WITH BILLIONS IN OIL PROFITS WHY THE HELL
CAN'T BP TAKE CARE OF ITS INFRASTRUCTURE?

From Democracy Now, an interview with oil industry watchdog Charles Hamel:

JUAN GONZALEZ: Now, BP has had a long-running series of problems, had been fined -- on several occasions, some very large fines -- for failing to properly keep up its lines there. Could you talk about that?

CHUCK HAMEL: Correct. But in this instance, it wasn’t just -- when you consider oilfield workers, I’m talking about engineers, BP engineers, BP corrosion experts, who have left the company because they wouldn’t participate in their corrupt corrosion program. Everyone who didn’t want to be part of it, those that didn’t, were independently coming to me -- I’m sort of their outlet -- anonymous complaints through me, to back to the company, and when the company doesn’t do the right thing, then I have to go public. I’m not getting paid for this. This dime -- I can’t get a cup of coffee at Starbucks. But I’m a prisoner of these concerned individuals, and they’re not just -- they’re engineers, they’re corrosion experts, who fear for the lives of their former colleagues and who work in the process centers, which are very volatile. And that’s what I’ve been involved with. Whether I like it or not, I have to help them, for fear that they’re going to roll themselves up.

And

JUAN GONZALEZ: The first one was about the budgetary problems.

CHUCK HAMEL: Well, yeah, this is sort of a dichotomy here. You see, BP last year made, I call it, windfall profits of $2 billion at Prudhoe Bay. However, the way they operate is, every year they have an annual budget, and the workers -- the supervisors are each given a budget to live with. If you operate below your budget, you get a bonus. And if you don't, you don't get your bonus. And one way of operating within the budget is, when something is not budgeted for, but you've got to run the pipeline, a certain valve ruptures on you, then you've got to be able to get a new one. It costs money, lots of money. This is big money is involved here. So you got to do something different.

Click here to watch, listen to, or read the rest.

It's very amusing to me that the pride of conservatives, the capitalistic business model, seems to be run, in this case at least, like old school Soviet factories. That is, this tomfoolery about leftovers from a limited maintenance budget given out to workers as bonuses strikes me as counterproductive at best, and dangerous and stupid at worst: clearly, BP employees had a financial incentive to cut corners on maintaining BP pipelines, just as the Soviet system, which banned any financial reward at all for its workers and managers, inadvertantly provided incentive, in the form of free fuck-around time on the clock, to cut corners as well--generally, so the legends go, Soviet workers, who weren't paid for quality, would tend to screw around for three weeks of every month and then during the fourth week rush like mad to make quota, which tended to result in substandard production. Anyway, the point is that this BP pipeline breakdown is just plain weird: it was apparently the result of a maintenance system that was guaranteed to fail.

Could a giant and wildly profitable corporation like BP be so stupid? Well, yes, it could. It's amazing how these corporations never fail to ignore the most basic principles of economics in their quest for world ownership. But when you run most of world's governments, and are operating in what amounts to an oligopoly, why should basic economics play any role at all? This may be exactly what Hamel says it is, shoddy business practice. And that seems to be how the mainstream news media are looking at it. The Houston Chronicle ran an article today with the exact same allegations from the exact same guy. Definitely believable. Corporations aren't geniuses; just look at the continuing slide of the US auto industry into history's dustbin of irrelevance, or Time Warner's foolhardy merger with AOL.

But these energy industry players are pretty sly. Remember the Enron trader caught on tape gloating about how their market manipulations were allowing them to fuck over "Grandma Millie?" It's now pretty well documented that the energy industry artificially created California's power crisis a few years back by purposely shutting down plants for "routine maintenance" at the exact moment that the state most needed electricity. The industry raked in billions over the "coincidence" and only had to repay pennies on the dollar in a later out of court settlement arranged by California's newly elected governor, energy darling Arnold Schwarzenegger.

And there is some strong evidence that today's absurd gasoline prices have far more to do with oil industry behind-the-scenes maneuverings than with simple supply and demand.

Check out this NOW transcript from last November:

JAMIE COURT: Oil companies have manipulated supply so that when there's-- gonna be a peak season of demand, they then withhold supply. And when there aren't adequate inventories, the system is rigged for a shortage, even though it's artificial.

MARIA HINOJOSA: You're using these terms "rigged," "control," I mean, these are not terms that most people kind of accept in a free market society.

JAMIE COURT: Well, I think the only thing free about this market for oil companies in the United States of America is they're free to do whatever they want. That's the market.

MARIA HINOJOSA: After crude is drilled from the ground, it needs to be refined — turned into gasoline, diesel or home heating oil.

But since the peak in 1981, more than half of the refineries that used to operate in the U.S. have been shut down. And that, charge critics, has been part of an industry strategy going back years.

In this Rand Corporation survey, "key members of the … refining industry" complained of "… substantial excess capacity …" in the 1980s and '90s … producing poor profits.

According to one quote … those times were "'… ugly for refining. [executives] know what caused it, and they don't want to do it again.'"

SEN. RON WYDEN: There is no doubt that during the 1990s, if you just look at the oil companies' own internal documents, that yes, in fact, what they did is look at how to limit production in order to boost their profits — not my words — the words of the oil industry.

Click here to read the rest, and here to watch the episode (be sure to scroll down to the "video" section).

Yeah, that's right, the oil industry purposely and massively reduced refining capacity expressly to create an artificial gasoline shortage that would necessarily raise prices at the pump resulting in huge profits. Actually, it's looking like the oil guys are very aware of basic economic principles. All of this brings me back to questioning whether this is a case of stupid management or of a conspiracy to suck Americans dry of gasoline dollars. Like I said, stupid management is always a distinct possibility, but the entire industry is already on record as having great love for the billions of dollars one can make with these market manipulation games.

Personally, I have zero trust for the industry that gave us the likes of Dick Cheney and George W. Bush, two of the biggest megalomaniac liars this country has ever produced. If I were betting, I'd say the whole thing is a scam. I mean, the corrosion is real, but it's a manufactured crisis.

Muckraker Greg Palast just comes right out and calls it what it is:

BRITISH PETROLEUM'S "SMART PIG"

Why shut the pipe now? The timing of a sudden inspection and fix of a decade-long problem has a suspicious smell. A precipitous shutdown in mid-summer, in the middle of Middle East war(s), is guaranteed to raise prices and reap monster profits for BP. The price of crude jumped $2.22 a barrel on the shutdown news to over $76. How lucky for BP which sells four million barrels of oil a day. Had BP completed its inspection and repairs a couple years back — say, after Dan Lawn’s tenth warning — the oil market would have hardly noticed.

But $2 a barrel is just the beginning of BP’s shut-down bonus. The Alaskan oil was destined for the California market which now faces a supply crisis at the very height of the summer travel season. The big winner is ARCO petroleum, the largest retailer in the Golden State. ARCO is a 100%-owned subsidiary of … British Petroleum.

BP could have fixed the pipeline problem this past winter, after their latest corrosion-caused oil spill. But then ARCO would have lost the summertime supply-squeeze windfall.

Click here for the rest.

Bottom line: this pipeline shutdown smells just too much like the energy industry's other scams; the burden is on them to prove they're on the level. I'm not going to hold my breath waiting.

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