Saturday, July 10, 2010

BP, BO, and Blame - Kill the Well

British Petroleum has a busy weekend planned. The oil mega giant is going to remove the present placed ill fitting cap on the ever spewing oil well. If successful, the newer, larger cap will capture nearly all of the leaking oil. Contamination of the Gulf of Mexico will be remedied. Ships on the surface, a mile above the sea floor gusher, will store the oil and it will eventually heat our homes, electrify our air conditioners and run our cars.

The ultimate solution is the relief well. BP is boring two right now. It is hoped they can hit a bulls eye near the present well and then shoot thick mud, concrete and other gunk into the well itself and clog up the gusher. The problem will be solved. Most everybody can't wait for the oil to stop flowing, not the least of whom is Barack Obama. The President has taken a beating in his management of this mess. His oil stains may never come out.

The mother lode well is located seven miles beneath the surface of the sea. It must be ginormous. No one seems to be able to say just how much oil is present, but it is a lot. A reasonable oil seeker would have to wonder why we would shut this black gold source down? Let's just say BP does cap it and stops the leaking and recovers the oil. Let's say, "Hey". Let's say, "Don't throw the baby out with the bathwater."

Mr. Obama has been a blaring blamer during this debacle. British Petroleum and the Britons themselves have taken a brutal blow to their respective net worths. BP is (or maybe now was) the highest valued company in the United Kingdom. Many UK citizens rely on BP dividends. Well, good news, if BP can succeed with the new cap, things will get better quickly. The stock, which is soooo undervalued at $33-34 a share, will bounce back like a super ball off a concrete facade. Dividends will resume.

Doubtless, sooner or later this well will be controlled one way or the other. The world's yen for oil will only increase, making BP's ability to thrive assured. The amount of money needed to right the Gulf will be forthcoming and in the end, all will be good. No matter what, things always happen, mistakes are made, acts of God occur and injustices abound. A basic principle which Mr. Obama should learn from this episode should be, "..define your problem and then define your solution". As a corollary to this principle, "Do not assign blame". And so it goes.

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