Hi, welcome to episode eight of the risk cast, the official podcast of risk management magazine and the risk management monitor blog. I am Bill Coffin and with me are my usual suspects, Emily Holbrook. And we're gonna work, greetings. Hey, so it's been a little while since we had another one of these podcasts, mainly because it's been a rather busy month and we've all been at the rims conference in Boston.
Now that we're back on that, Tan and Rested were ready to get back to business. And as it turns out, there's been a little oil spill while we were away, just a little tiny one. I don't know if that sounds about it, I've never heard of this. Well, so here's the deal.
Everybody knows of course, April 21st, Deepwater, Explorer, Ocean Rig, operated by Trans-Ocean Limited, contracting for BP. Basically it mysteriously catches fire explodes in the Gulf of Mexico about 200 miles away from New Orleans. And I guess by the day or two later, the whole thing sinks and it's been spewing oil ever since. I think right now about 100,000 barrels of oil, about four million gallons, have been released into the Gulf of Mexico so far.
To put that in perspective, Exxon Valdez released about 250,000 barrels. So the Valdez oil spill is about two and a half times the magnitude of the spill so far, exactly. And there's a ton of additional oils leaking out, you know what day after, day after day. They tried driving that massive top hat plug on top.
Are they working on the top hat now? And they were, well they tried one other plug. Yes, they tried driving a big cork on it, or a big box, and that didn't work. And the top hat is a big dome, like a second effort.
I mean, it's not easy, it's 5,000 feet underwater. And there's also that, I forgot, is that they have to maneuver it around the substructure of the rig itself, which is sitting down there too. Literally with the rig itself. So obviously it's a environmental disaster of huge proportions, and we've got lots to talk about it.
What I wanted to sort of jump on though, I mean, at this late stage, not many people in our audience are unaware of this, obviously. There are people in the rims membership who are intimately familiar with this. We've got people in our membership who are with Transocean and with BP. So, apology to those guys for what we're about to go off on.
But truth is, it's a environmental disaster of a man of the portion. There's not an official reason for what's caused it. But I mean, what it looks like is that there's the blowout protector of the OP device. Somehow fails.
What it looks like is what happens is that they're drilling. And this is a risk inherent to any kind of offshore oil-reeling operation. You're digging foil, all that work when you have to gas, or any kind of hydrocarbon. It's under immense pressure, and sometimes you get a big compression when you actually reach a pocket or something, and the idea is you have these monitors on the line, it measures the hydraulic pressure of the line.
You have to get a big jump in pressure. There's something that can basically seal off the line at the seabed floor, so things don't gush out. Sometimes that doesn't work, and you get these old-time gushers, which are a really bad thing, because oil comes out of the ground, it closes supersonic speed, it sprays up all over the rig, extraordinarily fast speeds, they're very flammable things. And just the mere friction of the stuff spraying out can produce enough of an ignition source to ignite the stuff.
And that's probably what happened with the border explorer. The plug failed. There are other interviews out there by people who have gone, kind of anonymously spoken off records. There's no telling how reliable these sources are, but anecdotal evidence points to that, you know, what you have here was a fairly regular regular.
Now, fairly, it's not routine, but it's the kind of thing that is not available in possibility. They hit something a lot more pressure than either the plug-out could contain, or the thing itself was just faulty, only another pressurized hydrocarbon flies out, trenches at the rig, it all goes off, kaboom, and you have a pretty massive oil situation going on. So the reason why I bring all this up is, there's lots of things we can talk about here. One thing I thought was interesting is that trans-ocean, now trans-ocean is, as I understand, is the world's leading offshore exploratory drilling company out there.
It means they fly by night operation. Their annual report looks like they brought in close to 12 billion in revenue last year, I mean, they're a very serious player on this. They are filing in federal court a petition to limit its liability to just under $27 million. Basically, the idea of it, and this is obviously this event, killed 11 workers, there is oil all over the Gulf right now.
I mean, they're having a hard time to even kind of figure out how much it's really going to cost everybody, but obviously it's going to be, I think it's a... So it depends a lot on how much goes to shore, because I mean, you've got cleanup costs and whatever. But what's against the shore, I think, is where they're worried about the costs, and the tourism to wildlife to ecosystem. The fisheries.
I mean, it's not necessarily expanded to all the places that can go, I mean, it killed the fishing business. They're just waiting to see. I mean, I was waiting last week, that prices of shrimp were going up like $3.3 a pound. Which is sort of, I mean, I don't know if it's like, you know, whenever you hear like, when a gas goes up a pump, when something happens, all of a sudden it just goes up, but you know, there's no way that gas that they have at that station, like, they didn't pay more for that.
They're just anticipating it feels a little bit like that. But there's a lot of truth to the fact that, you know, the shrimping industry is very seriously in the... Well, from what I understand is that the actual fishing season there's an emergency petition to get to move it up forward just so that the shrimpers can actually get what they can out of the water before the oil slowly kills it all anyway. So I wouldn't be surprised for the shrimp crop, if you will, to be pretty seriously impacted by the whole thing.
But yeah, I mean, right now they're just dealing with the cost of cleanup, but they haven't gotten the effects because, no, this is so different from the value situation because I mean, you know, up there, I mean, you don't have a heavily populated area for this, this way, I mean, as bad as that was, and it was a epic disaster to be sure. But it was largely a wildlife disaster. It didn't impact populated areas, and you only need to extend it to this, is already impacting populated areas. Mine is apparently the stench of the oil.
You can actually smell it in New Orleans, which, yeah, which I remember reading from it from a report, and that just starts to be amazing because, you know, Bourbon Street has a funk all to itself, and I can't even smell oil over that, that's quite something. So yeah, so Transocean is asking to limit its liability for a mere 27 million. How do they look around? Do they have that?
How's that possible? They limit liability company? No, no, no, no, no, no, no, no, no, no, no, no, no, it's actually not that uncommon. Here's how it goes.
It's under the limitation of liability act of 1851. All right, and if I had a lot of oils, and deep soil, that was very relevant. Well, it's just true, actually. I think by 1851, we hadn't even successfully drilled for oil yet.
I think the Titusville oil was 1859, so I mean, it's probably right, no, 1869. That would be the first oil, by the way. Yes, the very first one. What state?
Titusville, PA. The oil was seriously, I was leaking out the ground on its own, they didn't have to go very far ago. So, but here's the thing. Under the Slide Bill, the vessel owner is only liable for the post-accident value of the vessel and its cargo, okay?
And as long as the owner can show that they had no knowledge of negligence in the accident, then with the stage, here's what the thing is worth now. This is what we should be limited to. And prior to the accident, the deep water horizon was supposedly worth about $650 million. Now, they're saying, well, it's a twist of burning down the ground, right, down the bottom of the ocean.
It's now worth just about $26.7 million, so our liability should be kept at that. Now, here's the thing. It's not, it isn't. If they just leased it out, right?
It was their way around. Here's how it works. Transotion owns the facility. They lease it out to BP.
It's usually a daily, back when I used to cover this for ambass a little bit. And I don't think it's actually changed. The petroleum company's actually leased the oil drilling companies by day, you know, for drilling. Now, let me have long-year contracts with them, but I mean, which I'm just speaking of the cost of our titling on a toilet, so it's a short term basis.
But that's how it costs right. So BP hires trans-ocean. Trans-ocean gets its rig out there and starts drilling. Whatever they find, they find it, they cap it, and then BP gets production rig out there, and they sort of sits on top of that, and just sucks up all the oil, and then either tanks it up and ships it away.
So this rig was just meant to drill a hole in the earth and to find oil. Once they're going to find oil, then they would have run in a second. Right, right, right. And so when you see pictures of rigs, they're like those massive, like, almost like a big skyscraper out in the ocean, and they've got the helipads on them, and they're huge building all that.
That's production rig. That's a much bigger deal than the exploratory rigs. The exploratory rigs are mobile pieces of equipment. They're actually floated out to an area.
They get to an area and they either float in place, or they have legs, or they've ratchet down down, or there's a bunch of ways they've pulled into place. And they sit there and they just drill. And they're sometimes called wild catters, you know. But the point is this thing, whoop, and it's done.
The point of this, though, is that trans-ocean doesn't really expect to lend its liability to $20 million, $20 million. I mean, it knows it's not going to work. What it does do is it helps it kind of basically it's a procedural thing. So now anybody who's filing lawsuits against trans-ocean, there are many, they kind of have to regroup how they're going to do it.
They have to refile all these things federally. And so bias, transition a whole lot of time, and also gives them, for say, where the venue will be picked. So it's very much a legal liability method of risk management, quite honestly. And it's totally legal.
I mean, this is something they can do. I mean, it's not an illegal move or anything. Apparently, this happens a lot in maritime crashes, this sort of means. It's kind of along the lines of IANA, the International Air Travel Association, I guess, way back when limited liability for any passenger death to, well, I heard it was initially, but it eventually got raised to only $1 million.
The idea was it wanted to protect the fledgling airline industry from liability costs that could destroy it in the case of a single crash. And what happened is, as airline industry got much bigger, and $1 million per fatality became a ridiculous number, it was kind of hamster by its own efforts, because then what would happen is people would, as soon as there was a crash, even if airlines would want to pay out well more than that, they actually couldn't buy their own standards. And so people were forced to buy lawsuits against airlines to go with what they wanted. It was a situation that served nobody.
It was a real bad thing. This is sort of along those lines in that this was a law meant to protect shipping from the owner's liability things in case something like this would happen. And just end cargo ships and all that. Because these rigs are mobile, they fall into this maritime law.
They're considered for the purpose of this law, like a ship. Even though it's not really. It's a floating building. So, yes, it's a legal tactic.
And then I was thinking to get their Dutch order, I guess, so they can have a better chance of fending off the legal onslaught that is sure to follow. Yeah, they've got a lot of problems. I mean, they were all down in Washington, point of fingers and say, what's my fault? PPE Transocean and twibrels.
Well, as I understand it, the way the things are organized between PPE Transocean is that Transocean is actually not liable for cleanup costs from the oil spill. That all falls upon PPE. It's because PPE sort of bought the oil. Right, and PPE has shown no reluctance to accept responsibility.
You know, PPE's definitely stuff. I'm very beginning to PPE is going to know. We will pay for this. Yeah, it's more good for reputation stuff.
We don't really know. It's the only thing they can do. I mean, it's as good as somebody who polluted the entire Gulf of Mexico can look. Well, such a really few act of it, supposed to say, I don't know, Toyota was having their problems.
And just were kind of like, no, nothing at all. We didn't do anything. You know, PPE has been out there in front. And much of it's not companies, not companies are doing bad reputation or risk management.
I mean, PPE has done what it can do, I think, in this sort of situation. I mean, it had to very clear and say, look, it's not our fault. You know, you probably have an on-transotion side. And transotion's going, well, we're not paying for the spill.
It's a PPE thing. And it's all true. You know, eventually it's all going to come out. But transotion is not a small firm.
It's a very large firm. So clearly, and this is one of the unintended consequences of this maritime law that they're invoking, is that it kind of forces plaintiff lawyers, sort of pool their resources to get all the definitions going on. Well, I don't know about you. I mean, anything that gets more than one plaintiff's attorney in a room at the same time can't possibly be good for the defense.
So this is the size of the lawsuits that are probably going to be bigger belief. And even though transotion's not going to be held liable for the cleanup costs, there's still 11 fatalities to deal with. And depending on how that, if they're found to be negligent, because there was early reports saying that perhaps there was certain safety equipment that either A wasn't included, should have been included, or BP had fought against. I mean, for the most part, it did research and it slipped my brain.
But it's more of a let the market regulate sort of situation. Well, then an actual government regulation here is the standard you have to follow in this instance. So they weren't necessarily, the government only talked to, they weren't necessarily keeping up every bit of safety procedure that they could. We don't look all that much further than that.
Well, we don't look much farther than New York Times in the Wall Street Journal to come across stories that we'll talk about how the government regulatory agency, it's overseeing this particular kind of operations actually rather small. And it would appear to the casual viewer that it's outsized to the risk. Its size is very much not proportionate to the possible risk we're talking about. Now, it's said that this particular spill is kind of a once in a lifetime sort of thing.
But what does that really mean? It once in a hundred years, once in a thousand years. It doesn't really matter because it's happening now. Exactly.
I was wondering if I really cared about the frequency that it could have been, it's spilling well right now. There's 100% chance that this just happened. Yeah, 100%. 100%.
It happened. There you go. This whole event has brought a lot of publicity to BP's history of spills. And I didn't know about this until we were thinking about it just a few minutes ago.
In 2005, in Texas, a refinery blew up killing 15 workers. And then after that, the company said, that's our fault like they're doing now. And we vowed to follow the safety measures more closely. And then next year, same thing kind of happened in Alaska's North Slope Giant Rollsville 200,000 gallons.
So I don't like gallons for this. Hang on, wait. How did you hear? Just for the purpose of this podcast?
What kills me is he actually knows a conversion in his head about now, what's the conversion for gallons? It's 42 gallons per barrel. See? Did you all know that?
I didn't know that. Now we do. Knowing staff the battle. 4762, basically.
That was the one that was 62 barrels. Yes. That was their 2006 spill. Now why do you prefer barrels to gallons?
Because oil is priced by barrel, not by gallon. And because of the media, I think it's using gallons because it makes for a larger number. So you'll say, oh, it's been, and it's also been weird. I've actually seen, I mean, Alex, like CNN confused barrels and gallons so far.
And it's annoying. I wish to just stick with barrels because it's not. It's matter what place do you're on it, right? If you're just reporting this to Main Street, well, people can understand what gallon of milk is, right?
Or how big it is, right? You can imagine a gallon. Nobody really ever has a chance to come up to and look at and pick up a barrel of oil, right? I mean, they can imagine what a barrel might be.
Same barrels in their life. Right? They don't know how many gallons. They don't know how big it is.
No, a barrel of oil costs X, which is a gallon of gas cost me. And oil and gas are at the same time. No, I mean. So we're going to get this from an industrial standpoint.
Barrel is really the measure you should go on by not by gallon. But the media loves gallons because bigger numbers. So there you go. Just to add one last thing to this New York Times article, it says that regulars are investigating whistle blowers, allegations of safety violations at the Atlantis, which is one of BP's newest offshore drilling platforms in the Gulf of Mexico.
So I'm just going to get seen over. No, I'm interested to see what will come with that. I think BP's in for a long ride with this. Yeah.
And like I said, they supposedly have a history of fighting certain safety things. I mean, that's just what happens to you. I mean, if you weren't necessarily mandated, sometimes you just choose not to until something bad happens. Well, again, this is a story I've been following with special interest, not for the least reason, because I'm environmental issues greatly trust me.
But I had a chance to spend a couple months really researching this industry, while back in the age of the fascinating industry. I mean, there's so much goes into it. And the truth is that even under the best of circumstances, even with the most stringent risk management, with stringent safety protocols, the most recently built equipment, oil exploration and production and refining is just inherently dangerous business. I mean, there's just no getting around that.
And that's one thing that people need to understand. There's a ton of rigs out there all doing this. And the truth is that this does dangerous work. There's no, there's an apparent risk with doing this.
You cannot get around it. And stuff like this can't, it will happen. It's just a nature of this sort of work. It's unfortunate it happened, right?
As there's been all this political back and forth. It's right now, it's one of those things where environmental issues and political tide happen to intersect at just the worst time for the petroleum industry. And that's what's interesting fall out as well. I know they finally win the drilling advocates finally Obama says, all right, we'll drill.
And the worst thing that could happen for that measure to continue is to have something like this happen. Well, and how's it's going to say about that before I get to it? Because we're about to veer into crazy land, conspiracy theory type stuff, and it's just going to be so upset. At least, yes.
I don't like movies. I don't like conspiracies. You know what, conspiracy is about Obama. Is that the conspiracy?
Yeah, kind of. It's put forth by people who kind of wish Obama did it. So it's right. But one thing I have seen that's legit though, is that there's a 2001 report from BP talking about the BOP of the blow-up remuner that has been used for the sort of operation.
And in addition to how it had more than 200 different points, this particular point of being used had more than 200 points of possible points of failure. Right? And the thing is, I don't know much more about this, except that some senator got their hands on the wind. How can any devices got more than 200 points of failure than I fail safe?
This is impossible. My first thought is, wait, let's be real here. A car has got 10,000 points of failure on it. A point of failure is where something could go wrong.
It's not saying the thing is cracked and falling apart. It's saying that a blow-up remuner is a very complicated piece of machinery. It's got a very important job to do, and it's very complicated. The whole operation is very complicated.
Does that have a bunch of points of failure? Sure. I'll buy that. It doesn't necessarily mean it's a bad piece of equipment.
I mean, look at a rocket ship. It only points of failure on a rocket ship. It means you shouldn't set up in space. It just means that you have seven.
Oh, no, more. Nine? No. It just means that your risk management requirements are not that much higher.
That's all it means. But getting into crazy land. Going to crazy land more can wake up. I was reading about this other thing that they didn't have.
Supposedly, they didn't have some cool acoustic trigger, which is actually required in only two different countries, no way in Brazil. It's another one of those, like a third level of shutdown if they had one. But since BP is a UK company, I'm sure you've got a US company. Those are required.
They didn't have one. Of course, but these sorts of things, right? These sorts of things that anybody can call up with something that they should have that they didn't. Right.
Anything. That is when all of a sudden liability is going to be an issue for that. It's not just going to be, oh, well, you didn't, you chose not to do it. It starts to become well.
You kill people too. Are you negligible or no, because you knew there were ways to prevent this? Yeah. Which is where it adds to the costs exceeding billions and billions of dollars for one place I see here, right in front of me.
Fourteen billion. But that's for everything. Now, when we were talking before we started recording, you had to figure on possible insured. Well, insured according to AAA insurance information, it's due to the insured losses are about one point four billion.
To date, you mean? Yeah. Okay. No, that's the exposure.
Oh, these are fairly modest. Yeah. Morningstar investment research firm has said that a lot of the loss of business and the price of the clean up of things could exceed four billion. I've seen clean up listed as high as seven billion.
It goes all over the place. I mean, well, it's all billions. It's all, and it's depending on how you ended up. Fishing in the stream, Louisiana, two point five billion, tourism three billion.
Depending on what you talk to, but it's twice a say, all multiple billions of dollars in every facet. Now you add them all up and you're getting to ridiculous numbers. One thing I do find fascinating, real quick, is that as massive as these numbers are, if you keep in mind more recent hurricane hits and even, you know, the damage from 9-11, it still pales before all that. And it speaks about the bailouts that are, you know, from a, you know, that's not your situation.
We can't even, this podcast not authorized to bring in some of that. We spent quite a bit of money in the end. This thing ends up being 20 billion. That's relatively speedy.
But in terms of disaster management, I mean, in the last 10 or 11 years, 20 billion is within the realm of what the system seems to be able to bear. You know, I mean, I know he's happy about it, but in 20, I mean, I, I mean, I, I said, it's, it's, it's, it's, it's, it's, it's, it's, it's, it's a small number. And it's, it's, it's just like my enormous amount of jobs and livelihoods that are, you know, wrecked because of this. I'm considering BP.
I'm sure they don't make 20 billion dollars a year. I don't know what they make. Well, the main goal is less because I can tell you this, since, since the explosion, okay, BP stock price has dropped 21% from about $60 a share to about 48 to 50 a share. Transoceans stock price has dropped down about 26% from 92 from about 92 dollars a share to 68.14 per share.
I just say, seriously, Transoceans three letters symbol on the techers is rigged. R.E.G. which I thought was pretty cool. But anyway, cool.
So here's, here's what we got this. We were back to whose fault it is. And supposedly there's, we don't know this. The North Koreans did it.
Did they now? Dastardly? They are good. People.
Or possible, or possibly environmental terrorists, but almost certainly the North Koreans. Dastardly terrorists. I know. They probably took one of the little submarines.
Dastardly is my favorite word of the week. So I want to get in there at least multiple times. So here's what I, here's what I stumbled across. This is where we get into crazy stand is that, so I'm looking for news about this thing.
You know, I'm at the conference, you know, trying to keep on top of things. And I come across this and it's, it's, it's one of those things where the lack of accountability and willingness to vet stories online seems to have no end. This came from, I guess, I want to tell, came from basically the Russian version of the weekly world news, you know, so it's, you know, and strangely Russia has gone from like, probto, which is just, you know, holy, not, not, you can't count on it. It's going to like, just, just, just unbelievable in the other direction, and it's pretty, whatever the hell they want.
It's like, it's like, it's like, probably again, just craziness. Here's the thing. Apparently, this is based off of some report from the Kremlin. So it's already two stages off of, off of anybody taking any kind of, you know, kind of like the story.
It's a report. According to sources, a long story story story is this. A North Korean cargo vessel, the Dai Hong Dan left Cuba, staffed with the 17th sniper core suicide troop, and they basically veered left and fired off a little mini submarine to the, to the border explorer. There's only targeted, yes, horizon, sorry, people are horizon.
They're like, people are exploring. That's like, well, we wouldn't want them. And that's a very, very good point, especially when I'm starting on media credibility. I need to get my name to write.
So the deep water rig. Well, actually, and you know, even that's unfair because it turns out a number of rigs are named people are named. I'm sure that's what's said in the deep water explorers are more to. Yeah, so, so it goes, so it goes out and the story is it fires two torpedoes and boom, hits the thing and then it, and then it self detonates in a suicide move.
Or beneath it to make it all sink down to the bottom of the other thing. And that explains it. And that Obama has issued a news black out about this. He has a stand on the military.
Federal SWAT teams are seen on, on, on scene. You know, I have initial fire. Why are we there? All this sort of craziness.
And the theory is that, is that the reason why the North Koreans would do this is because it would force Obama into an impossible dilemma. Or he has this massive leak underground. The only way that's proven to do this is to detonate a nuclear bomb down there to seal the plug. I guess a lot, aren't again.
So wait, really? How that's the question? The Russian journalist. You know, what's not?
You let the truth get away from the story. Knock it off. Right. So is that just going to take it down there?
I know. They better bring on Steve Buschummi. He was also well, yes. And you have two people to drive.
And Michael Clark Duncan, you need him too. And Sylvester Stallone? No. No, we should put on.
We should put on different movies. We should put on different movies. But Ban Affleck. Ban Affleck too.
And Aerosmith will be their rock in the background. He's not trying to do this for the deep water. This is the movie Armageddon. Exactly.
How'd she miss? I don't want to see. It was like a presidential lady. You should really want to see it, but you should have to see it.
Oh. I don't have to do. So anyway, no boss of me. So North Koreans blow up the oil rig.
North Koreans blow up the oil rig. And the only way to stop it. The problem is he only stopped by dating a nuclear bomb underground. That would somehow then plug the hole.
I think I would just make a bigger hole. But there's also Friday and time going to Mexico. Apparently this would be defensible international law. The reason why they don't want this is because nuclear negotiations are due to start.
And so how did the United States force them? They know when they're using their own nukes and off their own shores. They're all like hammering. They need to build a house.
Right. Right. Exactly. It was built by Hyundai heavy industries.
Yes. It was in South Korean. So it's just credit South Korea as well. Why North Korea would have to either go to the Panama Canal or down the tip of South America to discredit South Korea where they can just simply fire water balloons over the mountains at the city of Seoul.
But so I'm going to give you the credit to North Korean scientists to know that all of this would have happened. This bill would build up oil for days and days and weeks. And you know that one little submarine was going to have the perfect amount to collapse an entire oil rig. Which is not what I was like.
I was like having a hard time having citizens not eat grass from sidewalks because of chronic food shortages. Not that's not what I was like. The food shortages. Right.
So you're the story like this is crazy. This story kind of like gets in the ear of a lot of right wing blogging. One of my favorite takes on this is from the examiner.com. It's a New York paper.
I had the conservative side. This guy is going off. I'm going to read a couple of snips from this from Anthony G. Martin.
He's there. They're punded on the staff. I guess. And he's going to have Obama's wording.
I can say this is an act of sabotage. Why do you have SWAT teams on there. And so it's great. It is to be remembered however.
If the explosion is the result of the explosion. The source of such an act may have absolutely nothing to do with North Korea. Environmentalist extremists have been known in the past to engage in acts of violence to get their message across and to prevent what they see as the raping of the environment by the wicked, the minted oil companies, nuclear energy companies and others who do the demonic work of providing essential energy for the country. Energy that runs the computers from which left wing chills, sitting there under wear and their mama's basements spouting extremists propaganda.
Of course the best way to get an ironing tag. I don't know what it does. But yes. In case, you know.
It's obvious. You know what you do when you have an environmental concern. You create an environmental. Yes.
Yeah. Yeah. It's actually. All right.
We created this picture to clean it up. Look what we've learned. Oh my God. We can never have off-shore drilling.
That's the goal. The reasoning is as in response to the expansion of offshore drilling and also as a climate change bill is just reaching the halls of Congress now. The idea is already this and it's going to force a certain number of legislative changes. It should be nice though if people were to say, well, where are the point now where we're drilling in high risk areas.
You know, we're proposing to drill in high risk areas. Go from Mexico is the deepest part of the body of water. It's a little mild down. But the further and further you go out to say like, no, other parts of the world.
It's probably all over the place and it's going to take a little bit of effort to get to it and it's going to run the risk higher. So, you know, it'd be nice if this is the sort of impetus to maybe actually finding alternative fuel sources that aren't comical, you know, there aren't ways of time. I mean, I agree with that idea. That sounded like a good idea.
But the fact is we don't have any infrastructure set up to run anything but oil. So we're going to oil out whether you like it or not. Yeah. And the truth is that no environmental extremists is going to put down their latte starbucks long enough to figure out how to blow up an offshore oil rig.
I mean, come on. Maybe they wouldn't. You know what? It's a good cover.
But it's sort of the. GPT Which is that. This isn't the only blog that kind of sounded off on this. This is obvious, suspicious.
Maybe it's not an accident. Maybe it's not an accident. Maybe we don't agree with puttically to what we're trying to throw the blame back on the Obama and all this sort of stuff. I mean, it's clear.
It becomes razor. It's an industrial accident. It happens. And to be fair, I'm sure there's an equal number of blogs that point to the deregulation policy which we should put down.
Not to say the reason you see the reason they do BPE or whoever didn't have whatever they should be. It's because they weren't required to do so. And, you know, as much as they're saying somehow, Obama's evil everybody's got an agenda agenda and they can take a disaster and twist it to whatever ends they need to obviously right submarines and yeah yeah and I was looking for these stories is only I need those around so somebody goes did you hear about the North Korea theory I'm like the what you know and I look at I didn't even bother looking up the equally greatest stuff on the left to yeah you know that you know that you know what okay because you know Albert is involved in this rig you know they provide some equipment so you know right then they're anti-haliburton folks just cranking that stuff up oh it's Albert they you know whatever you know it's it's it's it's actually it's happened we were everybody was all about let's we're all about driving our cars I know sorry yeah yeah yeah you walk the protest price price you know let me want to abandon all of our technology but what I find interesting is that this is the only block that was covered as legit as a with a lot more legitimacy and credibility than they really should have given it okay I mean obviously political bias was was so caring today here for these particular sources but what was fascinating to me was reading the reader responses to stories like this and people going well you know you know there's anything to prove this you know people taking really a lot more seriously than I would imagine you'd ever see and you know it's funny I was talking to somebody the other day about how the RSS feed is one of the worst thing to happen to the media industry and I was like why is that it's well it's because when you what it really does more than anything else is enables you to listen to one voice and you just want to be told what you want to hear that's all that you know that's all there is and you have a whole media culture out there that there's for everybody's building our test kind of helps you build this echo chamber for yourself you're only gonna want to hear which one here especially news gets more increasingly politicized and what I see with this situation and you know I want to know about the failsafe and the BOP it's not that it's not that different from when I saw you know senator also committee grilling the guys about AIG right I'm clearly these guys don't really know the industry that's involved here they didn't know the insurance industry they know AIG just they don't know this they don't know what goes into drilling much less disaster yet there's a need to play to the public okay and the public are buying shares the public are not writing letters to the congressman the public is deeply involved here so the need to actually engage us on the on the real true technical level I mean it's like there's two different ways to handle the crisis there's actually handle the crisis and then let's get involved in this crazy let's talk about it kindergarten terms make people feel better you know and the problem is that kindergarten level that's helping drop the share price these companies you know I mean right now I mean BP shares almost certainly down because well it's got legal liabilities are not looking at the long tail same way we're trying to ocean but I guarantee you there are people out there who just hear about it went you know what forget it I'm out here and then I'm looking at the information not looking at the possible on tail up sides for these companies there's going and I don't like it I'm out here and that's fueled by this weird media echo chamber where people are willing to talk about this without getting any information and it puts a further sharpening on that whole notion of reputation risk we keep bringing up time again it's impossible we think about maybe it happens 20 years ago you got your local newspaper in the local and then and then let o'clock news yeah maybe I see and maybe don't depending on what time for everyone to go to 30 years ago say yeah yeah 20 years ago there was 30 years ago I don't know how old I am anymore what do you do? is that what it is?
but he doesn't look like they were 50 dozen oh I'm out of there pre-cable news pre-24 hour news cycle you had your engine newspaper and you had your you know 11 o'clock whoever your choice of the 3-minute radio radio yeah but you but you had very limited sources in or else and no one has no one had the the soap box yeah they do now to say North Korea blew it up with a submarine yeah it just didn't exist so now you got to remember we're so much harder at managing reputation when every repute every crackpot almost has equal opportunity to get on the soap box and maybe get picked up by some random blog talking about risk management yeah when you could have filled a little way into nothing yeah you just perpetuated a conspiracy theory because it sounded cool but in the past we had no way to do that yeah yeah so we'll just perpetuating whatever sounds cool so if you come up with some outlandish now imagine trying to rep manage reputation of something that is completely like there's no way to know what crazy story is gonna trick attraction on the internet yeah it's difficult I it sucks why you got to be a little more uh oh you just gotta be aware of the fact that that exists I guess yeah I don't know which is probably why it's good that you know somebody like be be right out going sorry we're gonna fix this yeah yeah yeah I mean if you let like five minutes go by where you're not responding to me all of a sudden you're you know you're in league with the aliens and the Scientologist oh wait no it's just the vacuum will be filled with something and it may be something that you have no way of stopping from snow falling out of your control absolutely true you can't let there be a vacuum I don't think in this you know these days and and you know well we've been we've been trying to mention BP actually Transocean has been out there in front as well from your relationship standpoint and one thing that they really ought to be committed for I should say is that a lot of rumor has kind of jumped into the channels especially online about about you know what's happening and you know who's been forced to sign what paperwork they got ashore and all that and transocean the pretty transparent about it your other website they've got some and they got things rather clearly stated now I mean there's only so much you can throw that out there I mean you can only get information like that and the hands people who want to read it get back to echo chamber people want to think the worst of these firms based on nothing but just the prejudices you're kind of stuck against impossible challenge are you not really gonna get to that but I mean looking at from a corporate communications endpoint looks like the e-pian transocean doing everything you can really expect any firm to do in this kind of situation I think it's all they can do yeah you know silence is not as if you think it's not as if you can do best you can do is go well well I was ended up thankfully they have the money to do so what I thought was interesting is that I jumped on this forum called drill ahead which is a a forum basically populated by people from the oil gas exploration community these people who actually work rigs they know what they're talking about very tactical talk I mean it's easy to kind of feel your ad your depth there but you know the general tenor that conversation though was you know it wasn't you know og birds you know what these guys are bastards because there's always they was talking about well you know how could the failure have happened on the blowout protector how could the hydraulic pressure have spiked and it doesn't seem like there's a whole lot of question there that that's I mean among these are guys are professionals and I mean the the the prevailing opinion I mean I mean it seems like the only thing they're taking seriously at all is the fact that this is what it appears to be something was basically a gusher of ever proportions and it's took out a lot of and it took out a huge amount of equipment and it happened at the bottom of the ocean and it's been really it's been really hard to to go to go to go apparently though the leak could be much much worse what happens when the whole thing exploded the main pipe kind of can't kind of bend the straw so what's coming out of the sea for is actually less than what it could be it could be a hell of a lot more oil coming out there we have to look at the balance as far as the destruction goes they can turn it off so hopefully they can hopefully they can't afford anything or lasting indeed indeed so well I think I said about all I can say on this one you guys anything offer not on this I'm good at oil it's it makes for some amazing photos you check out if you have the chance it's Boston Globe yes say they're running they seem to be running groups of amazing photos I mean heartbreaking as as impressive as they are heartbreaking and I think Bill said he didn't want to say I want to be a bit me seeing the water is kind of pretty looking to realize that it's oil and that's environmental disaster waiting to happen it is kind of pretty looking at how to say it looks very poorly and cool every major every news magazine you kind of it's the economy business week blueberry business week showed up I'm had another one strangely beautiful photo of the oil it's it's hypnotizing but you should check out if you get a check out the Boston Globe site they have some pretty good photo essays even put it up yeah pretty fascinating so cool cool mine doors me at least and we have first today yep I'm Daimler German carmaker it's being fined $185 million for bribery apparently people associated with the carmaker have been bribing government officials with tens millions of dollars and mostly in Russia and China and it's also like 20 other smaller countries involved I thought that was interesting but then I came across another news article that made it even more interesting the report out that says half of Russians believe bribery solves problems like I like I like to have a beer bribery solved quote problem you know what I mean I know what I mean I know a guy let me tell you something about bribery Russia it says bribes bribe you yeah it drives you so we're actually the problem so bribes I don't know it's over first it says that 55% of the response to the certain poll so they believe that bribes are given by everyone who comes across officials in Russia were they bribed to be part of the poll say that's what this asterisk is right if they were right we were the poll they wouldn't say bribery is bribery here nice is true that's good yeah yeah opposition party with that the Lovata Center oh they're very uh oh right it says only 10% of those poll believe that only cheats and criminals bribed officials yeah so basically only 10% think it's wrong basically yeah right what do you think would you provide I'll give a 10% okay I'll pay 20 bucks to the answer okay you got it I guess we really think about it right somebody really says that if you're in your country culture whatever the case you think I'm sick country where you have to drive you ahead to get anything done no choice say you know you know you know you know you know you know you know you know you know so so actually actually from the table or you know you know you know you got to write this just something on those lines happen like he is actually Akio is trying to get a store open up somewhere and I'm talking details of the wrong so by all means if you're interested in story jump online go to a credible news source and look at all I know the BBC is covered extensively I mean the long sort of is that Akio was trying to get shot up in Russia I think they were trying to in Moscow St Petersburg and they found like they just had extraordinary bribery problems deal with people everyone with their palm grease and you know things like you know the city would just shut off power to the store if they have their own generators on site keeping going and it got to the point where I got it got the point where so much was was stopping things eventually you know and Akio had a very strong with the founder like he was like we were not gonna drive people we're just not gonna do it we'll do things like we'll set up on generators we'll make ourselves so self-contained that they can't possibly mess with us and I guess what happened is that the guy like the VP the one the top you know second tier guys who's handling things Russia finally turn a blind eye when people started driving people just because they had to get things done they wouldn't get the store up running and remember that the head of Akio was he was so personally betrayed by this and it really really killed him this has happened but but you're up against this kind of a it's very difficult situation I mean how much are you going to endure before you really figure what this is how the game is almost if 90% of people before it then what you're not like it's like you get busted for it yeah then again though Daimler was you just said Daimler was fine but where they find by exactly so they find him by the US US district judge Richard Leon ordered or gonna pay criminal fines and civil penalties that amounts to 285 million for bribes they took in Russia yeah and China and 20 other smaller countries you know but most of the nation's does some interesting studies on the cost of bribery across the developing world especially and it's not just a problem in Russia and China like in I mean like especially like in Africa and in much developing Asia I mean just the klepocracy involved is such a prophecy yeah that is a fantastic word but yeah klepocracy did you just make a democracy no no it's a threat to that because we all lie with it with a K that's a way to go no klepocracy governance by thieves really you know yeah and it's it's very much no one of these sounds like an awesome movie title that would be a good title right governments by thieves parliament of fools yeah no it's a secrecy it's not like that yeah but anyway the problem is is that in a lot of the developing world this problem alone is like the number one inhibitor to economic development because everybody's on the take and nobody's willing to it's so impossible to for one person to stand against it so the whole system is corrupt stays corrupt and foreign investors don't get involved because why bother you know just doing this is not your cost yeah exactly the thing is you're never going to defeat bribery by like driving somebody to the point of saturation right you're never gonna be like somebody's like I know I can't take anymore money I'm sorry I'm like I'm like a nice full it's no more there's no more zeros I don't know what to do I've got a house I've got a car I just stopped you know like my friend give you some okay you know and then I'm there's no way so it's like you can either ride so then if you think so then it becomes the cost doing business in that region so if you just fall if you think about it as just you know Machiavellian like this is what I have to do to do business here and this is how much is gonna cost this because this is what we have on the fine filed here the Russians will pay to obtain better medical services they prefer to buy their driver's licenses they buy police when they're caught violating traffic rules they also pay to ensure that their child can dodge the draft so basically I'll bet that yeah I can see that basically everything but you can't do a lot of these things the casually figures that came out of Chechnya were like Vietnam for so long people were doing anything they could give the kids which thing is basically anything that you could do you could probably wait if you have enough money you can do anything you got to chat up I think it's just so much more prevalent in Russia than the US well well you know actually I would know when I was in high school I got chance to go to the Soviet Union back when I was still the Soviet Union and out of front with me and we were told straight up yeah you can definitely bribe over there just bring things they can't get in the free market things like blue jeans and sneakers and sunny warmens and cigarettes like American cigarettes so yeah I brought over a couple of cartons of world rose I never smoked my life you know I brought over those I brought over extra pants I brought over all sorts of currency yeah I got a I got a national soccer jersey and I got a Russian military jacket and a tiger and a white jacket a bust on Sasha okay whoever she is Sasha I'm sorry I'm sorry a Russian military officer jacket and I was so worried I was so worried I was so worried I was like I was so concerned I was gonna get caught smuggling stuff out of the country that you know the day we left what is actually I stripped down I put the I took all the metal off and I put it in my suitcase that wouldn't notice you know like little pins and medals and badges and all that word on and I put my shirt on my sweater on top of that just hope it wouldn't if it had me down I wouldn't feel it or anything I was like so so so nervous I was like oh my god I'm gonna catch you I'm gonna go to Google August and the awful you know and we got and here's the thing is we left on a Monday morning and everybody security was so hung over there just like just go just go here and I could have honestly I could have walked through with a tiger and a rocket I could have had his head on the counter and pointed towards the world I could have had weapons I could have had anything that point oh my god and I had a friend with me just so loved this private culture over there he went and this is so beautiful I mean you know the supposed to tell the regime nothing right no way it was what it was a scoff loss it was astonishing at one point he bribes on traffic the middle downtown hospitals the heart of cigarettes to hold traffic both ways so he could run into a street and turn to picture of the world with a picture of you know and that was happening by the guy way back it was a time that was not the last night in Russia right it's the high school school by the way and us was us was us was a school school school school school and then it was a nice green school where I was at that one so there's another school I don't know the role since this is like we had a total party in the party in the U.S. and there was a time that was like a good thing but you know we got to teachers school and left you have to reach the students in the house So anyway, the last question I was asking is, we did a particular group of rooms and all that and all that. And it was just, it was just, it was just like crazy. It was not, there's a whole group of Irish-Irish-Irish-Irish-Americans.
You know, the people who entered this bunker just take it, you know, shimmy ball, you should watch the works of the other, but they entered a lot of the other rooms. But anything, they have to like, really shot out on the fire and off the works. It was, it was, it was, it was better. It was better, but a lot of my friends, like, you don't even, right, you're ready to find.
And I swear to God, he's in his drug, okay? What are we gonna do with the police show? And he goes, oh, don't worry about it, they already did. Any points, and there's this, there's this, there's this cop in the room.
He's dancing, he's got a bottle of wine in his hand. His hat's like a scance, his tie's like kind of done. He's like, oh, hey, how you doing? My friend's like, hey, you done, man.
And he already carried it. I'm like, hey, I was like, you must be happy here. He goes, Bill, I never wanna leave. Well, I'll just go, I'll just, I'll just, I'm one lone tear, a trickle down.
Yeah, yeah. It was bottled and then sold it. He's like, it was insane. It was, it was, I mean, it was, I can tell you what you're saying.
And even then, before things opened up, there was such a corrupt culture of corruption there. Just, and we were just high school kids. We didn't have anything really serious. We're just, you know, painting any stuff.
And frankly, we had to stop, we were trading for, probably being knocked off in like sweatshops, you know, just not even authentic, but you know, we were married to it. It was cool. And it was all in the table. I mean, you weren't allowed to have any kind of transaction like that, you know, but people were doing it.
So. That corrupt culture is still going strong, is you see? Indeed, indeed. Well, if you ever go to Russia, I guess you bring a lot of money.
Cigarettes might not be a deal, now it's open. Yeah, I think it's money. Now it's not a lot of cash. Bring some cash.
Or, you guys hear about this gold ATM? That just, in Abu Dhabi, is it off to put money in? Get a little gold cars out? Yeah, you got a little 10 gram gold chip.
What is it? Gold is, let's check $1,200 an ounce. Yeah, it takes all time high. Yeah.
And that's a high quality ATM. You can be walking around a lot of cash to take forever. Wait, you know, you get a little gold, that's just an ounce. Yeah, how much?
It's what's 10 grams? You know when you go to an ATM and you know, they only have 20 bucks and you're a college kid and you're a camp didn't even have 20 dollars in it. You wish you'd find one that had like a $10 bill. Yes.
Somehow, I don't think that Abu Dhabi's got in powers, politics going up to the gold machine. What if they have it? They look at just enough for a dominoes. It's like you could only put in a million dollars in cash because we only have really big gold bars or small gold bars.
A million dollars or cash. Come on, because I think it's sort of a machine. Just drops out. They're leaving little chips.
They've got to have a certain minimum. Right, right. Well, I love the guys that you know right now, it's just a cash machine. They're going to work on making a credit card thing as well.
Like, wow, this is fantastic. Holy crap. So gold's a cash machine. I know, right?
Somebody shows up with their platinum card and puts out all the gold they can get and leaves for the leaves. Wow, that's a really good idea, because if you just decide to take the gold, because you can take the gold because you can't. Yeah, you're gone. Exactly.
What's American Express going to do? I mean, I have to send out hitman. I'm going to be like a jim spondylie because I had $80 billion of gold bars. I could buy an island.
Would you or would you not welcome North Korean Submariners? Of course I would. I want ourselves to... We'll just...
we're gonna blow things up. We're just gonna have to blow... blow right around. We'll just be in that.
Come on. Jump on board. We'll joy ride. I'll tell him no more blowing up oil rigs.
You. You. So she has something about... you read today...
I will... I... yes. Let's end up here later.
And yet, not so late. No. Anybody who's working late. Stop it.
No more. Go home. Because according to the BBC, we work overtime. And nowadays, you know, a 60% increase risk of heart attack.
That's pretty insane. That's what they say. I would like to talk about this more, but we are at time. So thank you for being that up.
We should get out of here. We should get out of here. We should get out of here. I can't possibly testify this way.
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Just tell them I said so because you only get a hard time. That's more going to work. You said so. It's on the blog.
It must be true. Thanks for listening. We'll see you next time. Bye.