oil companies smell blood in the water they will go after BP as hard as they can in hopes of picking up the pieces at a bargain rate. Don't expect the other companies to cooperate with BP.

4. BP quarterly profits are roughly 6 billion so 20 billion wipes out less then a years worth of profits for them. That hurts the shareholders a lot more then the company.

Our predicament, ably described by someone who foresaw it decades before: William Catton, formerly of WSU.

BOTTLENECK

http://www.powells.com/biblio/61-9781441522245-1

See also:

OVERSHOOT
http://www.powells.com/biblio/1-9780252009884-8

Check this out...

www.youtube.com/watch?v=n5Z9W59Z5ZY

BP generates $30 billion a year in cash flow. "That hurts the shareholders a lot more then the company." The largest stockholder is JP Morgan with a 28% equity stake. This is not stock held in trading accounts for bank customers; JP owns the stock in its own name.

Not EVERY thing we know is wrong. But everything we know from TV is wrong, (make that pre-recorded TV; information on live TV is fairly trustworthy, yet hardly anyone discerns the difference anymore) ... and 95% of everything 90% of Americans 'know' came from TV. [Did you hear what Johnny Carson said last night? ... oops, I mean, what Sarah Palin said?] Ever since TV began, ~1950, it has been hatching the 'golden' maggot eggs of false brain information being laid by the CIA chickens which came home to roost first, 1946. [The CIA brags about its total mind control (by dictating massmedia News) of what we the people think, and think we know -- googlesee CIA-founder and -director('53-'65) Allen Dulles's 1965 autobiography, The Craft of Intelligence.] And not merely that 1950-2010 hypnotic 'TV News' is false, or wrong, but worse: TV News info is exactly opposite of truth. If TV says there are WMDs in Iraq then you must know AT THE MOMENT TV says it, BECAUSE TV says it, the truth is exactly opposite and there are NO WMDs in Iraq.

An example: A thing 'everyone' here seems to 'know' which is totally wrong is this: Russians are The Enemy, subhuman cretins, despicable, detestable, disposable.
Here's truth: [www.iansolo.net/sololyrics/s/sting_1.htm]

In Europe and America, there's a growing feeling of hysteria
Conditioned to respond to all the threats
...
It would be such an ignorant thing to do
... the Russians love their children too

---

Bill, (I love ya', man), you are right about abiotic oil, or the Abiotic Oil Theory is right. Inasmuch as I've seen and 'graded' the physics math, internal Earth has the compression pressures and constituent materials to make petroleum, in a similar fashion as molten lava is made and migrates to subsurface cauldrons or resevoirs and then to the surface.

For more info, go to this Search website and enter one word, 'abiotic'
www.fromthewilderness.com/search.shtml

Among the 'hits' is this:
If abiotic oil exists, where is it?, by Dale Allen Pfeiffer
Which says, 'yeah, planetary processes make petroleum, but NOT as fast as we the people suck it dry.' So, simply, reduce our usage to the rate at which Earth sustains creating it.
Included in Pfeiffer's article is this graph of production at Eugene Island you cited with false CIA-supplied numbers. Here are the well log numbers:

---

ex-cabbie, (I love ya' too, man), your Peak Oil characterization is wrong. Peak Oil'ers do NOT "hate" abiotic oil. (Mostly they never heard of it.) Peak Oil'ers only say that never again after 2007 can 87 million bbl/day of oil be 'produced,' (~30 Billion bbl/yr extracted and cracked and refined and shipped), and worldwide production totals are proving this out in showing gradual (1% rate) decline during the 3 years since Peak, (and forecasting accelerating rate-of-decline during further years near-term -- googlesee: Compounding Interest math). Again, all we fellow Earthling travelers have to do is match our annual oil 'production' to the planet's rate of abiotic oil oozing ... take our carbon footprint off the gas, slow down, take it easy, good-sense driving habits like cabbies and truckers know all about, to teach us.

---

Jack, (I worship at your altar, man ... eh?), do some financializing economicalistic math. Why haven't gas prices risen while a great gooey gob of oil supply inventory has shrinked, leaking loose into one of the seven seas? Well, as a previous Comment points out, that rig was not producing on-line yet. It was only an exploration -- please, no wagering. [I saw pre-recorded TV showing BP-hires shoveling and sopping up oil blots on the beaches, and I asked where the scooped-up stuff is being disposed of ... Is it piled on barges and taken far out in the Gulf and dumped??? Just asking ....] But in Big Economy terms there is more to consider than losses of a measly 2 million barrels (gallons?) per day pfffft! spreading on troubled waters. [US consumption: ~23 million barrels per day.]

Although the 2008(?) spike in gas prices was caused by marketmakers trading dollar-inflated derivatives, the fiasco provided Big Oil with some empirical data about price/demand elasticity. I think aftermath reports I saw said the price doubling from $2 to $4 yielded domestic demand reduction by 7% (as Americans drove fewer miles and in smaller cars). Anyway, in the longer view of persons who 'own' oil wells, such as you, let's say, there is a matter of the Time Value of money. When you 'own,' say, a gazillion barrels of oil, do you get more money by selling out fast at a 'high' price, or by stretching out sales at 'half-as-high' a price over four times as long. (You, with 'owning' a monopoly, can set both the price and amount you will sell.) Anyway, 2008's price spike seemed to not increase revenues enough to offset (losses? in) the decrease in gallons sold. ... or so it seemed to somebody.

Petroleum price&supply questions wrapped in mystery wrapped in enigma could ALL BE MADE CLEAR by nationalizing our oil industry with open-book public accounting. Eh?
What's the Oil Depletion Allowance subsidy? What's it costing us as taxpayers? Answers: Put the General Ledger on the internet.

Did you know that numbers estimating the oil remaining on our planet (reserves?) is the top-most Top Secret CIA-classified (mis)info there is? It's unlikely that that has been on TV. So it's hard to know. In fact, at times when&where They have told someone the numbers, They have had to kill them. Whoever 'They' are. ... it's hard to know.

There are going to be oil discoveries and rumors of discoveries. Pencil the math. Let's look at 10's units, round numbers, then halve them or double them to scale to the actuals.

Say there is 10 billion (barrels) known or discovered somewhere, perhaps 'off-shore.' Say it's worth $100 a barrel, 1 trillion $ total. Say it costs $10 billion to 'rig' a platform (cheap?) in-place to get it. Say it can pump about 1 million barrels per day, (333 million per year), so it lasts for 30 years, (10,ooo days). Say it costs $10 million per day ($10 a barrel) for rig operations, maintenance, piping ashore, refining, and transport to gas stations ... and employee wages, benefits, insurance, pensions.

So for a cost of $100 billion (plus platform, less debt service) outlayed across 30 years there is a $1 trillion return. That looks like a 10-to-1 30yr return on investment -- who getteth that profitteth of the world? 31 years later, what oil do our grandchildren sucketh?

But then fact-check reality: maybe there's less than 10 billion barrels, and maybe oil sells for less than $100 a barrel, and maybe expenses are more than $10 million a day, and it takes the same-size fixed-cost platform in-place to get at 10 thousand barrels or 10 billion barrels and maybe platforms cost more than $10 billion, (plus $20 billion for beach clean-up), not counting naturally-occurring calamities. The point being that the math shows some 'known' oil deposits yield $1 for each $10 spent to get it, and the prospects are drill baby drill into bankruptcy. Anyway, it still doesn't answer the question, What oil do our grandchildren sucketh? ... or maybe just don't have grandchildren .... [ opinionator.blogs.nytimes.com/2010/06/06/should-this-be-the-last-generation/?hp ]

All-in-all, Jack, the price of gas has little to do with inventory (supply) of oil, and has EVERYthing to do with inventory of dollars -- What is a dollar worth?

Who makes the supply of dollars? In short, (market pun intended), our problem in 2010 is the Federal Reserve ponzi-scheme started in 1910 by Paul Warburg, J.P. Morgan, et al., who invented the dollar ... I mean Federal Reserve Note, here:
[ www.modernhistoryproject.org/mhp/ArticleDisplay.php?Article=FedReserve ]

That's not a tar ball in your coffee. That's our fall in one century.
Put the News noose on the guilty necks.

---

Everyone: ... anyone? ... anyone? Our oil is depleting. DAMN SURE it MEANS reform of the world economy, and the bankruptcy of all business Made in USA by 20th-Century petroleum profligacy. The jobs they are a'changing.

Too many broadcast hate-talkers are heard, like on TV, saying the US Constitution includes an inalienable Right to a Job and a Right to business to stay in business, all of it government-guaranteed. Among the stupidest ideas is notion that a 'purpose' of government is to 'create' jobs. We be having us some Big Bankruptcy, busted flat. There's no stopping it since we don't have the oil anymore which we stopped it with before.

It ain't the Arabs' fault. It ain't the Russians' fault. It ain't the Mexicans' fault. It ain't the fault of communists or socialists or terrorists.

Know the problem. Use the mirror on your car's sun visor. Ask not what history has done to you; ask what you can do for history ... to have more of it.

.

http://www.oilposter.org/

One picture instead of a thousand words.

Steve wrote: BP was one of Obama's biggest contridbuotrs.

The Obama campaign raised around $750 million in 2008. None of that came from BP the corporation—Obama took no money from political action committees (at the time, direct corporate giving was banned). BP employees gave Obama $71,051, which amounts to around 1/100 of 1% of his campaign. The probably spent that much on balloons at the convention.