Tuesday, August 08, 2006


British Petroleum, the giant oil company known as BP, has a problem. The pipes running through their massive Alaska Prudhoe Bay oil field are corroded. Since corroded pipes are weak and could burst, the oil field has been shut down while they replace 16 miles of pipeline. As you might expect, this poses a bit of a problem.

We are in the middle of the peak driving season...and any hit on supply is going to cause prices to spike. This is 400,000 less barrels of oil a day on the market. BP is going to lose money because they won't be able to bring their crude to market like they thought. But, for safety's sake...the oil field is being shut down while the necessary repairs are made. Glad they caught it.

Energy Secretary Sam Bodman says the U.S. is prepared to release crude from the government's oil reserve to pick up the slack. Perhaps that's the right move. But as with every thing involving oil companies, Democrats are calling on Congress to investigate. In particular, Congressmen John Dingell and Ed Markey are demanding government action. They want hearings. Oh boy...more stimulating programming, coming to C-SPAN this fall!

So what exactly are they saying? Read between the lines. The suggestion is that BP let their pipes corrode on purpose, just so they could shut down the oil field and drive up the price of crude and gasoline on purpose. Nice conspiracy, but the only problem is BP is probably standing to lose more money than they could ever hope to recover by whatever short-term spike in prices there might be.

The free market works. If BP was negligent in inspecting their pipes and ensuring their proper operation, then they will be punished by the marketplace in the form of a shutdown. They will learn that it is in their best interest to properly maintain their delivery system. But don't tell that to the Democrats....only the government can right the wrongs in the oil business.

Besides .. this is all a plot to put money in the Bush's pockets. Right?

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