Why is the U.S. Government Protecting BP?

Posted at 11:10 AM (CST) by & filed under USAWatchdog.com.

Jim Sinclair’s Commentary

To quote CIGA Pedro, who holds all the credentials necessary for his position as an authority, it is all about OTC energy derivatives. If BP, who had their credit reduced to one year duration, gets squeezed out they cannot hedge their already huge positions putting that entire market in the same condition as the fake electricity market was after Enron.

Right now and with the financial conditions around the world unchanged from 2008-2009, only camouflaged by the FASB capitulation, a banking crisis would be put right back on the front burner.

The environmental disaster is to the financial community, as it is to Mother Earth.

Dear CIGAs,

A little more than 2 weeks ago, the government said nearly 75% of the oil from the worst environmental disaster in history was gone!  Government scientists claim most of the oil had dissolved, dispersed or been removed.   Now, government scientists are defending their claims against a new report from University of Georgia scientists.  According to the Associated Press, “. . .  Monday, five Georgia scientists who reviewed government data said that instead of only 26 percent of the oil remaining in the Gulf, as a federal report said earlier this month, it’s actually closer to 80 percent.  “Where has all the oil gone? It hasn’t gone anywhere. It still lurks in the deep,” said University of Georgiamarine scientist Chuck Hopkinson. He headed the quick independent look by the GeorgiaSea Grant program at the estimates the White House released.”  Hopkins also said,“The Georgia team said it is a misinterpretation of data to claim that oil that is dissolved or dispersed is gone.  The bottom line is most of it is still out there, There’s nothing in the report to substantiate the 26 percent.”  (Click here for the complete AP story.) 

The scientists at the University of Georgia are not alone in their skepticism of the government’s oil calculations.  Other scientists also challenged the government assertion that nearly 75% of the oil has vanished and is no longer a problem.  Yesterday, a story by the online news site 2theadvocate.com said, “I don’t believe the numbers in this report,” said Rick Steiner, a marine conservationist who retired as a professor at the University of Alaska after 30 years — including during the Exxon Valdez oil spill in 1989.  Some of the numbers are nothing more than wild guesses, Steiner said.  The most-disturbing aspect of the government report is that scientists “did not discuss any methodology it used for driving the results of its study,” Steiner said.  “There’s no way to judge the veracity of the estimates they make without knowing how they came up with them,” he said. “And for a scientific report, it’s only four pages long. I mean, come on.”  (Click here for the complete 2theadvocate.com story)

How could there be such large a discrepancy among scientists?  Could the answer be as simple as the government is protecting BP?  

The government seems to be going to great lengths to control the information the public is hearing.  The University of South Florida made a startling discovery early on in the gulf oil spill.  It discovered plumes of underwater oil several miles long.  Instead of being congratulated on their scientific find, university scientists say they were told to keep quiet by Uncle Sam.  The St. Petersburg Times documented this heavy handed treatment by our public servants.  The August 10 story said, “The reaction that USF announcement received from the Coast Guard and the National Oceanic and Atmospheric Administration, the federal agencies that sponsored their research:  

Shut up. 

“I got lambasted by the Coast Guard and NOAA when we said there was undersea oil,” USF marine sciences dean William Hogarth said. Some officials even told him to retract USF’s public announcement, he said, comparing it to being “beat up” by federal officials.

The USF scientists weren’t alone. Vernon Asper, an oceanographer at the University of Southern Mississippi, was part of a similar effort that met with a similar reaction. “We expected that NOAA would be pleased because we found something very, very interesting,” Asper said. “NOAA instead responded by trying to discredit us. It was just a shock to us.”  NOAA Administrator Jane Lubchenco, in comments she made to reporters in May, expressed strong skepticism about the existence of undersea oil plumes — as did BP’s then-CEO, Tony Hayward.  “She basically called us inept idiots,” Asper said. “We took that very personally.”  Lubchenco confirmed Monday that her agency told USF and other academic institutions involved in the study of undersea plumes that they should hold off talking so openly about it. “What we asked for, was for people to stop speculating before they had a chance to analyze what they were finding,” Lubchenco said. “We think that’s in everybody’s interest. … We just wanted to try to make sure that we knew something before we speculated about it.”

“We had solid evidence, rock solid,” Asper said. “We weren’t speculating.” If he had to do it over again, he said, he’d do it all exactly the same way, despite Lubchenco’s ire.”  (Click here for the St. Petersburg Times story.) 

Why should bona-fide scientists not talk “openly about” the worst ecological disaster in history?  Who does that help?  The fishermen who probably lost their lively hood?  The tourist locations that have lost vacationers?  Real estate owners whose property values have declined?  These people and many more have been damaged by BP.  What’s the big secret here?  

In another move that appears to protect BP, the government is requiring a confidentiality agreement to gain access to study the effects of the oil spill in many areas of the Gulf of Mexico.  According to ecosystem biologist Linda Hooper-Bui, Associate Professor at the University of Louisiana, her job as an independent researcher is being made more difficult by government lawyers.  Two weeks ago, the professor wrote, “I study insect and plant communities in near-shore habitats fringing the Gulf, and my work has gotten measurably harder in the wake of the Deepwater Horizon disaster. It’s not hazardous conditions associated with oil and dispersants that are hampering our scientific efforts. Rather, it’s the confidentiality agreements that come with signing up to work on large research projects shepherded by government entities and BP . . . I am having trouble conducting my research without signing confidentiality agreements or agreeing to other conditions that restrict my ability to tell a robust and truthful scientific story.”  (Click here to read Professor Hooper-Bui’s full story.)

So why is the government working overtime to protect BP and keep American citizens in the dark?  How much is BP’s potential liability?  A hundred billion bucks?  A trillion bucks?  Who knows, but it is surely a very big number.  Could it be that a bankruptcy of BP would be a worse financial disaster than Lehman Brothers?  Some say yes!  Gordon T. Long wrote a lengthy BP bankruptcy article for “The Market Oracle.”  He said recently, “I could not have stated it any clearer than Jim Sinclair at jsmineset.com: People are seriously underestimating how much liquidity in the global financial world is dependent on a solvent BP.  BP extends credit – through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of. The Gold community should think about the financial muscle behind a company with 100+ years of proven oil and gas reserves. Think about that in comparison with what a bank, with few tangible assets, (truly, not allegedly) possesses (no wonder they all started trading for a living!). Then think about what happens if BP goes under. This is no bank. With proven reserves and wells in the ground, equity in fields all over the planet, in terms of credit quality and credit provision – nothing can match an oil major. God only knows how many assets around the planet are dependent on credit and finance extended from BP. It is likely to dwarf any banking entity in multiples.” (Click here for The Market Oracle story in its entirety.)

The government knows that a BP bankruptcy would cause a giant financial meltdown that would probably make what happened in 2008 look tame.  That is the reason I think  the government is working so hard to protect BP.  In June, the President said, “Untold damage is being done to the environment — damage that could last for decades.”  I think the President got it right the first time.