Tuesday, 25 January 2011

Obama Visits Oil Spill, Pledges Resources and Aid for Affected Areas

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"Every American affected by this spill should know this: your government will do whatever it takes for as long as it takes to stop this crisis,"Obama said. "That's a commitment I'm making as President of the United States." Those are strong words, but the unfortunate fact is that they come at a time when no one knows for sure exactly how catastrophic this raging oil spill is going to be. The source of the spill is so far beneath the surface that -- surprisingly -- the technology simply doesn't exist to try to address the oil spill at its source.

Of course, the technology exists to drill at depths of a few miles below the surface, but then there is no technology to address problems with drills or wells? How is that possible. Many in the oil industry will quickly point to the technology required to drill for oil in the depths of the Gulf of Mexico as being greater than anything required for space exploration. Yet there seems to be know equipment or plan in place for this type of contingency.

That seems increasingly shocking when one considers the enormous pressures and other unique factors at play when performing tasks at such depths. How could one not foresee the potential for a large-scale problem? The fact is that it was certainly known to BP and every oil company drilling at those depths that there is always the potential for a disaster. But the potential profits from drilling at those depths likely outweigh the risk that a global-scale oil catastrophe might result.

Many are just now coming to grips with the fact that this oil spill is just beginning and that there is no way to know when or how it is going to end. Ultimately, this catastrophe will likely result in a re-calibration of the risk-reward equations used to justify off-coast drilling.