David Kotok: Here Are 3 Things To Watch In The Oil Leak Disaster


Photo: BP

This is going to be another week of intensely following the leaking oil in the Gulf.David Kotok of Cumberland Advisor, whose “Oil Slickonomics” pieces have been frightening and closely followed, have identified three key things to watch in the days ahead:

First: the drilling rigs and platforms in the Gulf that are registered in the US are under the supervision of our federal government.  Others, like the one that is the source of this catastrophe, are registered in foreign jurisdictions.  That is done by the oil companies in order to save money.  There are representations made about compliance with US law.  But the evidence is that the US-registered vessels get much more inspection and scrutiny than the non-US ones.  This foreign registry issue is now an exploding area of inquiry and controversy.  

The second item is dispersants.  EPA has ordered the cessation of the use of Corexit, a dispersant that BP had been using to combat the spill.  The reason is that it is too toxic.  EPA admits that there is no precedent for the amount of dispersant used in this event and the type used.  This is truly an uncharted area.  They are now concerned enough to call for only mild dispersants, so as to reduce the risk from the toxicity.  No one knows how much damage has been done by the dispersants already used.

Third, The New York Times reports that the laboratory used to do the sampling and testing to determine degrees of damage and eventual liability is owned by an oil-services firm that “counts BP” among its biggest clients.  Critics claim conflict of interest.  The lab owner says its work is “unbiased.”

He goes on to worry about oil entering the current loop — which according to some reports is already in the bag — at which point the situation in his words would go from “bad” to “worse”.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.