Opinion: BP oil disaster has huge repercussions

ROCKPORT, Maine — The international repercussions from the BP oil disaster can only be guessed at today.

Will the oil stay in the Gulf of Mexico? Or will it circulate out into the Atlantic to be borne by the Gulf Stream to contaminate foreign shores? How much oil is yet to escape into the oceans? And how will it affect the world’s economy?

Bermuda, a self-governing British dependency, has already sent people to Washington to discuss the possible ramifications. Tourism, second only to insurance in Bermuda’s economy, stands to suffer if its pristine beaches are defiled.

Canada’s Prince Edward Island is enquiring whether its 300 licensed tuna fishermen will be affected if the tuna’s spawning grounds in the gulf are destroyed. The province is reportedly contacting BP for potential help.

And then there is BP itself, which may not be too big to fail if too many demands are put upon it. A bankrupt BP would send shocks through financial markets all over the world. Already pension funds in Europe and America are suffering the effects of the oil spill because BP, under pressure from the Obama administration, has cancelled its dividend.

One optimist when it comes to containing the oil in the Gulf of Mexico is former investment banker to the petroleum industry and energy expert Mathew Simmons. He said most of the oil is too heavy to be swept out of the gulf on looping currents. Therefore he thinks Bermuda has little to worry about.

But that is the only aspect of the BP disaster that Simmons is optimistic about. One of the industry’s world class pessimists, Simmons caused controversy with his book, “Twilight in the Desert,” which posits that Saudi Arabia’s oil reserves are about to dry up. As a result Simmons is now in the forefront of exploring new sources of energy.

I sat with him for an hour on his porch looking out over the Penobscot Bay the other day, and the picture he painted of the current disaster was enough to make my notebook curl up at the edges.

According to Simmons, BP has been lying to us all along, perpetuating one of the biggest cover-ups in history: “The Watergate of the environment.” From the very beginning BP presented the disaster as a rig fire, while all along “it was the Gulf of Mexico that was on fire, ” according to Simmons. The real problem, he fears, is not the damaged under-water well head, but a crack in the ocean floor some miles from the rig disaster which is gushing unchecked. Simmons believes we should seize all of BP’s assets in America, “just the way we did with Iran.”

It was hoped, at first, that the oil pouring forth would be “Louisiana Light,” which would be comparatively easy to deal with, but instead it is a “horrid, toxic crude that has never seen daylight before.” It is also very thick, and much of it won’t rise to the surface, but could turn the gulf into a dead sea devoid of marine life. The stuff is so poisonous that Simmons fears that people are going to sicken and die upon exposure to it and its accompanying noxious gasses. There may come a need to evacuate people back from the Gulf Coast, Simmons fears.

What happens if the 18 water-hungry power stations along the gulf have to shut down because of oil in the water?

“The Houston ship channel could be closed,” and the region’s oil refineries might have to close, which would cause worldwide economic damage. “We could be facing enormous fuel shortages,” Simmons said.

One of the most troubling aspects of trying to plug the leak, according to Simmons, is that the oil under the Gulf of Mexico’s deep sea bed is under tremendous pressure — pressure not seen in shallower wells or on land. The oil industry, he said, hasn’t enough experience dealing with such force.

In Mexico’s “Ixtoc” gulf disaster of 1979, which was in much shallower water, the well was never plugged until the pressure diminished on its own, and that took 10 months, Simmons said. The size of the BP field is so much larger that it could take many years until the pressure lessens on its own.

That’s why Simmons feels that the moratorium on deep sea drilling is absolutely essential until the industry finds out more about how to deal with previously unknown oil pressures and how to avoid disasters.

As for the current under-sea gusher, Simmons is an advocate of using a nuclear device to heal the ocean floor.

“Nothing you can do now but nuke it,” he said. The Russians have used nuclear devices to plug leaks, though not at such depths, and their expertise could be put to work. Basically you insert a nuclear torpedo deep into the hole and the blast turns the earth to glass, sealing the hole. The Obama administration has rejected this option.

When all is said and done, the most serious international repercussions from the BP disaster could be how much economic and political damage it does to the United States and the Obama administration. It seems clear that BP is never going to be able to pay for all the damage, and the danger is that the economic recovery of the United States could be hindered. And when the American economy catches cold other economies catch pneumonia, as the saying goes.

And if the gulf disaster weakens the Obama administration in the eyes of the world — it is already a thousand times more serious than Katrina — then there can be repercussions that we can only guess at today for United States foreign policy.