oil spill

Some More Gulf Oil Spill Economic Loss Estimates

Bloomberg is reporting on more economic fall out from the oil spill. The tourism costs, now at $22.7 billion, exceed the $20 billion put into escrow. 300,000 jobs will be lost.

Subcommittee Chairman Bobby Rush, an Illinois Democrat, said various studies estimate that the oil spill has put 300,000 jobs at risk, or 15 percent of the total in the region.

Roger Dow, president and chief executive officer of the U.S. Travel Association in Washington, gave the estimate in written testimony for a hearing today by the House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection on the impact of the spill on tourism. The figure comes from Oxford Economics, a U.K. consulting firm, and was based on 25 previous disasters, including oil spills, hurricanes and terrorist attacks.

The estimated cost exceeds the $20 billion BP has agreed to put into an escrow account to pay spill victims. Tourism generates $94 billion in revenues for Louisiana, Mississippi, Alabama and Florida, Dow said.

“This large and vital sector of the Gulf Coast economy is in jeopardy,” Dow said.

According to the BBC, BP has set aside, including the $20 billion escrow account, $32.2 billion for the gulf oil disaster clean up.

BP Blow-out Preventer Offshore Outsourced to China

You're going to love this one. BP offshore outsourced the redesign of the blow-out preventer to China. Yes this is the very blow-out preventer that failed and caused the worst environmental disaster in U.S. history.

BP ordered the owner of the Deepwater Horizon rig, whose explosion led to the worst environmental disaster in US history, to overhaul a crucial piece of the rig's safety equipment in China, the Observer has learnt. The blow-out preventer – the last line of defence against an out-of-control well – subsequently failed to activate and is at the centre of investigations into what caused the disaster.

Experts say that the practice of having such engineering work carried out in China, rather than the US, saves money and is common in the industry.

This weekend BP remained cautiously optimistic that the cap placed on top of the Gulf of Mexico well on Thursday night would continue to hold back the torrent of oil. It is the first time the flow has been stopped since the accident happened almost three months ago. But BP said that the pressure readings from the Macondo well were not as high as it had hoped, which could indicate that it has ruptured and that oil could be leaking out somewhere else.

Credit Suisse Estimates BP costs to be $37 billion

Credit Suisse has released an initial estimate on the costs to BP and it's $37 billion.

More details from Business Week:

Cleanup costs may be $15 billion to $23 billion if the well leaks until relief drilling is completed in August, analysts led by Kim Fustier in London said. Claims may rise to $14 billion

Note, the two major components to this estimate. The first is the spill rate. Credit Suisse clearly is using 75 million gallons total.

By early August when the relief wells are drilled, Macondo could have spilled 45 to 75 million gallons of oil into the Gulf, four to seven times Exxon Valdez.

That is quite low of an spill rate estimate. Using a recent top estimate of 4 million gallons per day, we calculate by August, the total amount spilled would be 360 million gallons. The spill rate is an estimate, there is no meter actually measuring it. Spill rates were revised to the high end of 25,000 barrels a day.

Using a longer and clearer video clip of the oil leak for the USGS analysis, Wereley said the figure from his team was reduced to the 12,000-25,000 per-barrel range because of the amount of methane gas and other natural gases consistently gushing out of the pipe.